Datasets:

MHGanainy

/

multi_clustering

like 0

MR JUSTICE GIBBS: The Oxfordshire County Council appeals against a decision of the Special Educational Needs Tribunal, "SENT", dated 26th June 2002. SENT decided that a child, C, now aged 14, should be placed at a school called Prior's Court as a boarding pupil, as his parents, Mr and Mrs M, had requested, but contrary to the provisions set out in the appellant's statement of special educational needs in relation to C. The appellant had contended that C should continue to be placed at Bishopswood School, a day school which C had been attending, and which was run by the appellant as the local education authority. Mr and Mrs M, as the first respondents, resist this appeal. SENT, the second respondent, does not appear. The facts in brief are that C is a boy with autism and severe learning difficulties. He has had a statement of special educational needs since August 1994. He displays what is called "the classic triad of autistic impairments". He has poor, or no, speech and finds all communication very difficult. His relations with adults and children are severely impaired, and his behaviour is repetitive, rigid and, at times, aggressive. As already mentioned, he attends Bishopswood School, which is a maintained special school run by the appellant as the local education authority, and it caters for pupils aged between 2 and 16 with a range of special needs, which include severe learning difficulties, profound and multiple learning difficulties, and pupils at the vulnerable end of the range of moderate learning difficulties. C has enjoyed support from the appellant's social services department in the form of home visits from support workers, and also has had day visits and overnight stays at the Chiltern Resource Centre. That is a centre run by the charity Barnardos and part-funded by the social services department. C had been attending that centre for some eight years. It was, however, under threat of closure due to budgetary constraints affecting the appellant. The appellant's proposed provision in the event of a closure of Chiltern was to provide respite care at St Nicholas House. This institution currently caters for 15 children upon a rotating basis. It is an institution which provides care, but it is agreed between the parties that it does not provide any educational facilities. The proposal of the first respondents, namely Prior's Court School, is an independent school which was opened in 1999 for pupils with a diagnosis of autism in the age range of 5 to 16. The history of the proceedings before SENT may be summarised as follows. The disputed provisions in relation to C were set out in a statement of special educational needs dated 24th January 2001. The statement essentially provided for C to continue to be educated at Bishopswood School, with supplementary educational provision. Under the heading of "Non-educational needs and provision" respite care was to be provided at Chiltern. Mr and Mrs M appealed against the content of parts 2, 3 and 4 of the statement, pursuant to section 326 of the Education Act 1996. On 1st May 2002 the matter came before SENT. When it considered the evidence available to it on that date, the tribunal concluded that it could not continue with the hearing and reach a determination on the basis of the existing evidence. In explaining that conclusion the tribunal said as follows: "In summary, the parents' case is that C needs specialised education with other autistic children in a residential setting, receiving structured teaching and related support throughout the waking day. Mr and Mrs M did not consider that C's current school - Bishopswood Special School which is maintained by the LEA - can provide what C needs, mainly because the school day ends about 3.15pm and C needs a specialised and structured curriculum outside those hours. "The LEA's response was that Bishopswood School is catering adequately for C's needs now and he is making progress. It was accepted by the LEA that C needs a structured programme after school hours, and this was offered for him in the form of respite care from the county's social services department. C has been receiving such support until now at Chilterns Resource Centre, but in the letter we admitted as late evidence it was made clear that, because of budgetary constraints, the centre was scheduled for closure. No date has been set for this, but it will probably not be available to C for much longer. "A place had been offered in August 2000 for C by the county's social services department at St Nicholas House in Oxford. This is a residential unit with four long-term places - all of which we were told are currently full - and four other places, where children can stay on a weekly or other basis as appropriate. "The LEA's witnesses, namely C's head teacher Ms Northfield and the LEA's educational psychologist Mrs Meyers, could not give us much detail about St Nicholas House, either as regards staffing programmes for the children or as to a whether a place was currently available there for C. "We therefore reluctantly concluded that we were unable to make an informed decision on the information we had before us. We accordingly adjourned the hearing for such information to be obtained." The tribunal gave directions which included the obtaining of further information. This included information as to whether a place for C would currently, or in the very near future, be available at St Nicholas House, and if not, what other alternatives there might be; as to St Nicholas House, full details of the provision on offer, the staffing and expertise, whether specific programmes are designed for the children, and if so, by whom. If St Nicholas was not available, similar information about any other appropriate respite care unit, and costings, whether at St Nicholas House or elsewhere. The tribunal sought confirmation that the parents' educational psychologist, namely Mr Reid, would be afforded full facilities to visit and inspect St Nicholas House, or any alternative, as soon as possible so that he could report in writing to the tribunal office before the next hearing. The tribunal added that they appreciated that Ms Rodway, of the appellant, did not have the power to guarantee delivery of any of the above information, but asked her to do her best nevertheless to provide it. Ms Rodway is the education officer with the appellant, who was responsible for C's educational choices. She was present at the hearing on 1st May, as she was at the concluding day's hearing on 10th June 2002. Before the first hearing, SENT had been provided with, and had watched, a video recording illustrating C's behaviour whilst at home. Ms Rodway was not actually a witness at either hearing. The procedural rules, it should be said, restrict the number of witnesses normally allowed. But in a statement for the purposes of this appeal, dated 15th July 2002, having recited the fact the tribunal had seen the video, Ms Rodway continued as follows: "Quite early on during the hearing on 1st May, the Chairman commented about the difficulties faced by the Ms, and in particular Mrs M. He said, looking or gesturing towards Mrs M across the table, "Look at Mum (he may have said 'mother'), she's exhausted, she needs help (he may have said 'help of some sort'). These may not have been his exact words, but they were very much along those lines. "I would not normally have attached much significance to these words, but the course of the hearing made them quite significant. "It became plain during the course of the day that the SENT were particularly concerned about the level of social services provision that could be made for C and his family and in particular whether the Council could offer a residential facility for him. Our counsel submitted that this was not relevant to the question of what educational provision should be made for C, but said that the Council would try to provide that information as the SENT wanted it." As to the adjournment, Mr Friel, on behalf of the first respondents, says that they were upset that the appellant should have been given a further opportunity to put its house in order, but did not actively resist the adjournment despite the worry and distress that it brought to them. Mr Oldham, on behalf of the appellant, from a different perspective submits that the reasons for the adjournment and the circumstances under which it was directed demonstrate an error of law into which the tribunal was allowing itself to fall. I shall return later to that issue. Following the adjournment, the requested information about St Nicholas House and other evidence relevant to this and other aspects of the case were produced without objection to SENT, and were taken into consideration by the tribunal at the adjourned hearing. I do not think it would assist to set out all comprehensively all the material which SENT eventually had before it, but it included oral evidence from Mr Heald, described as a director of children's services, and temporarily in charge of Prior's Court School pending the arrival of a new head teacher. Ms Northfield, the head of Bishopswood School, gave evidence. The tribunal also had the benefit of written and/or oral evidence from Mr Reid, the educational psychologist instructed by the first respondents, and Mrs Meyers, the appellant's educational psychologist. Mr Hassall, a consultant clinical psychologist with the Oxfordshire Learning Disabilities NHS Trust, provided a written report which had been obtained by the appellant's social services department, and which was before the tribunal. As regards the statement of special educational needs itself, a measure of agreement had been reached between the appellant and the first respondents as to changes to parts 2 and 3 of the statement. That still left significant issues between the parties, some of which are relevant to this appeal. In particular there were two paragraphs of part 3 of the statement under the heading "Educational provision to meet needs and objectives", which the first respondents asked the tribunal to alter by substituting their own suggested wording. Two paragraphs in particular need to be mentioned. The original wording of paragraph 2 read as follows: "C needs adult oversight all the time he is in school, both to ensure his attention but also for health and safety reasons. Currently, C has a 1:2 ratio. C's autistic behaviour needs deliberate management. Outside consultants, such as the Advisory Headteacher for Autism need to be involved. There needs to be a common approach to his behaviour management in school. Such topics as C's attachment behaviour, his obsessive behaviour and his repetitive behaviour should be managed in a consistent and negotiated way." The alteration in wording proposed by the first respondents read as follows: "C needs adult oversight all the time both to ensure his attention but also for health and safety reasons. Teacher pupil ratio of one teacher to six pupils plus a high level of classroom assistance support to ensure delivery of individual and small group programmes on a daily basis. All staff to have significant training and expertise in meeting the needs of children with autism." The original paragraph 4 read: "There should be an explicit behaviour management programme, which needs to address the following issues:- Reducing C's anxiety. Deciding on the level of assertiveness that would be needed to bring C's behaviour under control. Describing rewards which should be made explicit and applied rigorously. Deciding on sanctions which again should be systematic and applied rigorously." The new wording for that paragraph proposed by the first respondents was: "All programmes in connection with C's self-help and independent skills, communication, amelioration of his aggressive challenging behaviours and obsessional behaviours, socialisation, imaginative and imitative play and cognitive development to be delivered throughout his waking day within a consistent and structured environment." In referring to the evidence it had before it, SENT mentioned the following matters, which are of significance to this appeal. It mentioned that the tribunal had heard from Mrs Ainsworth, the service manager with the social services department, to the effect that there was currently no place available at St Nicholas house. She had said that there was one child on the waiting list. The social services department did have some family-based respite care places, but Mr M said that they had been on the waiting list for family-based respite for six years with no such offer. The tribunal continued: "Summarising the reports about St Nicholas House, the SSD report described a caring environment where activities were available to the children in residence. There were extensive grounds where pupils could play, but always under supervision. Mr Reid's critique was to the effect that, whilst he accepted that St Nicholas House was a caring environment, it did not offer the structured 24 hour programme which he said was currently necessary for C." Mr Reid being an educational psychologist, it is clear that by "structured 24 hour programme" he meant an educational programme. The tribunal continued: "Mr and Mrs M's concerns about St Nicholas House included the fact that there were constant staff shortages, there would be a large turnover of children." The tribunal then went on to refer to thier other concerns, the most important of which was: "The fact that he would be cared for at school, at St Nicholas House and by other staff from SSD, all with the necessary transport in between involved; this would not represent the continuity or education which C currently needs." It is to be noted that the evidence of Ms Northfield, Mr and Mrs M, and Mr Reid all dealt with education outside school hours, and the ability or inability of St Nicholas House to provide it. However, having summarised those matters, SENT then referred to issues relating to the social services department and its budget, upon which, again, Mr Oldham relies in this appeal: "In the late evidence just referred to, we read that the SSD's budget is under pressure; cuts of 14% have to be found and provision for children is one of the target areas. Mrs Ainsworth could not give a date when such cuts will be implemented, or the form they will take." The tribunal then went on to set out relative costings. I need not recite these in detail. It suffices to say that there were included in the comparative calculations for C continuing at Bishopswood as against going to Prior's Court the cost of the social services department support under the former option. The inclusion of the social services department costing calculation is said by Mr Oldham either to be an example of the tribunal misdirecting itself by the inclusion in its considerations of an immaterial fact; alternatively, he says that its inclusion is at least an indication that the tribunal's approach to the case was wrong in law. I have referred to Ms Northfield as having given evidence about C's education. In a letter of May 2000 Ms Northfield had said that whilst her school, Bishopswood, could cater for C's special needs during school hours, this would not enable him to learn enough independent skills or modify his behaviour sufficiently to enable his continued involvement with his family. He required education outside the normal school day, and Ms Northfield and the school supported the parents' application for residential provision. In oral evidence at the hearing Ms Northfield had explained that this would be true of most autistic pupils; that is to say, education outside the normal day would be desirable for them. She said that she still thought that C would benefit from education outside school hours, and she informed the tribunal that C was broadly at the level of attainment of a four year old at the present time. At the time of the tribunal hearing C was 13 years old. Finally, with regard to SENT's decision, I need to refer to the crucial section, "Tribunal's conclusion with reasons". Amongst the matters set out by the tribunal were: "Part 3 • We agreed to replace the paragraph about adult oversight for C with the wording asked for by his parents. • We similarly agreed to the wording required in respect of a behaviour management programme, to replace the existing wording in the statement." Thus, the tribunal were accepting the new proposed substituted paragraphs 2 and 4 of part 3 of the statement which I have already quoted. Under part 4, its conclusion was as follows: "We have decided after very careful consideration that, although everyone currently working with C at school and from the SSD had shown care and sensitivity to his needs, we are not satisfied that the mixed programme he is receiving from various sources is currently meeting these needs. He is a severely autistic boy, currently operating at the level of a 4 year old. Whilst we accept that he is well managed at school, we equally noted that his behaviour at home is very disturbed and causes great distress to his family. Only in the setting of a school where a 24 hour curriculum is available can C in our judgment expect to make any significant progress. He is nearly thirteen and a half years old and not a great deal of time is left of his school days for such a programme to be implemented for him. "It is therefore our decision that Bishopswood School, coupled with any form of respite care currently available, is not appropriate for C, but that Prior's Court does represent the right place for him now. We have some concerns about the school, particularly as regards the absence of a head teacher until August and concrete programmes for integration with a wider peer group, but these concerns do not override our basic decision. We hope the provision of a wider peer group can be attended to in C's interests when he attends the school. "It follows from our decision about placement that the question of costing is not a relevant consideration. We noted the evidence of Mrs M to the effect that the family would be responsible for C's transport costs to and from Prior's Court and we have therefore included this as a condition of his placement at that school." The tribunal then went on to say that careful consideration had been given to the appeal papers and all the evidence at the hearing, and regard had been had to Chapter 8 of the Code of Practice. Part 4: "Reference to Bishopswood School is to be deleted and replaced by the following:- 'Placement at Prior's Court School as a boarding pupil, upon condition that Mr and Mrs M are responsible for all transports costs for C to and from the school.'" As regards the statutory framework applicable to the case, a brief summary and extracts of the relevant provisions are all that is necessary. The relevant provisions of the 1996 Act are as follows: "324 Statement of special educational needs (1) If, in the light of an assessment under section 323 of any child's educational needs and of any representations made by the child's parent in pursuance of Schedule 27, it is necessary for the local education authority to determine the special educational provision which any learning difficulty he may have calls for, the authority shall make and maintain a statement of his special educational needs. (2) The statement shall be in such form and contain such information as may be prescribed." The form and information have been prescribed by regulations which I need not quote. "(3) In particular, the statement shall- (a) give details of the authority's assessment of the child's special educational needs, and (b) specify the special educational provision to be made for the purpose of meeting those needs, including the particulars required by subsection (4). "(5) Where a local education authority maintain a statement under this section, then- (a) unless the child's parent has made suitable arrangements, the authority- (i) shall arrange that the special educational provision specified in the statement is made for the child, and (ii) may arrange that any non-educational provision specified in the statement is made for him in such manner as they consider appropriate." Section 326 provides for an appeal against the local education authority's decision. Chapter 8 of the Code of Practice, to which I have already referred, reads, so far as is relevant, as follows: "Part 2: Special educational needs (learning difficulties) 8.32 Part 2 of the statement should describe all the child's learning difficulties identified during the statutory assessment. It should also include a description of the child's current functioning - what the child can and cannot do. The description in Part 2 should draw on and may refer to the professional advice attached in the appendices. Where the LEA adopt that advice in their description of the child's learning difficulties, they should say that they have done so. But merely stating that they are adopting the advice in the appendices is not sufficient. The advice received may contain conflicting opinions or opinions open to interpretation, which the LEA must resolve, giving reasons for the conclusions they have reached. All advice must be considered and appended to the statement. Part 2 should be set out in a fashion which can relate directly to the description of provision set out in Part 3(b). "Part 3: Special educational provision 8.33 Once a child's special educational needs have been assessed and set out in full in Part 2, the LEA must specify, in Part 3, the special educational provision to meet those needs. The key objective in specifying provision is to help the child to learn and develop. "Part 5: Non-educational needs 8.43 Part 5 should set out any non-educational needs of the child which the LEA either propose to meet or are satisfied will be met, by arrangement or otherwise, by the health services, social services department or some other body. "Part 6: Non-educational provision 8.44 Part 6 should set out the non-educational provision which is required to meet the needs identified in Part 5 and which the LEA either propose to make available or are satisfied will be provided by the social services department commissioned by the health authority in discussion with the Primary Care Group or Primary Care Trust for the area, or by other providers." I now come to the submissions of Mr Oldham, on behalf of the appellant. Whilst these were developed with skill and by reference to authority, they were in their essence simple: (1) that the tribunal erred in deciding upon Prior's Court School on the basis of grounds other than C's educational needs, in that it was improperly influenced by his care needs, which were the subject of a separate duty placed upon the social services department and therefore not properly to be taken into account by the tribunal; (2) part 3 of the statement, even as amended by the tribunal, did not specify 24 hour educational provision as being necessary for C's identified educational needs; and (3) the decision about placement was not supported by any adequate reasons. Mr Oldham was careful not to go so far as to submit that the decision itself reached by the tribunal was irrational in the sense that no reasonable tribunal could have arrived at it. He submitted that the errors in law and the absence of proper reasoning to support the decision meant that it was fatally flawed. He said that it should therefore be quashed and the matter remitted for consideration by another tribunal. Mr Oldham prayed in aid the remarks of the tribunal reported by Ms Rodway as going beyond mere sympathetic comment, and as indicating that it was unduly swayed by the undoubted difficulties of Mr and Mrs M in caring for their son. Mr Oldham further relied on the references in the tribunal's summary of the facts to matters which included costs which were the responsibility of the social services department of the appellant, not the education department. He submitted that this erroneous thinking was carried through to the conclusions with their reference under paragraph C to C's disturbed behaviour at home and the distress that caused to his family. Mr Oldham says that these aspects of the decision showed that the tribunal was unduly influenced by C's non-educational needs. He points out that the Education Act 1996, section 324(5), and the statementing process itself makes a clear distinction between the two aspects of need; for example, a local education authority is required to arrange special educational provision, but has a discretion as to whether or not to arrange non-educational provision. Mr Oldham relied on B v Isle of White Council [1996] ELR 279, a decision of McCullough J in this division. In that case the court held that on the particular facts before it, the tribunal was entitled to conclude that occupational therapy and physiotherapy were not an "educational provision". The local education authority had accepted that in some cases they could amount to educational provision, but contended that in that case they did not, since they fell at the medical, and therefore non-educational, end of the needs spectrum. Mr Oldham also referred to a series of decisions of the Court of Appeal, which included Richardson v Solihull Metropolitan Borough Council and Hereford and Worcester Council v Lane, as well as other cases all heard together, [1998] ELR 319, and finally Shead v Somerset County Council [2002] EWHC 1808, a decision of Sir Richard Tucker in this court. The latter case turned upon the interpretation of section 9 of the 1996 Act, and the meaning in that section of the expression "unreasonable public expenditure". The judge held that public expenditure in that context meant that of the local authority's education department, not of the public authority as a whole. That decision, submits Mr Oldham, who appeared in that case, demonstrates the error of the tribunal's approach in the present case in taking into account the expenditure of the appellant's social services department in the course of its factual summary. Mr Friel, on behalf of the first respondents, draws my attention to the significant overlap which has been recognised by the courts between educational and other provision. He submits that a broad definition of education is appropriate, especially in a case such as that of C, who requires significant extra measures as a result of his severe disability to enable him to achieve the relatively limited educational attainment of which he is capable. Mr Friel relies on London Borough of Bromley v SENT [1999] ELR 260, especially the judgment of Sedley LJ from page 290D to 296C (Mr Oldham later pointed out that in that case, unlike the present case, the tribunal had made a specific finding as to educational need in relation to the matter disputed, which, submitted Mr Oldham, distinguished that case from the present one). Mr Friel relied on R v Lancashire County Council, ex party M [1989] 2 FLR 279, especially the judgment of Balcombe LJ in the Court of Appeal, page 301F-H and 302G-H. Mr Friel further submitted that the legislation imposed a positive duty on the local education authority to give its attention to non-educational needs in co-operation with the social services department. He referred specifically to the passages of the Code of Practice from which I have already quoted. He submitted that the tribunal was therefore fully justified in requesting information about how any non-educational needs would be met. I come now to my findings on this appeal. The starting point is Mr Oldham's submission that SENT's decision was not in itself irrational, but rather invalidated by its erroneous approach. In considering the context of the tribunal's findings, it is necessary to have regard to the nature and extent of the evidence which was capable of justifying its decision, particularly where that evidence was either agreed or not disputed. Essentially, it was not in issue that C, though 13 years old, was functioning at the level of a 4 year old. His situation can perhaps most usefully be described by referring to the evidence of Mr Reid: "C clearly shows the triad of impairments associated with an autistic spectrum disorder; he has severely impaired communication skills, impaired social skills and difficulties in abstract concepts and, by extension, imaginative and limited play. There seems to be no reason why people should continue to refer to him as having 'autistic tendencies'. The formulation has significant implications for prognosis and placement; it tends to be a term which is used for children who have a global developmental delay and who show, in association with this, stereotypic behaviours ... The evidence clearly is that C's primary area of need relates to his autism and that his learning difficulties are associated with his autism; this is for example demonstrated by the discrepancies in relation to his cognitive functioning and again has clear implications for prognosis. 75% of autistic people have severe learning difficulties; C is one of those small group of children who have complex learning difficulties associated with autism and for whom autistic specific provision is clearly indicated." Up to this point Mr Reid's evidence was not effectively in issue. However, the following passage was not, or not necessarily, accepted by the appellant: "Coupled with the need for high levels of expertise and training, is the need for a highly consistent approach throughout C's waking day. There are major difficulties in implementing a communication or social skills programme, or indeed having him conform to expectations in relation to independence skills, when he has three different settings to contend with; home, school and respite care. There are simply not enough opportunities to implement the consistent programmes which he requires in major areas at home - given the need, as identified above, to have him dressed at a specific time for a school bus to collect him, having few opportunities at school to practice dressing and undressing and having different requirements in relation to skills such as eating and toileting. It is therefore essential, in my view, that he has a programme, which can be applied consistently by staff throughout his waking day ... "The Educational Authority has identified the need for a behaviour modification programme in relation to these behaviours. Research would suggest (as reviewed by Howlin) that behaviour modification with autistic children simply is not effective... "There are also very significant pressures placed upon the family; it is essential that these are eliminated, not only for the individual members of the family but also if the home is to become somewhere where programmes devised and implemented elsewhere, are to be positively reinforced. The family home, under pressure and stress, is not an environment where these measures can happen. "I would heartily endorse the parental request for residential placement at a school such as Prior's Court which is autistic-specific, can offer a range of therapies and reinforcement which C requires, and which will recognise his complex needs and the strengths he undoubtedly has and which can be worked with. I would anticipate that he would make significant progress within such an environment." (Incidentally, whilst not relevant to this appeal, the view expressed in the last sentence appears to have been borne out by subsequent events). The appellant, whilst not accepting the latter part of Mr Reid's opinions, does accept as part of C's special educational needs a behaviour management programme. This was the case under part 2 of the statement before it was amended, as well as after. The relevant quotation from part 2 of the statement is as follows: "C has the following special educational needs ... C needs a behaviour management programme, to reduce anxiety, that names rewards/sanctions, that will be systematic and explicit, and applied rigorously by all care givers." It may be said that disruptive behaviour can in any normal situation always be an obstacle to education, but it is clear, in my judgment, from the context that this case did not involve a normal situation. It is accepted that C's learning difficulties were severe. His education and development were intimately bound up with his behaviour. His progress depended, therefore, on the provision of a structured scheme to enable the necessary education to take place by inter alia managing C's behaviour. Whilst part 2 recognised that need in the passage just cited, and recognised it as specifically applicable to all care givers, I accept Mr Friel's submissions that part 3, as originally drafted by the appellant, was deficient in that it did not make any explicit provision for such a programme outside school hours. There was other evidence available to the tribunal to support the proposition at paragraph 3 of the appellant's own statement from which I have just quoted, and which defined C's needs for a programme out of school. There was before the tribunal evidence in the form of a statement from the senior residential social worker from Barnardos, who was responsible for the Chiltern Centre on the appellant's behalf, Marian Lee. Her statement included the following: "Because of his need for consistency and inflexibility, disjointed elements to his care could prove very damaging for him. The present arrangements for C's development are inadequate despite doing our very best for him, as we cannot offer the type of provision he needs, i.e. a 24 hour specialised consistent, seamless approach. He is only just holding his head above water. Chilterns acts as an extension to home, to give his family a short break. It is not an educational establishment and the young people we cater for are vulnerable, have physical and/or learning difficulties and are not perceived as having the kind of challenging and anti-social behaviour C exhibits." She then goes to describe how C's difficulties have escalated with time, compounded by the lack of progress in communication. She then continues: "Unfortunately within County there is no alternative suitable provision for young people like C and given that we are only just coping, it is a concern to us that his management is becoming increasingly specialised and outside our brief." She then goes on to speak of difficulties encountered by the interruption of C's day by the need to take him by taxi to the centre. She describes the cycle of negativity. She says: "Even the taxi journey of five miles (just ten minutes) from school to Chilterns is a constant source of anxiety for him. Something as simple as a change in route can provoke an assault on the taxi driver and escort when he arrives at his destination. Recently staff had to intervene in the car park when C was kicking, punching and spitting at the escort who was unable to defend himself." She then continues by saying that in the planning of future provision, frequent, lengthy journeys would be detrimental to C's safety and that of any occupants in his taxi. She concludes: "I cannot over-stress the importance of considering very carefully his next provision, given his very complex and demanding needs as it is fundamental and crucial to his future development and safety to him and all these around him." There was then a statement from Mr Hassall, the clinical psychologist. He said, among other things: "I would therefore support the view that C needs a very specialised environment, both during school time and outside school hours. This is not simply a matter of setting up a 'behaviour modification programme' and expecting a change of behaviour to follow from some degree of contingency management. I note the comments of Albert Reid, in his psychological assessment dated 9.5.01, that children with autism have difficulty in generalising learning from one situation to another and that simple behaviour modification is often not effective with such children. I therefore think that the arrangements for C need to reflect the fact that any effective management plans for helping him develop more socialised behaviour would need to be implemented in an environment designed for this purpose. Additionally, for children with autism, particular attention needs to be paid to encouraging language comprehension and expressive communication, which is a particular area of difficulty for these children and frequently contributes to their challenging behaviour." Then the psychologist continues, crucially: "To be effective, communication programmes need to be implemented throughout the day in a consistent manner, not just during school hours. Specialist training is also necessary for staff carrying out this work. "I very much hope therefore that it will be possible for C to be able to attend Prior's Court School, as this seems likely to offer the best available environment for his needs. It also offers the advantage of being close enough to his home to allow him to have weekends at home and to maximise the opportunities for contact between his parents and the school staff." In my judgment, in the light of the evidence I have just quoted, the last examples of which come from practitioners or experts instructed or engaged by the appellant, there was strong, if not overwhelming, evidence that C required a management programme that was "systematic and explicit and applied rigorously by all care givers", as part 2 of the statement stipulated. Crucially, it was a management programme that, as part 2 made clear, was an "educational need". That is the context in which Mr Oldham's submissions to the effect that the tribunal erred in its approach to the law fall to be considered. In that context, it is, in my judgment, plain that the reason why the tribunal adjourned at the first hearing was in order that the appellant should have the chance to show that St Nicholas House, or any alternative institution, was capable of providing beyond school hours the kind of educationally suitable and structured programme which C's needs demanded. If for no other reason, the intention of the tribunal was made clear by the direction that Mr Reid should have full facilities to visit and inspect the project; Mr Reid's expertise, of course, being in educational psychology. The recognition that Ms Rodway could not compel delivery of the information because the project was controlled by the social services department is, in my judgment, irrelevant. It was clearly the intention of the tribunal to give the appellant the opportunity to show that the project was one consistent with C's educational needs. Further, when the tribunal set out the evidence on which its conclusion and findings were based, it relied on matters which again related to C's educational needs. In my judgment the inclusion of a figure for the cost of the social services department support in that part of the decision does not indicate, still less constitute, an error of law. The tribunal in its findings at paragraph E states that the costings were not a relevant consideration in the decision itself. In addressing part 3 of the statement, the tribunal specified, in substituting a new paragraph 4, that there should be a delivery "throughout his waking day within a consistent and structured environment" of programmes for C, these programmes consisted very substantially of educational provision. In addressing part 4, the tribunal finds: "only in the setting of a school where a 24 hour curriculum is available can C in our judgment expect to make any significant progress". These last two findings make it abundantly clear that the appropriate programmes needed to engage C throughout his waking hours, and thus gave rise to the need for a 24 hour curriculum. The findings, in my judgment, underpin the decision to direct placement at Prior's Court. They left, in reality, no alternative in the particular factual context of this case other than a boarding school provision. The contrast with, for example, the facts in the case of Lane is clear in this regard. The reference at paragraph C of the conclusion to C's disturbing and distressing behaviour at home did not, in my view, indicate any error of law on the tribunal's part, and does not affect the lawfulness of the findings. There is therefore, in my judgment, no substance in the suggestion that the chairman of the tribunal's sympathetic initial remarks at the first hearing, or the adjournment of that hearing, form any basis for arguing that the tribunal allowed itself to stray from its proper task. I conclude that the tribunal directed itself correctly. It did not, in its reasons, explore in any detail or expressly the distinction between educational and non-educational provision. Doubtless Mr Oldham made his points about that before the tribunal eloquently, but the reality was, and is, that the evidence on the topic was virtually all one way, not only from the first respondents, but from much of the evidence presented by the appellant as well. It pointed to the failure, despite some limited recent improvement, of the existing educational provision, and the need for a significantly more extensive and effective arrangement. It pointed to the need for a so-called 24 hour curriculum. SENT was, in my judgment, entitled to conclude that the placement at Prior's Court was the best and, indeed, the only method for delivering this. It did not err in its approach to the matter, and properly analysed, its reasons support the approach which it took. For those reasons the appeal must be dismissed. MR FRIEL: My Lord, I would apply for the costs. Both parties have had discussions, and this is a case in which it is agreed, because there are some complex issues relating to costs, that it should be an assessment of costs. So I will apply on behalf of the respondents that the costs be assessed. I am grateful, my Lord. MR OLDHAM: I do not resist that. MR JUSTICE GIBBS: Very well. I make costs in favour of the first respondents' detailed assessment. Thank you very much.

Mr Justice Foskett: Introduction The Spanish authorities consider that the Appellant is, or at the material time was, a member or supporter of Euskadi Ta Askatasuna ('ETA'), the Basque nationalist and separatist organization. The Appellant, who was born in Bilbao, is now aged 47. Along with others the Appellant was arrested in the early morning of 6 June 1991 in circumstances set out in the European Arrest Warrant ('EAW') to which I will refer below. He spent 4 years in custody in Spain awaiting trial, but by June 1995 the trial had not commenced and, because the maximum period of pre-trial detention in Spain (equivalent to the 'custody time limit' in the jurisdiction of England and Wales) is 4 years, he was released from custody conditionally on 9 June 1995. Having breached the terms of his conditional release an order for his remand in custody was issued by the 5th Section of the National High Court of Madrid on 5 or 6 September 1995. He did not surrender to the court in compliance with that order and at some stage he came to the UK. He accepts that he left Spain knowing of the outstanding criminal proceedings against him. An EAW was issued over 16½ years later on 27 June 2012 seeking his extradition to Spain to face trial. On 16 November 2012 he was arrested in Liverpool after 17 years of being "wanted" in Spain. The Appellant contested his extradition. The final extradition hearing took place before District Judge Nicholas Evans on 16 April 2013. In a reserved judgment delivered on 7 May 2013, the District Judge ordered the Appellant's extradition to Spain. He appeals to this court against that decision pursuant to section 26 of the Extradition Act 2003. The terms of the EAW The warrant is, as I have indicated, an accusation warrant. The (translated) particulars given in the warrant of the alleged offences in respect of which extradition is sought are as follows, the numbering being numbering I have added for ease of subsequent reference: "1. [The Appellant and others] were recruited for the terrorist organisation E.T.A. Militar in 1990. They were trained in handling arms and explosives, in a flat located in Deusto. They were told the objectives to be pursued. They were given weapons and explosive material and information. On various occasions they carried out verifications and collected much information on members of law enforcement bodies, drug dealers, the Civil Governor in Biscay, supported various actions and carried out the orders given by "Gadafi", "Manu" and "Turko". Apart from this they had several hiding places filled with arms and explosive material to be precise: a) a mobile fridge hidden in Archanda Hill, inside of which were an automatic rifle M.A.T. with its numeration wiped off, two magazines, two grenades made in France as well as one grenade type E.T.A, and an explosives handbook; b) a hiding place located in Trapaga Valley (Biscay) that was hidden by sleepers. It contained screws for shrapnel; c) A hiding place located at Archanda Hill. This hiding place was made by GERMAN URIZAR, in the vicinity of the Tueba School. This hiding place contained a bag with a pair of surgical gloves; 2. From the 6th of June 1991 on, two pistols make Browning and one pistol make Sig Sauer were seized from JON MIRENA, [the Appellant] and GERMAN URIZAR. All serial and manufacturing numbers had been wiped off. On the 22nd of May 1991, RAUL ALONSO ALVAREZ, following the orders given by the three ETA members TURCO, GADAFI and MANU, left the group and handed over his pistol and an explosive device which he and GERMAN URIZAR had received from the three ETA members at the Deusto flat since it did not work. Two hours later they gave back that device to the last individual mentioned in order that he places that device in a vehicle that belongs to a police officer who was living in Baracaldo. The vehicle was a white Ford Scort, with license plate VA-4061-P. They had already informed about this vehicle. This vehicle used to be parked in Calle Landabeko. 3. For the purpose of carrying out the action that had been ordered by JUAN CARLOS IGLESIAS CHOUZA, JESUS MARIA MENDINUENTA and JUAN MARIA ORMAZABAL, in the first place they kept the pistols and device at JON MIRENA's home. JON MIRENA, [the Appellant] and GERMAN URIZAR DE PAZ picked up those items once they had carried out several verifications regarding the place where the car in which the explosive had to be placed used to be parked. In the early morning of the 6th of June 1991 they cautiously approached the vehicle but could not place the explosive since they were caught by police when trying to do so. 4. When police officers shouted "STOP POLICE", [the Appellant] left the weapon he was carrying on the vehicle roof. GERMAN URIZAR who was carrying the bag with the explosives as well as JON MIRENA started running, but not without first throwing the bag to the ground and firing several rounds at the corner of Calle Lukizago. They did not succeed in shooting the police officers, but police officers had to return fire. Eventually both men were arrested." Deusto, referred to in (1), is a district of Bilbao. The warrant refers to the "nature and classification" of the offences and the applicable parts of the Spanish Criminal Code, all of which were summarised as follows: i) 'membership in a terrorist organisation' (referred to elsewhere in the warrant as 'participation in an armed group') - punishable by 10 years imprisonment and a fine of €6,000 - contrary to Articles 147 (which is thought to be a typing error for '174') and 173; ii) 'attack … in conjunction with the offence of attempted murder' - punishable by 20 years imprisonment - contrary to Articles 233 and 406; iii) 'possession of weapons of war' – punishable by 12 years imprisonment - contrary to Articles 257 and 258; iv) 'possession of explosives' – punishable by 12 years imprisonment - contrary to Article 264. The EAW was issued by Judge Fernando Garcia Nicolas on (as previously indicated) 27 June 2012 and certified by SOCA on 23 October 2012. Certain further information was requested by the Respondent from the judicial authority and the prosecution in Spain in March 2013 to which I will refer later. I will refer to the reasons given by the District Judge for the decision to which he came when dealing with the Grounds of Appeal advanced before me. The hearing of the appeal was delayed pending judgment in the case of Sanchez v The Second Section of the National High Court of Madrid, Spain [2013] EWHC 2264 (Admin) and then the Supreme Court's decision on the application for leave to appeal against Artola v The Sixth Section of the National High Court of Madrid, Spain [2013] EWHC 524 (Admin). Permission in that case was refused by the Supreme Court on 28 October 2013 on the basis that the case did not raise an arguable point of law which could lead to a different substantive result. The grounds of appeal Mr Mark Summers QC, for the Appellant, relies upon three of the four grounds of appeal originally advanced. He accepts that there is no prospect of succeeding on Ground 2 in the light of the outcome in Artola v The Sixth Section of the National High Court of Madrid, Spain, but he reserves the right to take the point if this case should go further. I say nothing more about that ground. The other grounds can be summarised as follows: Ground 1 The District Judge erred in concluding that the EAW contained adequate particulars of the conduct alleged in respect of offences numbered 3 and 4 above pursuant to section 2(4)(c) of the 2003 Act. Ground 3 The District Judge erred in concluding that the extradition of the Appellant was not a violation of Articles 5 and/or Article 8 of the ECHR or section 64 of the 2003 Act, in circumstances where the limitation period has expired under Spanish law. Ground 4 The District Judge erred in concluding that the extradition proceedings were not an abuse of process, in circumstances where the Appellant had been tortured by the Requesting State. Ground 1 It is, perhaps, helpful to indicate in the first instance the District Judge's reasoning, which itself encapsulates the arguments advanced to a degree, and then to deal with the criticisms made by Mr Summers. I should say that submissions were made before the District Judge about the adequacy of the particulars in relation to charges 1 and 2, but the criticisms then made are no longer pursued. The District Judge's conclusions on the arguments relating to charges 3 and 4 were as follows: "6. Section 2(4)(c) of the Act requires the EAW to provide particulars of the circumstances in which the person is alleged to have committed the offence including the conduct alleged to constitute the offence, the time and place at which he is alleged to have committed the offence. … 9. It is submitted the third offence, possession of weapons of war, lacks specificity as it (the offence) might relate to (a) those with which the [Appellant] trained in the flat in Deusto in 1990, (b) those that were supplied to him after his training, (c) the rifle hidden in the mobile fridge in Archanda Hill and/or (d) the gun he left at the scene on 6th June 1991. Mr Caldwell suggests it refers to all of those. In my view the warrant implicitly is referring to (d) and there is no real confusion. 10. A very similar submission is made in relation to fourth offence of possession of explosives. My response is as above. The warrant implicitly is referring to (d), the explosive device that was to have been placed under the car on 6th June 1991; which was (implicitly) recovered as an exhibit. 11. I am satisfied that sufficient particulars have been provided in respect of all four offences and this EAW is a Part 1 warrant in compliance with section 2(4)(c) of the Act." Perhaps not surprisingly, Mr Summers has homed in on the difference in view between the position taken by Mr Caldwell in his submissions to the District Judge and the position taken by the District Judge. Mr Summers puts his argument attractively in his Skeleton Argument when he asserted that these two contrasting approaches to the EAW "visibly [demonstrate] its ambiguity". He submits that the EAW fails to specify the weapons (which he equates with the "conduct") to which Charge 3 relates or the explosives to which Charge 4 relates. Do the allegations, as the District Judge recorded, relate to (a) those with which the Appellant "trained" in the flat in Duesto in 1990, (b) those that were supplied to him after his training, (c) the rifle (and the grenades) that he had hidden in the mobile fridge in Archanda Hill and/or (d) the gun (and/or the explosive device) that he left at the scene on 6 June 1991, or some combination or all four? The divergence of view, he submits, demonstrates that the answer is sufficiently uncertain for section 2(4)(c) not to have been met. Mr Summers recognises that the effect of an order discharging the Appellant on this ground would be likely to be a new warrant, more specifically directed, for offences 3 and 4. Mr Summers draws attention to Dhar v National Office of the Public Prosecution Service, the Netherlands [2012] EWHC 697 (Admin), a decision of a Divisional Court comprising Moore-Bick LJ and King J. It is, of course, one of many cases where the question of the adequacy of the particulars in an EAW has been considered, a number of which were reviewed by King J at [63]-[70]. The two passages of particular relevance to the test to be applied are as follows: "The Appellant is entitled … to sufficient particulars to enable him to understand how the case is being put against him on critical allegations without that understanding being obscured by the fog of vagueness or ambiguity." (per King J at [81].) "Although I accept that the warrant need not contain highly detailed information of the kind that one might expect to find in a civil pleading, it must contain enough information to enable the requested person to understand with a reasonable degree of certainty the substance of the allegations against him, namely, what he is said to have done, when and where, and also, in a case where knowledge of particular matters is an essential ingredient of the offence, sufficient information to enable him to understand why it is said that he had the necessary knowledge." (per Moore-Bick LJ at [117].) Mr Summers submits that there is a risk that the specialty protection otherwise to be afforded to the Appellant may be lost if further clarity is not given. He also argues that if, for some reason, the events of 6 June 1991 are "not prosecutable" offences 3 and 4 should "fall away". Mr Caldwell does not shy away from his primary proposition that the particulars relating to the guns and explosives relate to all the offences and not just to those alleged to have been committed on 6 June 1991. He submits that the EAW gives full and specific particulars of the relevant conduct, including the period of time during which the Appellant is said to have been involved in ETA and the locations where firearms, explosives and bomb-making equipment were secreted. His participation in the handling of explosives and weapons, as well as the hiding of these articles, is expressed in terms of a joint enterprise with the others named. In respect of his conduct on 6 June 1991, Mr Caldwell submits that the warrant is unambiguous: the Appellant is said to be with two others who are named (Jon Mirena and German Urizar de Paz) and a joint attempt was made to place an explosive device on a police officer's vehicle at an identified location (Calle Landabeko, Baracaldo) and that each of them had a pistol (said to be a "weapon of war"). The warrant, he submits, identifies clearly and unambiguously the parameters of the alleged conduct and there is, he asserts, no uncertainty about the explosives or weapons with which the Appellant is alleged to have been concerned. His participation encompasses training in the use weapons and explosives, the hiding of these articles and their ultimate use in what was to be an attempt on the life of the police officer. Whilst, of course, careful consideration must always be given to the question of whether an EAW fails to satisfy section 2(4)(c), quite frequently the answer will be based upon an overall impression of what is set out rather than a minute contextual analysis of the contents or individual aspects of the contents, a contextual analysis that, if undertaken, would be upon a document translated into English from the original. Equally, it is necessary to look at the particulars given as a whole in order to see whether it can be said that the particulars for any individual offence are inadequate. The way that this EAW is framed is not dissimilar to the manner in which many warrants that come the way of the Administrative Court on appeal are framed, namely, in a narrative way that tells the story of the alleged participation of the Appellant in the offences specified. Here the background to the events of 22 May and 6 June 1991 are set out fully and, as Mr Caldwell says, there is no uncertainty about the explosives or weapons with which the Appellant is alleged to have been concerned. For my part, I would agree with the District Judge that the EAW was sufficiently particularised, but I would not myself conclude that any particular "implication" needs to be made to make good that conclusion. To the extent that it is of relevance, I would, for my part, say that it is clear that offence 3 embraces conduct going beyond the conduct alleged for 6 June 1991 because it follows offence 2 which itself refers to the events of 22 May. Offence 4 appears to relate solely to the Appellant's involvement with the weapon he had with him for the purposes of the events of 6 June 1991. To that extent the particulars are clear and there is no "fog of vagueness or ambiguity" – the Appellant knows to "a reasonable degree of certainty the substance of the allegations against him" and which he will have to meet on his return to Spain if ordered. Mr Caldwell also says in this connection, in my view with justification, that there is nothing to suggest that Spain will not honour its international obligations in respect of specialty. Indeed so much was confirmed by a passage in the judgment of the Divisional Court (Richards LJ and Silber J) in Brodziak v Circuit Court in Warsaw, Poland [2013] EWHC 3394 (Admin) at [46]: "There is, moreover, a strong presumption that other Member States will act in accordance with their international obligations in respect of specialty. In Hilali v Central Court of Criminal Proceedings Number 5 of the National Court, Madrid [2006] 4 All ER 435, Scott Baker LJ referred to "a surprising submission that Spain is likely to act in breach of the international obligations to which it has signed up" (para 52). In Ruiz & Others v Central Court of Criminal Proceedings No 5 of the National Court, Madrid [2008] 1 WLR 2798, Dyson LJ endorsed the approach in Hilali, stating: "67. It is to be presumed that the Spanish authorities will act in good faith in the absence of compelling evidence to the contrary. They are trusted extradition partners and parties to the Framework Decision. They have incorporated the specialty rule into their domestic law, so that the appellants have a remedy under their domestic law in the unlikely event of a breach of specialty. 68. Secondly, there is no compelling evidence that the Spanish authorities will act in breach of their specialty rule and article 27 of the Framework Decision. Castillo's case (which was governed by the Extradition Act 1989) does not provide such evidence. It appears that proceedings have not been completed. Even if Castillo's case were to be evidence of a breach of specialty, it would be a single instance. There is no other evidence. Moreover, if there has been a breach of specialty in that case, the defendant has his remedy in Spanish domestic law." The need for compelling evidence of a breach of specialty arrangements was further emphasised in Arronategui v 1st, 2nd, 3rd, and 4th Sections of the National High Court Madrid, Spain [2012] EWHC 1170 (Admin), at para 47." In my judgment, the challenge to the particulars of the EAW fails. Ground 3 Before the District Judge Mr Summers called as a witness Senor Don Alfonso Zenon who is a Spanish defence lawyer who will represent the Appellant in Spain if he is extradited. His evidence was to the effect that all of the offences specified in the EAW (which are offences committed prior to the coming into force of the 1995 Criminal Code in Spain) are subject to the limitation periods specified in the 1973 Spanish Criminal Code. He explained that Spanish law operates in accordance with Article 7 ECHR such that if the law is changed more restrictively after the commission of an offence, a defendant is entitled to the benefit of the more favourable law. Apparently, the limitation laws were generally made more restrictive by the 1995 Code, but because the relevant offences date from 1991, the Appellant is entitled to the benefit of the 1973 Code and its more favourable limitation periods. Senor Zenon's evidence was that the relevant limitation period in a situation such as that revealed by the EAW in this case is defined by the limitation period applicable to the most serious offence. According to the Spanish Criminal Code, "attack, in connection with the offence of attempted murder" (contrary to Articles 233 and 406 of the Code) is the most serious offence because, as the EAW demonstrates, it is punishable with up to 20 years' imprisonment. He said that what he described as "the prescription" would take effect after 15 years, a period which, he said, began with "the judicial ruling which marks the moment in which the procedure is commenced against the culprit" which in this case is "the ruling dated the 5th of September 1995". Since the EAW was issued on 27 June 2012 (some 16 years and 9 months later), the "prescription" would apply. He prepared a report to this effect dated 5 March 2013. The Respondent referred the report to the Judicial Authority and to the prosecution in Spain. The judge (Angel Hurtado Adrian, the Presiding Judge at the Second Chamber of the Criminal Court at the National Court) replied on 20 March 2013 in the following terms: "The judge who signs this document will not inform on this point, since he is not appointed to sit on the Court which, if appropriate, will hold the oral hearing once the requested person is in our country. As you know, any discussion on the statute of limitations implies going into the substance of the case. This matter must be resolved pursuant to our national law and national case-law. In any case, for further information on the statute of limitations see the Public Prosecutor's report attached hereto. What we can say is that if this Court in view of the background information had deemed that the statute of limitations period for the crimes the requested person is charged with had elapsed, this Court would not have issued this EAW." The prosecution said this: "The authorities who ask for more extensive information should be reminded of the fact that the elapse of the statute of limitations period in the requesting State is not among the grounds for optional non-execution of a EAW covered by article 4 of the Framework Decision of 13 June 2002. Only where the requested State has jurisdiction over the facts, the requested State has the right to apply the statute of limitations applicable under the laws of the requested State. The requested State must never assess the statute of limitations applicable under the law of the requesting State. To call for a clarification of that point infringes directly the above Framework Decision. A modicum of respect for mutual confidence on which the regime applicable to EAWs is based makes it impossible to accept an issue that goes far beyond the European Union provisions. Notwithstanding the foregoing, it should be made clear that the statute of limitations period for these facts has not elapsed, neither pursuant to the Spanish Criminal Code of 1973 nor pursuant to the Spanish Criminal Code of 1995." The prosecution response then goes on to justify the position indicated in the second paragraph of that quotation. It asserts that the limitation period for attempted murder and attack is 20 years and that the relevant period has not expired under the Criminal Code of 1973 since the Appellant was "prosecuted" on 6 July 1992 (which is probably a mistake or mistranslation for 6 June or 6 July 1991) and that the proceedings have been "paralysed" since the order of 5 September 1995 (see paragraph 4 above). Equally, it is said that the period under the Criminal Code of 1995 has not expired either: that period is also said to be 20 years. Those competing views were considered by the District Judge. As I have indicated, Senor Zenon gave oral evidence and was cross-examined. As I understand it, no oral evidence was given by an expert on behalf of, or other representative of, the prosecution in Spain. The District Judge introduced his response to this argument in this way: "23. … Paragraph (f) of the EAW provides an opportunity for a [judicial authority] to enter information relating to limitation periods. In this case that paragraph has been left blank. In those circumstances the court would normally proceed on the basis that there was no limitation issue. 24. However, here [the Appellant] raises a limitation issue and seeks to persuade the court that the limitation period has elapsed and that if he were to be extradited he would be entitled to rely upon it and demand his immediate release. If that is correct then to keep him in custody here pending extradition or even worse to order his extradition would be incompatible with his Convention rights in particular his article 5 and 8 ECHR rights and further could be said to be an abuse of process by the [Judicial Authority] if it appreciates that any prosecution in Spain, is doomed to fail on this limitation point." He then referred to Senor Zenon's evidence and to what he described as the "rather tetchy" response of the Judicial Authority and said that the judge's view, as revealed in the passage quoted in paragraph 28 above, "does little to reassure anyone that he turned his mind to the issue." He also referred to the prosecutor's view (see paragraph 29 above) and said (correctly, in my view) that it was wrong to say that "the requested state must never assess the statute of limitations applicable under the law of the requesting state" (my emphasis), although the District Judge observed that for the issue to arise it must do so as part of an abuse argument. I will return to that position shortly. He said that there was no basis for alleging abuse here and his conclusion on this issue was expressed as follows: "… I have to be satisfied that the [Judicial Authority] honestly believes that it has a sustainable case against [the Appellant]. This is not an instance of a [judicial authority] claiming to have such a belief but offering no explanation for its belief. The [Judicial Authority] has here squarely addressed the argument advanced by [the Appellant] that the limitation period has elapsed. In my view, it cannot be concluded that its reasoned position, as set out in the Public Prosecutor's letter of 2lst March 2013, has plainly no merit and that the [Judicial Authority] knows that it has no merit, so as to found an abuse of process. I do not say that [the Appellant's] arguments will inevitably fail, or even that it is likely to fail. But on the authorities that is not the relevant test for determining whether there has been an abuse of process." On that basis he said that he did not need to determine the issue of whether the limitation period had expired, but indicated his view of the evidence "if a higher court were to conclude that there is an obligation upon this court to come to a decision, one way or the other, on this point" in the following terms: "… I did not find Senor Zenon's evidence particularly convincing on the start and end dates of the 15 year period, but I did find him more convincing that it was a 15 year period rather than the prosecutor's assertion that it was a longer one. On balance, and with some misgivings, I find that [the Appellant] has not persuaded me that it is more likely than not that he has become immune by reason of limitation." Mr Summers relies upon that passage as demonstrating that the Appellant "won on the facts" that there was a 15-year limitation period and that the period had run by the time the EAW was issued. I am not quite sure how that can be asserted given the terms of the final sentence of the passage quoted (which Mr Summers says was "simply illogical"), but at all events the District Judge's expression of view on the effect of the evidence he heard must plainly be treated with some caution. He was evidently reluctant to express a view on the issue (because he considered that he did not need to do so) and such view as the passage quoted conveys was clearly expressed in suitably guarded terms. He had before him only one "live" witness with professed expertise on the matter and did not have the advantage of any "live" countervailing view. That always makes it difficult to make a properly informed decision on a complicated issue such as this: limitation, in whatever context, is often a difficult issue. It also highlights the proposition, to which I will turn shortly, that this kind of debate should only be entered by the courts of the requested state in the most exceptional of circumstances when there is the clearest possible evidence of the engagement in abuse by the prosecuting authorities of the requesting state. It needs also to be remembered that ordinarily there is no limitation period, certainly none prescribed by statute, in relation to crimes as serious as those involved in this case which have to be considered by the courts of England and Wales in relation to offences committed within their own jurisdiction. It follows that those courts are inevitably unfamiliar with the concept. That does not make it impossible for the courts of this jurisdiction to consider the issue if it arises, but a judgment on the issue that commands respect and recognition demands high quality evidence upon which it is based. It is possible, in the light of the District Judge's view, that the Appellant's advisers are right that the Spanish limitation period has run its course (although, speaking for myself, I would be surprised if this was so and, as Mr Caldwell submitted, it is counter-intuitive from the perspective of English law that judicial inactivity should have the effect of suspending the limitation period whilst actively seeking an order for arrest should give a fugitive the benefit of a limitation period running in his favour: Gomes and Goodyer v Government of Trinidad and Tobago [2009] UKHL 21); but irrespective of that, it seems to me that the mere advancement of a potentially erroneous proposition of law does not of itself necessarily evidence abuse of the kind needed for the requested state to intervene. In this case, of course, the disputed proposition emanates, at least implicitly, from the judicial authority of the requesting state. Mr Summers, however, says that it is wrong for the courts of England and Wales only to address this issue in the context of a potential abuse argument. He recognises that this has been the approach in cases such as Battistini v The Court of Naples, Italy [2009] EWHC 3536 (Admin), Bendik v Judicial Authority of Slovakia [2010] EWHC 1821, Mohammed v The Court of Appeal, Paris [2013] EWHC 1768 (Admin) and Konuksever v The Government of Turkey [2012] EWHC 2166 (Admin). He says, however, that discharge was ordered on limitation grounds in the absence of bad faith by this court in Laskowski v District Court of Legnica, Poland [2011] EWHC 994 and Janaszek v Circuit Court in Plock (Polish Judicial Authority) [2013] EWHC 1880 (Admin). He also draws attention to some cases that address what he describes as "the broadly parallel situation where a defendant has served the entirety of his sentence (or possible punishment) on remand awaiting extradition": see, e.g., Wysocki v Polish Judicial Authority [2010] EWHC 3430 (Admin) and Newman v District Court of Krakow, Poland [2012] EWHC 2931 (Admin). For my part, I do not see the approach in the cases of Laskowski, Janaszek, Wysocki and Newman as anything more than, in each case, a pragmatic response to an acknowledged and obvious legal situation in the requesting state. I would not myself have deduced from them any support for the approach sought to be established by Mr Summers. Indeed the same, as it seems to me, can be said of Jaffar (No. 1) v HM Prison Brixton [2003] EWHC 3077 and Atilla v Government of Turkey [2006] EWHC 1203 (Admin), both relied upon by Mr Summers. The former can, of course, be said to support the proposition that an expired limitation period may establish "oppression" under the "lapse of time" provisions now to be found in section 14 and the latter that, in similar circumstances, Article 5 may be engaged. However, neither sheds light on what the domestic court should do when the issue is not clear cut and is contested. Mr Caldwell says that the approach in Battistini (followed by me in Mohammed), which involved disputed opinions about Italian law, is the correct approach and consistent with other authorities. It is worth repeating what Maurice Kay LJ said in Battistini: "However, the prior question is whether this court should become involved in adjudicating upon these inconsistent interpretations of Italian law. For my part, it seems to me fundamental that in a European Arrest Warrant case it is wholly inappropriate for this court to proceed to adjudicate upon rival interpretations of Italian law. All this is a matter for the Italian courts in accordance with the principle expounded by Lord Brown in Gomes. Quite simply, we should not get involved." To that Mr Caldwell adds Symeou v Public Prosecutor's Office at the Court of Appeals, Patras, Greece [2009] EWHC 897 (Admin), where the Divisional Court (Laws LJ and Ouseley J) had to consider the primary submission of the appellant that "extradition would be an abuse of process because of the way the Greek police had investigated the offence, within which was subsumed what had been a separate argument to the effect that a serious defect in its domestic procedure invalidated the Greek domestic arrest warrant and thereby invalidated the EAW" (see [2]). In that case there was a conflict of evidence before the District Judge as to whether there had been a breach of the Greek Criminal Code by the prosecutor. Ouseley J, giving the judgment of the court, said this: "49. In our judgment, the District Judge's fundamental concern about hearing evidence about the Greek Prosecutor's compliance with domestic law was well-founded. The EAW system follows the Council Framework Decision of 13th June 2002 which envisages the creation of a common area of justice, in which there would be free movement of judicial decisions in criminal matters, a common judicial area replacing traditional forms of co-operation. A new and simplified system of surrender of suspects for prosecution was to be created. As Lord Hope put it in Dabas … at para 42: "The principle on which this new system is based is the mutual recognition of criminal decisions between the member states. The European arrest warrant is designed to have a uniform effect throughout the European Union. The effect at which it aims is that of swift, speedy surrender." 50. Lord Hope then applied that principle to the question of whether a judge considering an extradition order based on a EAW needed information not specified in section 2 in order to test whether the conduct alleged constituted an offence against the law of the requesting state. Although that is not the issue here, what he said is apposite to the argument which does arise. In paragraphs 53 – 55 he said: "53. In Office of the King's Prosecutor, Brussels v Cando Armas … para 30, I said that the judge need not concern himself with the criminal law of the requesting state when he is asked to decide under section 10(2) whether the offence specified in the Part I warrant is an extradition offence. Miss Montgomery said that this was not so, but I believe that what I said there was accurate. The system on which the European arrest warrant is based depends on co-operation between the judicial authorities of member states. Any scheme which retained scrutiny of the text of the foreign law as a requirement would be bound to give rise to delay and complexity – the very things that in dealings between member states the Framework Decision was designed to eliminate. In my opinion section 2(4)(c) does not require the text of the foreign law to be set out in the Part I warrant. Article 8(1)(d) of the Framework Decision states that among the information that the European arrest warrant must contain is "the nature and legal classification of the offence". Section 2(4)(c) requires no more than that. 54. Consistent with the Framework Decision, the judge need not examine the text of the foreign law in order to decide whether the conditions set out in section 64(3) are satisfied. Section 2(4)(c) is not to be read as requiring material to be included in a Part I warrant, not mentioned in the Framework Decision, that the judge does not need when he is conducting that exercise. A warrant which contains the statements referred to in section 2(2) is a Part I warrant for all purposes. So I do not think that it is possible to spell out of the language of the statute the requirement for which Miss Montgomery contends." 51. Although Lord Hope couches his language in terms that the judge "need not concern himself" with the criminal law of the requesting state, the thrust is that he should not do so, except in true abuse of extradition process cases, and should not do so, not as a matter of discretion, but as a matter of jurisdiction. Such inquiry is simply not his task. The effect of the Framework Decision, and the interpretation of the 2003 Act Part I, go further than the traditional assumption of good faith between sovereign states and a need to accommodate different national legal processes. 52. The circumstances of this appeal illustrate the point, and the way in which the contrary view would undermine the legislative intention. The context is an extradition case, pursuant to what is intended to be a simplified decision-making process in an area of mutual recognition of judicial decisions in criminal matters. There is a disagreement among the Greek lawyers about what the Greek Code of Criminal Procedure requires. It would be quite extraordinary for the District Judge to hear evidence from competing experts on Greek law, including the Prosecutor of the requesting state, so as to rule as a matter of fact on what Greek law was, then to find whether in fact the actions of the Prosecutor had breached whatever the law was found to be, then to rule on the effect on the validity of the warrant of a breach of its Code, each of which might be quite uncertain in Greek law, and then to rule on whether that caused the EAW to be invalid as a matter of English law implementing the Framework Decision. And if extradition then ensued, the matter would be dealt with by the Greek Courts who would be unlikely to regard the views of the English Courts on Greek law as of more than passing interest. If it did not ensue, the Greek Courts would never have the chance to put it right. 53. The District Judge, on this basis and he recognised this was probably right, should not have considered evidence about Greek domestic law. If he had ruled that on the facts that there had been a breach of domestic law and that that in Greek law invalidated the domestic warrant, he would have trespassed beyond his functions. It follows from Dabas that even if he concluded that the domestic warrant was invalid in Greek domestic law, he had no jurisdiction to rule that the EAW itself was thereby invalidated." Mr Summers' essential argument is that there is nothing in that case to the effect that section 14, Article 5 and/or Article 8 prohibit inquiry into whether a relevant limitation period in the requesting state has expired and to act upon a positive finding that it has. Whilst, strictly speaking, that is so, it does not, in my judgment, negate the proposition (to be deduced largely from cases where the issue of abuse has either been raised or has been considered the legal umbrella under which the issue of limitation should be debated if it is to be debated at all) that the domestic courts should be extremely reluctant to engage in evaluating the competing arguments about the local law of limitation in the requesting state. It is always wise never to say 'never', but the circumstances when it is justified must surely be truly exceptional. At all events, I do not consider that the District Judge needed to consider the issue in this case beyond the reasons he gave in the passage of his ruling set out in paragraph 33 above. Furthermore, I do not consider that his tentative expression of view on the position under Spanish law gives the Appellant any support in this appeal. In my view, this ground fails. I should record that Mr Caldwell also referred me to the decision of the Supreme Court in Zakrzewski v The Regional Court in Lodz, Poland [2013] UKSC 2 and Mr Summers referred me to the decision of the House of Lords in Caldarelli v Court of Naples, Italy [2008] 1 WLR 1724. Neither, in my judgment, advanced the arguments in this particular context significantly further than the authorities to which I have already referred and I do not think I need make further reference to them. Ground 4 The Appellant's case (which was advanced by way of his own evidence before the District Judge) is that following his arrest in June 1991 he was detained incommunicado during which he was repeatedly interrogated by the Spanish police and ill-treated to an extent that he contends amounted to torture. His evidence was that he was subjected to the following: 1. being tied to a chair with his hands behind his back and punched in the stomach with force; 2. having pencils placed in the webs between his fingers and squeezed to cause intense pain; 3. having a cigarette stubbed out in an open wound on his face; 4. being questioned for hours at a time whilst tied to a chair; 5. being hit on the back of his head with the flat of the hand and with books; 6. being deprived of food and sleep; and 7. being taken into a forest and made to dig (what he was told) was his own grave, and told that he was going to be killed. His account is that on the first and third days of his incarceration, 6 and 8 June 1991, he signed incriminating statements, the second having been signed in the presence of a state-appointed lawyer (with whom he was not permitted to communicate). He says that after these statements had been signed the torture ceased. I will say a little more about his allegations in this regard shortly, but it is to be noted that Mr Summers says that, whilst, as he would say, problems remain in Spain, it is not suggested by the Appellant, nor has he ever suggested, that the "international materials disclose any real risk of torture for [him] in Spain now." If surrendered, the Appellant would not be in the custody of the Guardia Civil. However, it is his case that at the material time there was a prevalent practice of ill-treatment of terrorist suspects, the existence of such practice being acknowledged by reputable sources such as Amnesty, Human Rights Watch and the Council of Europe Committee for the Prevention of Torture ('the CPT'). The District Judge's attention was drawn to a CPT report dated March 1996 which spoke of this practice. He took this into account in reaching certain findings of fact on the Appellant's account. Before dealing with those findings, again it should be noted that the District Judge did not consider that it was an area he ought to enter. His general approach, having referred to Konuksever v The Government of Turkey (see paragraph 36 above), was expressed as follows: "Accordingly, if proof of torture is not, in itself, an automatic bar to extradition then the district judge at the extradition hearing needs to consider very carefully whether the court should undertake any inquiry of such an issue. Obviously, any court enquiry as to whether there has been torture in the requesting state is likely to be better undertaken by a court in the requesting state, providing of course, that court is willing to undertake such an enquiry. In this case, for example, the alleged torturers, the interviewing officers, the doctors who examined [the Appellant] and other potential witnesses are all in Spain and it would be open to a Spanish court to hear evidence from such persons and [the Appellant] and then to decide whether [the Appellant's] allegations are true or false. It is unlikely that any court in this jurisdiction, (particularly if, as in this case, only [the Appellant] gave live evidence) could come to any conclusion other than the court could not rule out the possibility that he had been tortured. Such a finding has little value." Having expressed that view, he did go on to make certain findings against the background set out in the following paragraph of his decision: "In case a higher court should conclude that there is a duty on the district judge to make a finding on whether or not [the Appellant] was tortured then what follows is my decision on that issue. For all the reasons given above and, in particular, as the [Judicial Authority] has not participated (it could have done, but in my view correctly declined to do so as the issue of whether [the Appellant] was tortured is a matter for Spain to resolve) and therefore it follows my decision is made on limited material without the benefit of the [Judicial Authority's] contribution." The following extract from the ruling of the District Judge will indicate the nature of the evidence he received on this issue, both from the Appellant and by reference to certain medical records: "63. … Following [the Appellant's] arrest early on 6th June 1991 he was seen by a doctor at 5 pm that afternoon. [The Appellant] told the doctor he had "received blows to the head with an open hand, and also by foot. Also refers to abdominal contusion from a fist and having pencils pressed into the web of left hand." On examination he had injuries consistent with that history (although strangely there does not appear to have been an examination of his stomach so we do not know whether there was any evidence of a bruise there) and, in particular in relation to the 'pencil treatment' the doctor found 'increased local heat and erythema (superficial reddening of the skin caused by dilation of the blood capillaries, as a result of injury or irritation) in the web of the 4th finger of the left hand, referring to paraethesis (abnormal sensation, especially 'pins and needles' caused by pressure on or damage to peripheral nerves) of the finger. [The Appellant] was seen again the next day (7th June) at 8.30 pm when he complained he had been hit again with a hand to the back of his head. No signs of new injury were found. In relation to the paraethesia in the 1st and 4th fingers of the left hand there were no signs of inflammation. [The Appellant] was seen again on the next two days but he makes no complaint of having been mistreated and no new injuries were detected, but he continued to complain about the persistent paraethesia of his fingers. 64. That evidence shows he was complaining to the doctor of mistreatment by the police and whereas some of his injuries might be consistent with a forceful arrest that seems unlikely in relation to the 'pencil treatment injuries.' Further there is a complaint of further mistreatment the next day, he claims he was hit with a flat hand to the back of his head whilst in police custody, although in that respect there are no supporting medical findings." The District Judge then referred to evidence of further occasions when the Appellant complained about his treatment in custody and reached the following conclusion: "68. In the light of all this material I acknowledge [the Appellant] (i) complained to the doctors, when examined, that he had been mistreated by the police on the first and second days of his detention, (ii) when he made his statement before the court on 10th June 1991 it included allegations of his mistreatment by the police, (iii) there was medical evidence which lent support to his claims, in particular, in relation to the 'pencil treatment,' (iv) no one has suggested any innocent explanation that might account for the 'pencil treatment injuries.' 69. Given (i) the CPT reports, (ii) [the Appellant's] contemporaneous complaints, (iii) the evidence of [the Appellant's] injuries, as noted by the doctors at the relevant times and (iv) [the Appellant's] evidence to this court I am persuaded (on such evidence as I have heard) that it is more likely than not [the Appellant] suffered what I have been calling the 'pencil treatment.' I am not persuaded he was tortured." The District Judge encapsulated what he saw as "torture" in the following way: "I am not convinced, even if [the Appellant] suffered as he claims, it would be characterised as torture or even severe ill-treatment. Obviously, a deliberate hard punch to the stomach whilst [the Appellant] "was tied to a chair" …, the pencil treatment …, having a cigarette stubbed out in an open wound on his face … are all examples of deliberate assaults intended to cause pain, but whether such conduct 'causes very severe and cruel suffering' is debateable. Nevertheless, if it occurred it was manifest mistreatment to which he should not have been subjected." Leaving aside other issues, Mr Summers submitted that the District Judge's conclusion that the "pencil treatment" was not torture was unsustainable. I did not understand Mr Caldwell to disagree. I also do not, with respect, understand how such an activity could not be characterised as torture. Whilst there are plainly degrees of ill-treatment and in so far as there may be a scale of seriousness of torture, it is, of course, possible to imagine what many would regard as worse forms of torture than this, but torture this must surely have been. The District Judge did not make positive findings on the other allegations made by the Appellant, but equally did not apparently reject them. For the purposes of the appeal, I will assume that the Appellant was the victim of ill-treatment during his detention (designed to secure admissions from him) such that his treatment should be characterised as torture. Mr Summers recognizes, however, that that assumption will not be sufficient for this court to conclude (as his original Ground 5 alleged) that there would be a "flagrant violation of Article 6 … owing to the prospective use of evidence obtained by torture": see, e.g., Krolik v Several Judicial Authorities in Poland [2012] EWHC 2537 (Admin) and Sanchez v The Second Section of the National High Court of Madrid, Spain [2013] EWHC 2264 (Admin). On that basis, Ground 5 was not pursued. However, it is asserted that it is unconscionable – and abusive - for a state whose officials have deliberately tortured a person in their custody to seek to use the EAW system (founded on the principles of mutual trust and international cooperation) to seek to gain further custody over that individual in (and to continue) the same proceedings. This is Ground of Appeal 4. Mr Summers submits that this would be a "tainted prosecution" which would offend the rule of law: cf. R v Horseferry Road Magistrates' Court, Ex parte Bennett [1994] 1 AC 42. Mr Summers referred to Rangzieb Ahmed, Habib Ahmed v The Queen [2011] EWCA Crim 184, where the Court of Appeal Criminal Division summarised the nature of the jurisdiction upon which he seeks to draw in this part of his argument. At [24] Hughes LJ, as he then was, said this: "There is no doubt about the jurisdiction to stay for abuse of process. It applies where the trial process will be internally unfair …, but it is not limited to such cases. It may be exercised also where, by reason of gross executive misconduct manipulating the process of the court, the defendant has been deprived of the protection of the rule of law and it would as a result be unfair to put him on trial at all. That was clearly established by [Bennett] and R v Mullen [1999] 2 Cr App R 143. In both cases the defendant had been kidnapped abroad and brought into this jurisdiction by an unlawful rendition, to which the British authorities were party. In both those cases, however, there was a clear link between the abuse of power on the part of the executive/prosecution and the trial; the trial was the very object and result of the unlawful abuse of power. Thus in those cases it is properly said that not only is the misconduct of the executive an affront to the public conscience, but also, and critically, that the trial itself is such an affront. The first is not a sufficient ground for a stay, but the second is; the jurisdiction does not exist to discipline the police or other executive arms of the State (although of course it will incidentally do so), but rather to protect the integrity of the processes of justice. In R v Grant [2005] EWCA Crim 1089; [2005] 2 Cr App R 28 at 409 the police had deliberately and unlawfully eavesdropped on and recorded privileged conversations between a suspect and his lawyer. This court held that a stay should be imposed in consequence even without there being any product of the listening giving rise to evidence relied on at trial. We are bound by that decision, albeit that it appears to represent some extension of the jurisdiction, but we observe, as did the judge in the course of argument in this case, that even without use of the material in the trial there was a clear link between a suspect's right of private access to legal advice when facing criminal charges and his subsequent trial on those charges. Indeed, the court in that case described the behaviour of the police as an affront to the integrity of the justice system (paragraph [54] – our emphasis). Moreover, that description is unsurprising since the actions of the police can only have been deliberately unlawful and there existed no even colourable claim to a necessity to balance competing considerations of public interest. We also accept that the jurisdiction to stay may, in certain circumstances, be invoked where to try a defendant would involve a breach by this country of a specific international obligation not to do so: see for example R v Uxbridge Magistrates Court ex p Adimi [2001] QB 667, considered in R v LM & others [2010] EWCA Crim 2327. In those cases also, however, there was the clearest link between the trial itself and the international obligation; to undertake the former involved a direct breach of the latter. It does not at all follow that in every case in which it is suggested that there has been a breach by the UK of an international obligation in respect of an individual, that individual becomes exempt from prosecution, and (if guilty) punishment, for an offence which he has committed." In that case Hughes LJ articulated (at [25]) the case that Rangzieb Ahmed sought to advance in this way: "The first limb of Rangzieb's case on the application to stay was that the UK had connived in this case, as in Bennett and Mullen, at his unlawful rendition to this country by the Pakistani authorities for the purpose of putting him on trial here. If that had been so, it would indeed provide a ground for staying the prosecution. There would be a plain connection between an international wrong, to which the British authorities were party, and the trial." Mr Summers contends that, by analogy, there is a ground for intervention by the domestic court in this case because there was an international wrong (namely, the torture) perpetrated to extract a confession with a view to putting the Appellant on trial. Whilst that case involved an alleged unlawful rendition, the same principles, it is said, should apply to this case. He also said that what was advanced as the second limb of Rangzieb Ahmed's case (see [26]-[49]) ought also to apply and that this is a clear case of abuse (because of the torture) and the extradition should, accordingly, be halted. It is not entirely clear to me what distinction there is between the first and second limbs in Ahmed for the purposes of the arguments in this case: it is essentially a question whether the established torture is sufficient to taint the prosecution. In this overall connection Mr Summers drew attention to what he said was a lack of frankness on the part of the prosecution and the Spanish judge about what had occurred during the Appellant's interrogation. In the same document as that referred to in paragraph 28 above, the judge said this: "Torture allegations made by the counsel for the defence are not surprising. Such allegations are usually made in this kind of proceedings. We have not been able to read the requested person's statement that was forwarded to us, since it has been transcribed in English. What we can say is that we have reviewed the whole proceedings and we have verified that although he was held incommunicado during his arrest, this incommunication was controlled at all times by the pre-trial judge. The requested person was assisted by legal aid when making his statements before the police and before the court. Pursuant to Spanish procedural law any detainee held incommunicado must be assisted by legal aid and not by a lawyer of his choice. There are no complaints from the requested person about ill-treatment during his detention, nor during his examination by the forensic surgeon on 10 June 1991 when he was brought to the Central Pre-Trial Judge, nor when he made a statement before this Judge. We have no evidence of any later complaints for ill-treatment lodged by him." The statement of the Appellant to which the judge refers runs to some 39 single-spaced paragraphs and 8 pages and sets out his current account of the events of June 1991. The statement suggests that he was not taken before a judge until 10 June which does appear to be borne out by what the judge said. The Appellant, however, suggests that he had no opportunity to consult a lawyer before signing the "confessions" which means that he was not "assisted" before he did so as the judge asserts. For my part, I cannot see that this affords any basis for suggesting that the judge had not been open with the District Judge. It rather depends on whether the word "assisted" in the translation conveys accurately the judge's meaning. If, for example, what was meant was that any confession was made simply in the presence of a state-appointed lawyer (and not a lawyer of the detainee's choice), which appears to have been the practice at the time, then, whilst that might raise other issues, it does not raise any question of misinformation being given by the judge to the District Judge. The suggestion that there were no complaints by the Appellant about his treatment would, taken simply as it stands, be at variance with the evidence. However, there are two paragraphs in the same document from the judge, following a very short paragraph detailing the circumstances in which he was arrested, where the judge records the occurrence of the medical examinations on 6 June and 10 June when the Appellant did complain about his treatment. The judge also recorded the results of the examination of the doctor which, at least to some extent, confirmed the Appellant's account. What the judge says is that the Appellant did not complain to the judge before whom he appeared whereas the Appellant says that he did. The mere fact that there is a difference in view about this (which no court in England or Wales could resolve) does not mean that the Spanish judge is giving misleading information to the District Judge. Subject to the submissions to the contrary made by Mr Summers (see paragraph 63 below), the focus of a "tainted prosecution" must be upon the conduct of the prosecuting authority, not the judicial authority. Mr Summers draws attention to what the prosecuting authority said in response to the request for further information and suggests that it is less than frank ("outright untruthful and misleading" was the expression used in his Skeleton Argument) and betrays a preconceived notion about the Appellant's allegations: "With respect to allegations of torture it must be noted that these are the classic defence allegations made for Basque terrorist organization members who are in prison. It should be noted that the Spanish Public Prosecutor's mission as well as the Crown Prosecution Service's mission is to ensure the defence of legality and the defence of citizens' rights as well as to ensure full respect and integrity of those rights. Both not only do not consent to crimes but have the mission to prosecute every crime, even those crimes that might have been committed in cases of ill-treatment of detainees. That said, nowhere in the proceedings is there any evidence whatsoever to support ill-treatments, especially not during the statement given before the pre-trial judge. In our legal system it is the pre-trial judge who directs the investigations and examinations. Furthermore, it is up to the pre-trial judge to ensure full respect of the [accused's] individual rights throughout the investigation stage. The Public Prosecutor assists in the investigations and plays an active role. The Public Prosecutor neither is aware of any torture or ill-treatment of detainees nor would he have consented to torture or ill-treatment of detainees, acting in the same way as the CPS." Mr Caldwell was inclined to agree that this was less dispassionate than it might have been and there can be no doubt that the suggestion that "nowhere in the proceedings is there any evidence whatsoever to support ill-treatments" is plainly incorrect. But taking this adverse criticism of what is said by the prosecutor at its highest, does it afford a basis to find bad faith on the part of the prosecutor or that it evidences the proposition that the prosecution is "tainted"? Mr Caldwell contends that there is no evidence that the prosecutor had prior knowledge of the intentions of police officers to ill-treat the Appellant or to try to obtain evidence by means of ill-treatment or that the Prosecutor connived or gave any encouragement to such conduct. There is, he says, a clear denial of complicity and the decision of the prosecutor to continue proceedings where there has been a complaint of torture does not in itself sustain a conclusion that there is an abuse of process by the Spanish state. That, he says, is a matter for the Spanish courts to determine. He also emphasises that the issue for consideration is the conduct of the prosecuting authority, not the police. This is brought into relief by Symeou (see paragraph 39 above). The following two paragraphs of the judgment of Ouseley J are relied upon: "33. In our judgment, the reason why these two strands to the abuse argument cannot succeed is this. The focus of this implied jurisdiction is the abuse of the requested state's duty to extradite those who are properly requested, and who are unable to raise any of the statutory bars to extradition. The residual abuse jurisdiction identified in R (Bermingham) v Director of the Serious Fraud Office [2007] QB 727 and the Tollman case [2007] 1 WLR 1157 concerns abuse of the extradition process by the prosecuting authority. We emphasise those latter two words. That is the language of those cases. It is the good faith of the requesting authorities which is at issue because it is their request coupled with their perverted intent and purpose which constitutes the abuse. If the authorities of the requesting state seek the extradition of someone for a collateral purpose, or when they know that the trial cannot succeed, they abuse the extradition processes of the requested state. 34. The abuse jurisdiction of the requested state does not extend to considering misconduct or bad faith by the police of the requesting state in the investigation of the case or the preparation of evidence for trial." Mr Summers replies to those arguments by making a number of points about Symeou. First, contrary to the approach in Symeou, he submits that there is no scope for the division of "the state" into police, prosecutor and judge: they are all, he would say, emanations of the state and it is impossible to divide them in the way suggested. He draws attention to Ahmed and says that that case involved police misconduct, but nonetheless would have engaged the abuse powers of the English court if the facts had been established. Second, he says, on the facts of this case, that the police were not acting in isolation because the torture took place in the context of the interrogation and the CPT materials suggest that, at the material time, there was a systemic practice of torture. Third, he says that Symeou was not concerned with torture. Fourth, Symeou was concerned with police conduct relating to witnesses and not to the treatment of the accused in that case. Finally, he says that Symeou was decided before Ahmed and, presumably, contends that it should be read subject to Ahmed. In the first place, in my view, some caution needs to be shown before applying any phraseology used in Ahmed to the extradition jurisdiction. That was a case in which the Court of Appeal Criminal Division was reviewing the correctness of the decision of a judge sitting in the Crown Court about whether to stop the case on the grounds of abuse. It was not addressing directly any of the normal issues that arise in extradition proceedings. Secondly, and allied to that first point, Symeou was concerned directly with the extradition process and what the court said, albeit not directly in the context of torture, was undoubtedly in point by analogy in the context of torture allegations: I cannot see that the distinction between the two types of case is material for present purposes. Third, in my judgment, the division of the organs of the Spanish State as between the police, prosecutor and judiciary is entirely legitimate: they may each be an emanation of the state, but each is separate and distinct and the distinction maintained in Symeou is a valid distinction for these purposes. Conclusion However the issues raised by Mr Summers on the Appellant's behalf are articulated, they are answered by the proposition that the essential framework by which this court determines its extradition jurisdiction is to show mutual trust for the processes of those countries with which it has extradition arrangements and, of course, to assume that Convention rights will be upheld in requesting states. Whatever the history may have been in this case, it is recognised that the Appellant will not be subject to torture on his return to Spain if it is ordered and that he will receive a trial meeting Article 6 requirements. In that latter context the natural assumption is that the Spanish court will, if any disputed confession is relied upon by the prosecution, subject the circumstances in which it was given to appropriate scrutiny and, if shown to have been obtained through torture, to exclude its admissibility. In this case it cannot be ignored, as the District Judge observed, that if the primary police evidence is accepted the Appellant and his accomplices were caught "red-handed". However, all the relevant protections against the use of tainted evidence exist within the Spanish legal system such that they can be deployed by the Appellant should he choose to do so. The same broad approach applies to the question of limitation for the reasons I have given. The District Judge was, correctly in my view, very reluctant to become involved in some of the fact-finding missions upon which he was invited to embark. To my mind, there is plenty of authority (for example, in the guise of Battistini and Symeou) which would have justified refusing to embark upon those missions as a matter of principle. There remains in most cases the pragmatic consideration (which also informs the principle) of the quality of evidence that could be received: half the story given orally by one side and half provided in writing on the other (with no full disclosure) is hardly a satisfactory basis for a finding of fact that is ordinarily far more conveniently made in the courts of the jurisdiction where the issues originally arose. In my judgment, the grounds of appeal do not succeed and the appeal must be dismissed.

OPINION OF ADVOCATE GENERAL WATHELET delivered on 22 January 2015 ( ) Case C‑519/13 Alpha Bank Cyprus Ltd v Senh Dau Si, Alpha Panareti Public Ltd, Susan Towson, Stewart Cresswell, Gillian Cresswell, Julie Gaskell, Peter Gaskell, Richard Wernham, Tracy Wernham, Joanne Zorani, Richard Simpson (Request for a preliminary ruling from the Anotato Dikastirio Kyprou (Cyprus)) ‛Judicial cooperation in civil matters — Service of judicial and extrajudicial documents in civil or commercial matters — Regulation (EC) No 1393/2007 — Article 8 — Refusal to accept a document — Requirement to use the form set out in Annex II to the regulation to inform an addressee of his right to refuse to accept a document — Validity of service in the event of failure to use the form — Possibility of service subsequently through the addressee’s lawyer’ I – Introduction 1. The request for a preliminary ruling was submitted in connection with seven cases concerning the balance on a mortgage loan brought by Alpha Bank Cyprus Ltd (‘Alpha Bank’), a company trading in the banking sector, against purchasers of immovable properties and against Alpha Panareti Public Ltd, another company, which had guaranteed that loan. ( ) 2. That request concerns the interpretation of Article 8 of Regulation (EC) No 1393/2007 of the European Parliament and of the Council of 13 November 2007 on the service in the Member States of judicial and extrajudicial documents in civil or commercial matters (service of documents), and repealing Council Regulation (EC) No 1348/2000. ( ) 3. Article 8 of that regulation, entitled ‘Refusal to accept a document’ states that the addressee of a document must be informed, ‘using the standard form set out in Annex II [to the Regulation]’, that he may refuse to accept the service of that document if it is not written in, or accompanied by a translation into, a particular language. 4. The request for a preliminary ruling concerns inter alia whether or not that standard form is obligatory and the consequences of failing to use it as regards the service of a document. II – Regulation No 1393/2007 5. Article 8 of the regulation, entitled ‘Refusal to accept a document’, provides: ‘1. The receiving agency shall inform the addressee, using the standard form set out in Annex II, that he may refuse to accept the document to be served at the time of service or by returning the document to the receiving agency within one week if it is not written in, or accompanied by a translation into, either of the following languages: (a) a language which the addressee understands; (b) the official language of the Member State addressed or, if there are several official languages in that Member State, the official language or one of the official languages of the place where service is to be effected. 2. Where the receiving agency is informed that the addressee refuses to accept the document in accordance with paragraph 1, it shall immediately inform the transmitting agency by means of the certificate provided for in Article 10 and return the request and the documents of which a translation is requested. 3. If the addressee has refused to accept the document pursuant to paragraph 1, the service of the document can be remedied through the service on the addressee in accordance with the provisions of this Regulation of the document accompanied by a translation into a language provided for in paragraph 1. In that case, the date of service of the document shall be the date on which the document accompanied by the translation is served in accordance with the law of the Member State addressed. However, where according to the law of a Member State, a document has to be served within a particular period, the date to be taken into account with respect to the applicant shall be the date of the service of the initial document determined pursuant to Article 9(2). …’ III – The dispute in the main proceedings and the questions referred for a preliminary ruling 6. The respondents in the seven appeals before the referring court are (i) purchasers of immovable properties situated in the Republic of Cyprus, and (ii) the vendor of those properties, Alpha Panareti Public Ltd. ( ) The properties were purchased by means of a mortgage loan granted by Alpha Bank, which has brought actions before the courts in Cyprus for payment of the balance of that mortgage loan against the purchasers and the vendor, namely Alpha Panareti Public Ltd, which had guaranteed the loan. 7. Since the purchasers ( ) were permanently resident abroad, Alpha Bank obtained, following an ex parte application, ( ) in each of the actions at first instance an order allowing a true copy of the document initiating the proceedings ( ) and the notice attached to that document, ( ) and of a translation of each, to be served outside the geographical jurisdiction of the court (‘the contested order’). Each of those contested orders provided, moreover, that those documents should be served in accordance with the rules laid down in Regulation No 1393/2007. 8. The following documents were served on each of the purchasers in England: — a true copy of the document initiating the proceedings and the attached notice, in Greek and English; — a true copy of the contested order in Greek only, and — a true copy of the affidavit given by the translator attesting that she had made a faithful translation of the original documents. 9. The respondents in each of the seven cases entered an appearance under protest at first instance and applied for an order for the annulment or setting aside of the contested orders and of the service itself. They contended that, in pursuance of Regulation No 1393/2007 and of the Cyprus Code of Civil Procedure, other documents should also have been served, namely, in each case: — a copy of the ex parte application; — a translation into English of the contested order; — the standard form set out in Annex II to Regulation No 1393/2007, in accordance with Article 8 of that regulation, and — an explanatory letter concerning the documents being served. 10. Alpha Bank argued before the court of first instance that, as the respondents had been apprised of the existence of the action and its subject-matter and of the timetable for the taking of measures on their part, they could not argue improper service. In the view of Alpha Bank, the respondents had applied to have the service set aside in a bid to avoid service. 11. The court of first instance held in each of those seven cases that the application was well founded. It found that the failure to serve all the necessary documents and the English translations, especially a translation of the contested orders, infringed the Cyprus Code of Civil Procedure and Regulation No 1393/2007, as it deprived the addressee of the documents of the opportunity to obtain knowledge of their contents. It also found that that regulation had been infringed because the standard form set out in Annex II to that regulation, which would have informed the respondents of their right to refuse to accept the contested orders in Greek without the necessary accompanying English translation, had not been served on them. The court of first instance, on those grounds, annulled the service of the document initiating the proceedings, the attached notice and the contested order in each of those cases. 12. Alpha Bank lodged an appeal challenging each of the seven judgments before the referring court. 13. The referring court held, in a separate judgment, that the court of first instance had erred in the part of the seven judgments at first instance that related to annulling service on grounds of irregularity under national law, as, in the circumstances of the main proceedings, any irregularities could have been remedied, in keeping with the spirit of Regulation No 1393/2007. According to that court, ‘[n]otwithstanding the numerous problems identified in the way in which service was effected, it is not apparent from the documents sent for service that the respondents were actually misled, as they entered an appearance before the court at the appointed time. Furthermore, the respondents did not specify how they had allegedly been misled or, more importantly, the repercussions on them of their possibly having been misled’. 14. The referring court stated that it would not annul service unless the Court were to find that service using the standard form set out in Annex II to Regulation No 1393/2007 was necessary in every case of service of documents on the basis of that regulation and that failure to serve that form could not be remedied and would lead to service being invalid. 15. In those circumstances, the Anotato Dikastirio Kyprou (Cyprus) decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling: ‘(1) Is service of the standard form pursuant to Regulation No 1393/2007 necessary in every case or can there be exceptions? (2) If it is considered that service is necessary in every case, does the omission in the present case constitute a reason why service is invalid? (3) If not, can it be effected, in keeping with the spirit of Regulation No 1393/2007, by service on the lawyer acting for the respondents appearing under protest, who is under an obligation vis-à-vis his clients to accept service, or must service be effected anew under the procedure provided for in Regulation No 1393/2007?’ IV – Procedure before the Court 16. Alpha Bank, the respondents, the Cyprus, German, Greek, Spanish and Austrian Governments and the European Commission submitted written observations. Alpha Bank, the respondents, the Cyprus, German and Spanish Governments and the Commission presented oral argument at the hearing on 27 November 2014. V – Analysis A – First question 1. Arguments of the parties 17. In its first question, the referring court asks in essence whether Article 8 of Regulation No 1393/2007 must be interpreted as meaning that the receiving agency ( ) must always use the standard form set out in Annex II to that regulation when effecting service of the document to be served on the addressee. 18. The respondents contend that Regulation No 1393/2007 does not contain any exception to the right to receive the standard form set out in Annex II thereto. They note that the EU legislature intentionally provided for that form in order to guarantee and protect the fundamental rights of addressees to receive information and a fair hearing. Alpha Bank contends, on the contrary, that the standard form in question has no purpose where the document initiating the proceedings has been translated into the language of the receiving agency. 19. The Greek Government is of the view that neither Article 8 nor any other article of Regulation No 1393/2007 provides for an exception which would allow the receiving agency to dispense with use of the standard form as required by Article 8(1) of that regulation. According to the Spanish Government, the wording of Regulation No 1393/2007 leaves no room for doubt. Article 8 states that the information it requires must be provided using the standard form set out in Annex II to that regulation. The Austrian Government is also of the view that service must be effected using the standard form in all cases. 20. According to the Cyprus Government, although, in principle, use of the standard form set out in Annex II to Regulation No 1393/2007 is obligatory in every case in which a judicial document is served, the Court would appear to have introduced a derogation from that general obligation in Weiss und Partner (C‑14/07, EU:C:2008:264) where the addressee is familiar with the content of the document being served. 21. So far as the Commission is concerned, the standard form in question has an informative purpose and is required where service of the judicial document is effected in a language which the defendant does not understand. Consequently, in its view, where service of the document has been effected in one of the languages provided for in Article 8(1) of Regulation No 1393/2007 the standard form has no purpose and its use is not required. It adds that the addressee would not have had the right to refuse to accept the document in the present case if the standard form had been attached to the documents to be served. 22. So far as the German Government is concerned, the receiving agency is required to attach the standard form set out in Annex II to Regulation No 1393/2007 only where a document, within the meaning of Article 8(1) of that regulation, has not been translated into one of the languages provided for in Article 8(1)(a) and (b) of that regulation. The obligation to inform laid down in Article 8(1) is an obligation ‘to conduct a special examination, imposed on the receiving agency’, which would carry out its own investigation using its particular expertise as an authority or court. That Government therefore contends that the receiving agency must determine in each case whether the addressee referred to in Article 8(1) of Regulation No 1393/2007 should be informed of his right to refuse to accept a document by means of the standard form. In its view, the contested order constitutes a document within the meaning of Article 8(1) of Regulation No 1393/2007, since it cannot be excluded, in the absence of a translation, that its content may be essential from a procedural point of view, which would justify an autonomous obligation on the receiving agency to provide information in pursuance of that provision. 2. Assessment 23. To my mind, the scope of Article 8 of Regulation No 1393/2007 is clear and unambiguous. Use of the standard form set out in Annex II to that regulation is required in all cases of service of judicial documents, ( ) without exception, irrespective of the language in which the document to be served is drafted and whether or not it is accompanied by a translation. ( ) 24. First, the wording ( ) of Article 8(1) of Regulation No 1393/2007 requires clearly and without exception that the receiving agency should use the form in question when effecting service of a document to be served. 25. Article 8(1) of Regulation No 1393/2007 therefore provides no opportunity for the receiving agency to decide whether or not that form should be used depending on the language of the document to be served, or languages which are understood by the addressee — information which in any event is often not available to it — or the official languages of the Member State in question, or whether or not a translation into those languages is attached to that document. 26. The phrase ‘if it is not written in, or accompanied by a translation into, either of the following languages’ applies not to the use of the form but merely to the addressee’s right to refuse to accept the document. 27. The standard form set out in Annex II to Regulation No 1393/2007 must always be used therefore for the service of a document to its addressee, even if it may prove to be redundant in view, for example, of the language skills of the addressee or, more specifically, where the document to be served is written in the official language of the Member State addressed. I would add that, even in the latter case, the routine obligation to attach that form, which is only one page, in the official language of the Member State addressed or one of the official languages of the place where service is to be effected does not, to my mind, constitute an obligation that is unduly excessive. 28. Secondly, the standard form set out in Annex II to Regulation No 1393/2007 and the related obligation to use it constitute an innovation in relation to the earlier regulation, namely, Council Regulation (EC) No 1348/2000 of 29 May 2000 on the service in the Member States of judicial and extrajudicial documents in civil or commercial matters. ( ) That innovation reflects, in my view, the intention of the EU legislature to improve efficiency and speed ( ) in the transmission of judicial and extrajudicial documents between Member States whilst respecting the addressee’s rights of defence. ( ) 29. Obligatory use of that form is designed to prevent the occurrence of unfortunate situations, such as in the present case, where a one-page document, namely a true copy of the contested order, written only in Greek and therefore not in a language which would (or could) be understood by the respondents or in the official language of the State addressed (English), is included amongst a number of other documents written in Greek, all of which, apart from the contested order, are accompanied by a translation. ( ) 30. In my view, receiving agencies do not therefore have any discretion as regards use of the form in question. ( ) An independent and uniform interpretation of Regulation No 1393/2007 means, moreover, that the standard form in question must always be attached whenever service of a document is effected. ( ) That regulation applies to all the Member States of the European Union, ( ) with documents to be served potentially in over 20 languages. Consequently, it seems to me impossible, even from a purely practical point of view, for receiving agencies to determine which documents to serve and whether translations exist in every case. 31. In its report of 4 December 2013 to the European Parliament, the Council and the European Economic and Social Committee on the application of Regulation No 1393/2007 ( ) (‘the report’) the Commission mentions the need to use the standard form set out in Annex II to that regulation in cases where the document to be served is in the language of the Member State addressed and where, therefore, the addressee cannot validly refuse service under Article 8(1)(b) of that regulation. The report states that attaching the standard form in such circumstances might mislead the addressees into thinking that they do have the right to refuse. 32. However, I consider that the standard form set out in Annex II to Regulation No 1393/2007 contains very clear guidance for the addressee of the document to be served and that its precise wording is not likely to mislead. That form expressly provides that the addressee may ‘refuse to accept the document if it is not written in or accompanied by a translation into either a language which he understands or the official language or one of the official languages of the place of service’. ( ) The right to refuse is not therefore linked in any way to the presence of the standard form in question. ( ) 33. In the light of those considerations, I consider that Article 8 of Regulation No 1393/2007 must be interpreted as meaning that use of the standard form set out in Annex II to that regulation when effecting service on the addressee of the document to be served is required in all cases without exception, irrespective both of the language in which the document to be served is written and whether or not it is accompanied by a translation into a language understood by the addressee or into the official language of the Member State addressed or, if there are several official languages in that Member State, into the official language or one of the official languages of the place where service is to be effected. B – Second and third questions 34. In its second and third questions, raised in case the first question is answered in the way I suggest, the referring court asks the Court, first, whether failure to use the form constitutes a reason why service of the document to be served is invalid and, secondly, how that failure may be remedied. 35. Regulation No 1393/2007 says nothing about the legal consequences which flow from failure to use the standard form set out in Annex II to that regulation. A fortiori, it does not provide that such failure constitutes a reason why service of the document to be served is invalid. ( ) Since Regulation No 1348/2000 is silent concerning the consequences of service in a language other than one of those it provides for in the same way as Regulation No 1393/2007 is silent concerning failure to use the standard form, the case-law relating to the former of those two regulations contains valuable information in that regard. 36. In paragraph 51 of Leffler (C‑443/03, EU:C:2005:665) the Court held that, since Regulation No 1348/2000 (which Regulation No 1393/2007 replaced) did not prescribe the consequences of certain facts, it was for the national court to apply, in principle, its national law while taking care to ensure the full effectiveness of EU law. The Court added that the regulation’s silence might ‘lead [the national court] to refrain from applying, if need be, a national rule preventing that or to interpret a national rule which has been drawn up with only a purely domestic situation in mind in order to apply it to the cross-border situation at issue’. ( ) 37. Moreover, in paragraph 65 of the same judgment, the Court held that, in order to uphold the effectiveness of the regulation, it was important for the national court to ensure that the rights of the various parties to the case are accorded maximum, and balanced, protection. ( ) 38. As regards the rights of the addressees of a document to be served, it is apparent from settled case-law that the objectives of efficiency and speed set out in Regulation No 1393/2007 cannot be attained by undermining in any way the rights of defence of those addressees, which derive from the right to a fair hearing guaranteed by the second paragraph of Article 47 of the Charter of Fundamental Rights of the European Union, ( ) which means inter alia that they must have ‘sufficient time to prepare [their] defence’. ( ) 39. As regards the rights of the serving party and the objectives of efficiency and speed set out in Regulation No 1393/2007, I consider that they should not be compromised for purely formal reasons that would not affect the rights of defence of the addressees. 40. That would be the case if failure to use the standard form in question led to service of a document being invalid where it could be proved, for example, that the addressee of that document understands the language in which it is written or the document is written in the official language of the State addressed. In paragraph 52 of Leffler (C‑443/03, EU:C:2005:665), the Court speaks, with regard to comparable situations, of ‘a refusal … which purely seeks to delay matters and manifestly constitutes an abuse’. ( ) 41. Consequently, in the event of failure to attach the standard form set out in Annex II to Regulation No 1393/2007 to the document to be served, it is for the national court ( ) to determine whether that document was written in a language understood by the addressee or an official language of the State addressed. ( ) 42. As was noted in point 9 above, the respondents stated that in each of the seven cases in the main proceedings certain documents and translations which ought to have been served on them had not been served. 43. It remains for me to consider the term ‘document to be served’, which Regulation No 1393/2007 does not define, nor does it make any reference to annexes, the number and nature of which vary considerably according to the national legal system concerned. ( ) 44. In paragraph 73 of Weiss und Partner (C‑14/07, EU:C:2008:264) the Court held that where the document to be served is, as in the cases in the main proceedings, a document instituting the proceedings, the document or documents to be served must enable the addressee to assert his rights in legal proceedings in the State of transmission, to identify with a degree of certainty at the very least the subject-matter of the claim and the cause of action as well as the summons to appear before the court. ( ) The Court goes on to state that ‘documents which have a purely evidential function and are not necessary for the purpose of understanding the subject-matter of the claim and the cause of action do not form an integral part of the document instituting the proceedings’. 45. At first sight and subject to verification by the referring court, service on the respondents of a true copy of the document instituting the proceedings, both in Greek and in English, enabled them to identify with a degree of certainty the subject-matter of the claim and the cause of action in the cases in the main proceedings. 46. However, as regards the summons to enter an appearance before a court, it appears that there was a significant difference between the time-limits set in the document instituting the proceedings and the contested order ( ) in the cases in the main proceedings. For example, so far as Mr Si is concerned, the time-limit set in the document instituting the proceeding appears to have been 10 days, whilst the time-limit set in the contested order — which was served only in Greek — appears to have been 60 days, which the respondents claim was misleading. However, it was not disputed at the hearing and it is clear from the documents lodged at the Court (which it is for the referring court to confirm) that, in each of the cases in the main proceedings, the time-limit set in the contested order is the same as that set in the attached notice. ( ) That ‘notice’ was served on the respondents both in Greek and in English. 47. If, contrary to the evidence contained in points 45 and 46 above, the referring court were to find (quod non?) that the failure to use the standard form set out in Annex II to Regulation No 1393/2007 and the absence of a translation of the contested order, or the uncertainty regarding the time-limits for entering an appearance did indeed infringe the respondents’ rights of defence, that situation should be remedied as soon as possible, ( ) by sending the standard form and the missing translation in accordance with the rules for the service of documents laid down by Regulation No 1393/2007, ( ) which would confirm automatically the time-limit for entering an appearance contained in the contested order. 48. In that regard, I concur with the observations of the Spanish Government that it is appropriate to revert, so far as possible, to the situation existing prior to the irregularity. ( ) None of the possible failures at issue can be remedied by effecting service of the document to be served and the standard form at issue on the respondents’ lawyer. Service in that way would not comply with the rules laid down by Regulation No 1393/2007. ( ) 49. In my view, to find otherwise would jeopardise the independent and uniform interpretation and application of Regulation No 1393/2007. ( ) 50. In the light of the foregoing, I consider that failure to use the standard form set out in Annex II to Regulation No 1393/2007 when effecting service of a document instituting proceedings does not constitute a ground of invalidity of such service if the addressee of the document is enabled to assert his rights in legal proceedings in the State of transmission. Failures which infringe the rights of defence of the addressee of the document to be served must be remedied as soon as possible in accordance with the rules for the service of documents laid down by Regulation No 1393/2007. VI – Conclusion 51. In the light of all the above considerations, I propose that the Court should answer the questions referred by the Anotato Dikastirio Kyprou as follows: Article 8 of Regulation (EC) No 1393/2007 of the European Parliament and of the Council of 13 November 2007 on the service in the Member States of judicial and extrajudicial documents in civil or commercial matters (service of documents), and repealing Council Regulation (EC) No 1348/2000, must be interpreted as meaning that use of the standard form set out in Annex II to that regulation when effecting service on the addressee of the document to be served is required in all cases without exception, irrespective both of the language in which the document to be served is written and whether or not it is accompanied by a translation into a language understood by the addressee or into the official language of the Member State addressed or, if there are several official languages in that Member State, into the official language or one of the official languages of the place where service is to be effected. Failure to use the standard form set out in Annex II to Regulation No 1393/2007 when effecting service of a document instituting proceedings does not constitute a ground of invalidity of such service if the addressee of the document is enabled to assert his rights in legal proceedings in the State of transmission. Failures which infringe the rights of defence of the addressee of the document to be served must be remedied as soon as possible in accordance with the rules for the service of documents laid down by Regulation No 1393/2007. ( ) Original language: French. ( ) In each of the seven cases Alpha Panareti Public Ltd is summoned in that capacity. ( ) OJ 2010 L 324, p. 79. ( ) It is clear from the documents submitted to the Court that that company, incorporated in Cyprus, is not owned by Alpha Bank. ( ) The vendor is established in Cyprus. ( ) That is to say, an application submitted without notice to the other party. ( ) Referred to as a ‘writ of summons’ in the procedural documents attached to the request for a preliminary ruling. ( ) Referred to as a ‘notice of writ’ in the procedural documents attached to the request for a preliminary ruling (‘the notice’). ( ) Service in the cases in the main proceedings took place in accordance with Article 4(1) of Regulation No 1393/2007, namely between the designated (‘transmitting’ (in Cyprus) and ‘receiving’ (in the United Kingdom)) agencies, in pursuance of Article 2 of that regulation. ( ) See Article 8(4) of Regulation No 1393/2007. The questions referred to the Court concern in particular documents initiating the proceedings. As regards its scope, that regulation provides for only two circumstances in which the service of a judicial document between Member States falls outside its scope, namely (i) where the permanent or habitual residence of the addressee is unknown and (ii) where that person has appointed an authorised representative in the State where the judicial proceedings are taking place. In other situations, where the person to be served with the judicial document resides abroad, the service of that document necessarily comes within the scope of that regulation and must, therefore, be carried out by the means put in place by the regulation to that end, as provided for by Article 1(1) thereof. See also to that effect, paragraphs 24 and 25 of Alder (C‑325/11, EU:C:2012:824). ( ) See paragraph 37 of Alder (C‑325/11, EU:C:2012:824), in which the Court held that ‘Article 4(3) and Article 5(1) of Regulation No 1393/2007, read in the light of recital 12 in the preamble thereto, lay down the requirement that the service of judicial documents be effected using a standard form and that that form be translated into a language understood by the addressee or into the official language of the Member State addressed, or, if there are several official languages in that Member State, into at least one of the official languages of the place where that service is to be effected’. ( ) See to that effect, inter alia, the versions in Spanish ‘[e]l organismo receptor informará al destinatario’, Czech ‘[p]řijímající subjekt vyrozumí adresáta’, German ‘[d]ie Empfangsstelle setzt den Empfänger […] in Kenntnis’, Greek ‘[η]υπηρεσία παραλαβής ενημερώνει τον παραλήπτη’, English ‘[t]he receiving agency shall inform the addressee’, French ‘[l]’entité requise informe, Irish ‘[c]uirfidh an ghníomhaireacht fála an seolaí ar an eolas’, Italian ‘[l]’organo ricevente informa il destinatario’, Dutch ‘[d]e ontvangende instantie stelt degene voor wie het stuk is bestemd […] in kennis’, Portuguese ‘[a] entidade requerida avisa o destinatário’, Slovak ‘[p]rijímajúci orgán […] informuje adresáta’ and Finnish ‘[v]astaanottavan viranomaisen on ilmoitettava vastaanottajalle’. ( ) OJ 2000 L 160, p. 37. ( ) See Article 4(1) of Regulation No 1393/2007, which provides that ‘[j]udicial documents shall be transmitted directly and as soon as possible’. See Alder (C‑325/11, EU:C:2012:824, paragraph 34). See, by analogy, Weiss und Partner (C‑14/07, EU:C:2008:264, paragraph 46) and Roda Golf & Beach Resort (C‑14/08, EU:C:2009:395, paragraph 54) with regard to Regulation No 1348/2000. As the Commission observes, it ‘is clear from recitals 2, 6 and 7 of Regulation No 1393/2007 that its objective is to improve and expedite the transmission of judicial and extrajudicial documents in civil or commercial matters for service between the Member States which are to be served in another Member State, whilst ensuring judicial protection for the defendant’. ( ) Regarding the importance of respect for the rights of the defence during the service of documents, see Weiss und Partner (C‑14/07, EU:C:2008:264, paragraphs 47 and 48). ( ) Moreover, as the Austrian Government observes, the ‘fact of attaching the standard form to the document to be served does not delay the service procedure. On the contrary, there [would be] a risk of errors and delays were it necessary to examine whether or not there was an exception. It should be borne in mind that there are a large number of requests for service and each service procedure must therefore be simplified as far as possible’. I agree with the Spanish Government that ‘[u]se of that form ensures not only that a document is transmitted speedily but also that it is transmitted safely’. ( ) Moreover, where receiving agencies do have discretion Regulation No 1393/2007 makes express provision to that effect. See, for example, Article 7(1) of that regulation, which provides that the transmitting agency is not obliged to effect service of the document by a particular method requested by the transmitting agency if that method is incompatible with the law of the Member State addressed. See also, by analogy, Articles 12 to 15 of Regulation No 1393/2007. ( ) In paragraph 46 of Leffler (C‑443/03, EU:C:2005:665) the Court held in respect of Regulation No 1348/2000, which preceded Regulation No 1393/2007, that ‘the choice of the form of a regulation, rather than that of a directive initially proposed by the Commission, shows the importance which the Community legislature attaches to the direct applicability of the Regulation’s provisions and their uniform application’. See also Weiss und Partner (C‑14/07, EU:C:2008:264, paragraph 60). ( ) Paragraph 3 of Article 1 of Regulation No 1393/2007, which is entitled ‘Scope’, provides that ‘[i]n this Regulation, the term “Member State” shall mean the Member States with the exception of Denmark’. However, application of that regulation was extended to include the Kingdom of Denmark under the Agreement between the European Community and the Kingdom of Denmark on the service of judicial and extrajudicial documents in civil or commercial matters, signed at Brussels on 19 October 2005 (JO 2005 L 300, p. 55). ( ) COM(2013) 858 final. In that report the Commission assesses the application of Regulation No 1393/2007 during the period from 2008 to 2012. Article 24 of that regulation provides that no later than 1 June 2011, and every five years thereafter, the Commission must assess the application of the regulation and, if need be, propose adaptations. The Commission states in the report that it launched a study in 2011 in order to collect data and assess the application of Regulation No 1393/2007. The matter was also discussed at meetings of the European Judicial Network in Civil and Commercial Matters, and the Commission states that it took into account citizens’ letters, complaints and petitions, and preliminary rulings by the European Court of Justice concerning that regulation. ( ) Emphasis added. ( ) See point 26 of this Opinion. ( ) See, by analogy, judgment in Leffler (C‑443/03, EU:C:2005:665, paragraphs 37 and 39). ( ) See also, to that effect, judgments in Simmenthal (106/77, EU:C:1978:49, paragraph 16); Factortame and Others (C‑213/89, EU:C:1990:257, paragraph 19); Courage and Crehan (C‑453/99, EU:C:2001:465, paragraph 25); and Muñoz and Superior Fruiticola (C‑253/00, EU:C:2002:497, paragraph 28). Moreover, in paragraph 39 of Leffler (C‑443/03, EU:C:2005:665) the Court adds that ‘several of [the regulation’s] provisions suggest that the lack of translation may be remedied’. I note that although the earlier regulation required a translation it made no mention of a form. ( ) See also the judgments in Leffler (C‑443/03, EU:C:2005:665, paragraph 52) and Weiss und Partner (C‑14/07, EU:C:2008:264, paragraph 76). ( ) See to that effect Weiss und Partner (C‑14/07, EU:C:2008:264, paragraph 47) and Alder (C‑325/11, EU:C:2012:824, paragraph 35). ( ) See paragraph 52 of Leffler (C‑443/03, EU:C:2005:665). ( ) It is clear from the wording of Article 8(1) of Regulation No 1393/2007 that the addressee of the document to be served has the right to refuse to accept the document only if it is not written in or accompanied by a translation into one of the languages provided for. See also recital 10 in the preamble to Regulation No 1393/2007, which states that in order to ‘secure the effectiveness of [that] Regulation, the possibility of refusing service of documents should be confined to exceptional situations’. ( ) See, by analogy, Article 19 of Regulation No 1393/2007. ( ) In the present case, English. ( ) See, to that effect, Weiss und Partner (C‑14/07, EU:C:2008:264, paragraphs 41 to 45). ( ) ‘[I]t can take a long time to translate supporting documents and, in any event, such translation is not necessary for the purposes of the action which will take place before the court of the Member State of transmission and in the language of that State’ (see paragraph 74 of Weiss und Partner (C‑14/07, EU:C:2008:264). The objectives of Regulation No 1393/2007 to improve and expedite the transmission of documents would be undermined if a translation of ‘secondary’ documents was required. ( ) It should be noted that service of the contested order to the respondents is provided for under Cyprus law. ( ) Therefore, the contested order and the notice attached to the document instituting the proceedings set a time-limit for entering an appearance of 60 days in the case of Mr Si. ( ) See, to that effect, Leffler (C‑443/03, EU:C:2005:665, paragraph 64). ( ) See, to that effect, Leffler (C‑443/03, EU:C:2005:665, paragraph 63). See, by analogy, Article 8(3) of Regulation No 1393/2007. ( ) I note in that regard that at the time the judicial documents at issue in the main proceedings were served the respondents were residing abroad. Given that the latter had not at that time appointed an authorised representative in the Member State where the judicial proceedings are taking place, namely Cyprus, service of those documents necessarily fell, and still falls, within the scope of Regulation No 1393/2007, as provided for by Article 1(1) thereof. See, by analogy, Alder (C‑325/11, EU:C:2012:824, paragraphs 24 and 25). ( ) Alder (C‑325/11, EU:C:2012:824, paragraphs 29 to 32). The means of transmission within Member States of judicial documents in civil or commercial matters are laid down in an exhaustive manner in the scheme established by Regulation No 1393/2007. ( ) See, also, recital 8 in the preamble to Regulation No 1393/2007, which states that that ‘regulation should not apply to service of a document on the party’s authorised representative in the Member State where the proceedings are taking place regardless of the place of residence of that party’.

Judgment of the Court of First Instance (Fifth Chamber) of 29 January 1993. - Robert Wery v European Parliament. - Conditions for the grant of the education allowance. - Case T-86/91. European Court reports 1993 Page II-00045 Summary Parties Grounds Decision on costs Operative part Keywords ++++ Officials ° Remuneration ° Family allowances ° Education allowance ° Conditions for granting ° Training received in an educational establishment but connected to a contract of apprenticeship (Staff Regulations, Annex VII, Art. 3) Summary The distinction between educational training and vocational training in Article 2(3)(b) of Annex VII to the Staff Regulations allows payment of the education allowance provided for in Article 3 of that annex to be withheld where the dependent child in respect of whom the education allowance is sought is receiving vocational training with no connection with an educational establishment. On the other hand, the distinction does not prevent payment of the education allowance where a dependent child is receiving vocational training provided by an educational establishment at which he is in regular full-time attendance. In that respect, the purpose of the first paragraph of Article 3 of Annex VII to the Staff Regulations allows training provided outside the establishment to be treated as regular full-time attendance at an educational establishment if such training is regarded as an integral part of the programme of instruction laid down by that establishment. Consequently, entitlement to the education allowance arises in respect of a child receiving vocational training given by an educational establishment which is approved as such by the national authorities, including where part of that training takes place under a contract of apprenticeship concluded under the aegis of the educational establishment. Parties In Case T-86/91, Robert Wery, an official of the European Parliament, residing at Arlon (Belgium), represented by Jean-Noël Louis, of the Brussels Bar, with an address for service in Luxembourg at the office of Fiduciaire Myson SARL, 1 Rue Glesener, applicant, v European Parliament, represented by Jorge Campinos, Jurisconsult, assisted by Kieran Bradley, of the Legal Service, acting as Agents, with an address for service at the Secretariat of the European Parliament, Kirchberg, defendant, APPLICATION for the annulment of the decision to withdraw, as from 1 April 1990, the education allowance for the applicant' s child and the decision to deduct the corresponding amounts from his salary and, so far as necessary, the general implementing provisions relating to the grant of the education allowance inasmuch as they require educational training which comprises a minimum number of hours of theoretical instruction, THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Fifth Chamber), composed of: D.P.M. Barrington, President, R. Schintgen and K. Lenaerts, Judges, Registrar: B. Pastor, Administrator, having regard to the written procedure and further to the hearing on 10 November 1992, gives the following Judgment Grounds The facts of the case 1 On 28 September 1990 the applicant submitted an application for an education allowance for his three children for 1990/91, using the standard form provided for that purpose by the administration. With regard to his son Laurent, who had been under a recognized contract of apprenticeship as a floriculturist at Arlon since 14 March 1990 and was to remain under the contract until 31 July 1992, he attached to his application a certificate issued by the competent Belgian authorities and a copy of his contract of apprenticeship. 2 By memorandum of 4 February 1991 the European Parliament (hereinafter referred to as "the Parliament") informed the applicant that in respect of his son Laurent the education allowance and the dependent child allowance, which had both originally been granted, would be withdrawn with effect from April 1990 and that amounts equivalent to the sums already paid would be deducted from his salary. 3 The applicant maintains, and the Parliament accepts, that in answer to his requests for an explanation the administrator of the competent service informed him, firstly, that an education allowance is not generally granted for an official' s child who is serving an apprenticeship and, secondly, that even if it were possible to treat part of his son' s training under the contract of apprenticeship as educational training the education allowance could still not be granted as in his case the number of hours of theoretical instruction was less than the requisite minimum of 16 hours per week. 4 However, the Parliament decided to resume the dependent child allowance, which the decision of 4 February 1991 had also withdrawn, and to refund the amounts which had already been deducted in that connection. The withdrawal of the education allowance was none the less upheld. 5 On 3 May 1991 the applicant submitted a complaint under Article 90(2) of the Staff Regulations of Officials of the European Communities (hereinafter "the Staff Regulations") concerning the decision of 4 February 1991. He challenged the grounds relied on by the administrator of the competent service, namely that an apprenticeship did not qualify for an education allowance and that, in any case, the number of hours of theoretical instruction was less than the requisite minimum. 6 The Parliament recognized that the complaint raised the question of whether vocational training under a national apprenticeship programme could be treated as regular full-time attendance at an educational establishment within the meaning of Article 3 of Annex VII to the Staff Regulations and, while still not accepting that it should be so treated but not excluding the possibility of reviewing its previous practice, it decided to submit the question for examination by the Committee of Heads of Administration, particularly in the light of the judgment of the Court of First Instance in Joined Cases T-34/89 and T-67/89 Costacurta v Commission [1990] ECR II-93. However, at the meeting on 19 February 1992 of the committee responsible for the preparations for the session of the abovementioned Committee it emerged that most of the other institutions shared the Parliament' s view and consequently it was decided not to refer the question to the Committee. 7 On 26 August 1991 the Secretary General of the Parliament rejected the complaint of 3 May 1991 in the following terms: "I have examined your complaint of 3 May 1991. I regret to inform you that I am unable to give you a favourable reply. In so far as it concerns the dependent child allowance for your son Laurent, the complaint is devoid of purpose. It is common ground that the administration reversed its decision to withdraw this allowance before you submitted your complaint and refunded the amounts withheld in that respect in April 1991. In so far as it concerns the withdrawal of the education allowance for Laurent, the complaint is unfounded. Without prejudice to the question which you have raised whether your son' s training course entitles you to an education allowance, I would remind you that it is for the official to show that he has incurred 'actual education costs' within the meaning of Article 3 of Annex VII to the Staff Regulations. Such proof is even more necessary in the present case, since your son himself receives a monthly allowance in excess of the amount fixed for the education allowance. In these circumstances, I can only uphold the decision to withdraw as from 1 April 1990 the education allowance which you previously received for your son Laurent." 8 By memorandum of 10 September 1991 to the Secretary General of the Parliament, the applicant claimed that the administration had never asked him to produce evidence of the actual education costs which he incurred and that the fact that such an obligation was imposed on him and not on other officials constituted an infringement of the principle of equal treatment. By letter of 3 December 1991 the Secretary General of the Parliament confirmed his decision of 26 August 1991. 9 Following the rejection of his complaint, and in reply to a further application for the education allowance for 1991/92, the administration sent the applicant a letter dated 13 November 1991 asking him to produce "the invoices proving the actual education costs connected with your son Laurent' s apprenticeship". During the procedure before the Court the applicant stated that he did not learn of this letter until 26 November 1991, that is the very day when he lodged his application at the Registry of the Court. 10 In his reply, which was undated, the applicant firstly pointed out that the request in the said letter for proof of the actual education costs that he had incurred was the very first request of that type which the administration had sent him. He then detailed the costs of his son Laurent' s apprenticeship. Procedure and forms of order sought by the parties 11 Consequently the applicant brought the present action on 26 November 1991. The written procedure followed the normal course. 12 Upon hearing the report of the Judge-Rapporteur, the Court decided to open the oral procedure without any preparatory inquiry. 13 However, the Court requested the parties to give written answers to questions concerning, first, the documents relating to the apprenticeship being served by the official' s son which had been attached to the application for the education allowance in issue; secondly, the actual education costs of the apprenticeship; thirdly, the right of a person in a situation comparable to the applicant' s to receive, under Belgian law, family allowances and/or social benefits in connection with school attendance and also whether a person in a situation comparable to that of the applicant' s son might be able to obtain a grant under Belgian law. 14 The hearing took place on 10 November 1992. The parties' representatives made their submissions to the Court and gave their replies to the Court' s questions. 15 The applicant claims that the Court should: 1. annul the decision to withdraw the education allowance in respect of his son as from 1 April 1990; 2. annul the decision to make deductions from his salary pursuant to the memorandum of 4 February 1991; 3. order the European Parliament to repay the sums deducted, with interest at 8% per annum from the date of each deduction until the date of repayment; 4. order the defendant to pay the costs; 5. to the extent necessary, declare illegal the general implementing decision adopted by the defendant relating to the grant of the education allowance, in so far as it requires a minimum number of hours of theoretical instruction for students taking a vocational training course officially recognized by a Member State. 16 The Parliament claims that the Court should: ° declare the application inadmissible; ° for the remainder, declare that it is unfounded; ° make an order for costs in accordance with the law. Admissibility Arguments of the parties 17 The Parliament disputes the admissibility of the application on the ground that the applicant' s complaint of 3 May 1991 was rejected because he failed to produce proof of the education costs actually incurred by him for his son Laurent. As he failed to produce such proof, the applicant, according to the Parliament, had no right of action and therefore his complaint was inadmissible. 18 The Parliament adds that while the administrator of the service did not mention the absence of proof of actual education costs at the interviews with the applicant following the decision of 4 February 1991, the reason was that this was quite incidental by comparison with the principal ground for rejecting the application for the education allowance, namely the fact that the training pursued by the applicant' s son could not be treated as equivalent to educational training, which alone gave the right to the education allowance. 19 Alternatively, the Parliament claims that the submissions relied on in the application are not consistent with those relied on in the complaint and that they must therefore be dismissed (see judgment of the Court of First Instance in Case T-57/89 Alexandrakis v Commission [1990] ECR II-143, paragraph 8). 20 The applicant replies, firstly, that the Parliament' s observations show that it accepts that the decision to withdraw the education allowance for his son Laurent and the rejection of his complaint were based on the nature of the training and not on the alleged absence of supporting documents. 21 Secondly, he points out that it was not until the memorandum of 13 November 1991 from the Staff Regulations and Personnel Administration Department that the Parliament asked him for the invoices proving the actual education costs of his son' s apprenticeship and that, as a result of the memorandum, he sent a statement of the costs to the Parliament on 3 December 1991. 22 With regard to consistency between the complaint and the application, the applicant points out that originally the Parliament had clearly indicated that the refusal of the education allowance was due entirely to the vocational nature of his son' s training. Therefore this was the only ground against which he was able to direct his complaint. It was only at the stage of the decision rejecting the complaint that the Parliament first raised the absence of proof of the actual education costs. 23 The applicant concludes that it is admissible for him to answer, in his application to the Court, the argument of which he did not become aware until the decision rejecting his complaint. Findings of the Court 24 The Court finds that the Parliament accepts that, before the decision rejecting the complaint, it had never raised any grounds other than the type of training pursued by the applicant' s son for refusing the education allowance. Therefore the Parliament led the applicant to believe that the sole ground for rejecting his application was the type of educational training being undertaken by his son. 25 It follows that the Parliament is not justified in contesting the admissibility of the present application by claiming that it is based on new submissions in comparison with the substance of the complaint, such as those relating to the applicant' s denial that he has an obligation to prove his son' s actual education costs. 26 As regards the question whether the applicant has a right of action since he did not submit proof of the actual education costs that he had to incur, this cannot be separated from the question whether he had to prove those costs or whether he could take advantage of the standard-rate arrangement laid down by the general implementing provisions relating to the grant of the education allowance adopted by the Parliament (hereinafter "the general provisions"). This is a question of substance. For that reason the question of the applicant' s right of action is inseparable from an examination of the substance of the case. 27 The application must therefore be declared admissible. Substance 28 In support of his application, the applicant relies on two submissions, one alleging infringement of Articles 2 and 3 of Annex VII to the Staff Regulations and the second alleging infringement of Article 25 of the Staff Regulations. Furthermore, and to the extent necessary, he contends that the general provisions are unlawful in so far as they require educational training consisting of a minimum number of hours of theoretical instruction. 29 The first paragraph of Article 3 of Annex VII provides that an education allowance is to be granted "for each dependent child, within the meaning of Article 2(2) [of Annex VII to the Staff Regulations], who is in regular full-time attendance at an educational establishment". Pursuant to Article 2(3)(b) of Annex VII to the Staff Regulations, the dependent child allowance is to be granted "for children between eighteen and twenty-six who are receiving educational or vocational training". Alleged infringement of Articles 2 and 3 of Annex VII to the Staff Regulations Arguments of the parties 30 The applicant observes that the Parliament has resumed payment of the dependent child allowance. It has therefore accepted that his son is receiving educational or vocational training. That is in fact the case because, according to the applicant, his son is under a contract of apprenticeship in floriculture recognized by the competent Belgian authorities and is therefore following a regular full-time course of vocational training including, in addition to practical training, general and scientific theoretical instruction. 31 In so far as it refers to "an educational establishment", the first paragraph of Article 3 of Annex VII makes no distinction between educational establishments providing educational training and those providing vocational training. 32 The applicant therefore considers that, as his son is taking vocational training at an educational establishment, he is entitled to the education allowance provided for in the first paragraph of Article 3 of Annex VII. 33 The applicant relies on the judgment of the Court of Justice in Case C-149/90 Costacurta v Commission [1991] ECR I-5463 in contending that the only condition laid down in Article 3 of Annex VII to the Staff Regulations is that the child for whom the education allowance is claimed is in "regular and full-time attendance at an educational establishment", even if part of the training takes place outside that establishment. 34 He also submits that the Parliament cannot object that he did not produce proof of the education costs actually incurred with his application for the education allowance. In this connection he points out that the Parliament waited until the reply to the complaint before raising this question and that it waited until 13 November 1991 that is after the end of the academic year in question, before asking him to produce proof. He adds that the Parliament agreed that, in the interviews with him in February, it had not raised the question of proof. Furthermore, he has produced proof of the costs which he has actually incurred for his son. 35 The applicant finally states that he had no obligation to produce such proof as he was entitled to receive the standard rate laid down in the general provisions and the Parliament could not refuse this on the ground that his son was receiving vocational training. 36 The Parliament replies that it is clear from the wording of the contract of apprenticeship and from the relevant legislative provisions that the applicant' s son is receiving full-time vocational training, consisting of a practical part (of approximately 31 hours per week) and a theoretical part (of 8 hours 45 minutes per week). The Parliament refuses to accept that the provision of theoretical instruction can convert vocational training into educational training. 37 The Parliament considers that the vocational nature of the training received by the applicant' s son prevents the grant of an educational allowance to the applicant. The first paragraph of Article 3 of Annex VII should in fact be interpreted in the light of the distinction in Article 2(3)(b) between educational training and vocational training. The "educational" allowance (allocation "scolaire") is payable only in respect of "educational" training (formation "scolaire") within the meaning of Article 2(3)(b) received on a regular, full-time basis at an educational establishment (établissement d' enseignement) which is necessarily "educational" ("scolaire"). 38 The Parliament justifies this interpretation by observing that educational training is characterized by attendance at an educational establishment (établissement d' enseignement) of an educational type (type scolaire) and does not normally give rise to payment from the State for the benefit of the child' s family. Otherwise it is necessary to apply Article 67(2) of the Staff Regulations, which provides that officials in receipt of family allowances are to declare allowances of like nature paid from other sources and that such latter allowances are to be deducted from those paid under Articles 1, 2 and 3 of Annex VII (see judgment of the Court of First Instance in Case T-117/89 Sens v Commission [1990] ECR II-185). An apprenticeship, on the other hand, is characterized by more or less regular attendance at a place of work, possibly supplemented by part-time attendance at an educational establishment of a vocational type, and generally gives rise to remuneration. 39 The Parliament adds that, as the applicant did not produce proof of the actual education costs incurred in respect of his son, he cannot claim the education allowance. The Parliament states that the applicant cannot take advantage of the standard-rate arrangement laid down in the general provisions because this is only for children receiving educational training and not for those receiving vocational training. 40 Lastly, the Parliament states that if it did not mention this point during the administrative procedure, the reason is that it was quite incidental to the principal ground for rejecting the application for the education allowance, namely the vocational nature of the training. Findings of the Court 41 The Court notes at the outset that the Parliament accepts that Laurent Wery is dependent on his father, to whom the dependent child allowance has been granted. It is therefore necessary to examine whether in this case the applicant is also entitled to the education allowance. 42 The Court finds that the Parliament' s arguments rest on the strict distinction between educational training and vocational training in Article 2(3)(b) of Annex VII. The Parliament considers that the two are mutually exclusive and that vocational training cannot therefore give rise to payment of an education allowance. 43 On this point it must be observed that the Court of Justice, in defining "vocational training" within the meaning of Article 128 of the EEC Treaty, considered not only that vocational training and educational training are not mutually exclusive, but also that to a large extent they are the same if the training is provided in an educational establishment. The Court of Justice has held that "any form of education which prepares for a qualification for a particular profession, trade or employment or which provides the necessary training and skills for such a profession, trade or employment is vocational training, whatever the age and the level of training of the pupils or students, and even if the training programme includes an element of general education" (Case 293/83 Gravier v City of Liège [1985] ECR 593, paragraph 30, and Case 24/86 Blaizot v University of Liège [1988] ECR 379, paragraph 24). The Court concluded in the first case that "vocational training" includes courses in strip cartoon art provided by an institute of higher art education" and in the second case that it includes, inter alia, "university studies in veterinary medicine". 44 The Parliament cannot claim that this interpretation renders the distinction in Article 2(3)(b) of Annex VII meaningless. The distinction remains relevant in the sense that it allows payment of the education allowance to be withheld in respect of children for whom the dependent child allowance is paid when they are receiving vocational training not connected with an educational establishment. 45 Therefore, to determine whether in the present case the applicant is entitled to payment of the education allowance in respect of his son' s training, it is necessary to examine whether the training in question in floriculture ° which both parties agree must be described as vocational ° is provided by an educational establishment. 46 On this point it must be observed that the training in floriculture is in three parts comprising general knowledge, theoretical vocational knowledge and practice. Lessons in the first two take eight hours forty-five minutes per week, while the third takes the form of a contract of apprenticeship under which, in this case, the head of the enterprise has undertaken to train the applicant' s son in the trade of floriculturist for a period from 14 March 1990 to 31 July 1992, in accordance with a specific programme approved by the French Community in Belgium. 47 In the first place the Court observes that the first two ° theoretical ° parts of the course of training are provided by the Institut Francophone de Formation Permanente des Classes Moyennes and, secondly, that the contract of apprenticeship was concluded under the auspices of that institution and the supervision of the administration for training of the Ministry for the French Community, and is signed by the Minister' s representative. Article 6 of the contract provides that "the working time shall not exceed 40 hours per week, including hours of instruction". 48 In addition, for certain students of the institution who are younger than the applicant' s son, the training they receive there enables them to satisfy the compulsory schooling requirements to which they are subject under Belgian law. 49 It follows from the foregoing that the Institut Francophone de Formation Permanente des Classes Moyennes, an establishment recognized by the French Community of Belgium ° which, under the Belgian Constitution, is competent in matters of education °, is an educational establishment within the meaning of the first paragraph of Article 3 of Annex VII and that the applicant' s son is receiving educational training there. 50 Under that provision, in order to receive an education allowance, the child in respect of whom it is claimed must not only take a course in an educational establishment but must also be in regular full-time attendance at that establishment. It is therefore necessary to ascertain whether the applicant' s son is in regular full-time attendance at the establishment. 51 In this connection it is clear from the case-law of the Court of Justice and the Court of First Instance that the assimilation of training completed outside an educational establishment to regular full-time attendance at the establishment may be justified, having regard to the purpose of the first paragraph of Article 3 of Annex VII, if it is regarded as an integral part of the programme of instruction laid down by the educational establishment (see the judgment of the Court of First Instance in Joined Cases T-34/89 and T-67/89 Costacurta v Commission, cited above, upheld on appeal by the judgment of the Court of Justice in Case C-149/90, cited above, paragraph 8). 52 In the present case the Court finds that the applicant' s son is in regular full-time attendance at the training course provided by the Institution Francophone de Formation Permanente des Classes Moyennes. 53 Furthermore, in the case of university education leading to a profession, towards the end of the course the essential part of the training is frequently provided, not in the educational institution where the course is being taken, but outside it and under its supervision with professional practitioners. In such cases entitlement to the education allowance is not disputed. 54 Consequently it would be socially unfair to accept that the parents of a university student spending the greater part of his time on in-service training qualify for the education allowance, while those of a student receiving manual training and also spending the greater part of his time in apprenticeship under a training programme provided by an educational establishment do not so qualify. 55 On the question whether the Parliament may base its decision to refuse the education allowance on the ground that the applicant has not produced proof of the actual costs of his son' s education, the Court observes, like the applicant, that the Parliament did not put forward that ground until the stage of rejecting the complaint, when the academic year had ended, and that it was even later, on 13 November 1991, when the Parliament asked the applicant to produce proof of the actual education costs, which the applicant did without delay. Furthermore, the Parliament accepted that this reason for refusing to pay the allowance was secondary compared with the matter of the nature of the training and, at the hearing, the Parliament expressed the wish that "the Court [would] resolve the question of principle" (that is the interpretation of Article 3 of Annex VII), and stated that "the administration of the European Parliament has not had the opportunity to judge the matter" (that is whether the proof produced by the applicant was adequate and appropriate), that "the general provisions cited by the applicant are not appropriate" and that "quite simply, the general provisions could not be applied". 56 It follows that the question of proof of the actual education costs incurred by the applicant for his son must be examined by the Parliament, which will, if necessary, have to decide in the light of the present judgment on how to apply the general provisions in issue to training such as that received by the applicant' s son. 57 On the question whether the monthly allowance paid to the applicant' s son by the head of the enterprise pursuant to Article 3 of the contract of apprenticeship is an allowance "of like nature" to the education allowance within the meaning of Article 67(2) of the Staff Regulations, the Court considers that it should not make an assessment where the administration has not yet done so. This question must be determined by the administration in the light of the information available, subject to review by the Court if necessary. 58 There is all the more reason for that to be the case as neither the applicant nor the Parliament gave their views on that point during the procedure before the Court and also because the Parliament, in its letter of 26 August 1991, touched on the question without even hinting at an answer. The letter reads: "I would remind you that it is for the official to prove that he has incurred "actual education costs" within the meaning of Article 3 of Annex VII to the Staff Regulations. Such proof is all the more necessary in the present case as your son himself receives a monthly allowance in excess of the amount fixed for the education allowance". In its defence (paragraph 8), the Parliament added that "the administration considered that, where an apprenticeship or part thereof could be regarded as giving the right to an education allowance, it would have to decide whether the monthly allowance received by the applicant' s son should be deducted from the said education allowance". 59 It follows from all the foregoing, without there being any need to examine the applicant' s other submissions, that the decision of 4 February 1991 to withdraw as from 1 April 1990 the education allowance in respect of the applicant' s son Laurent and the decision to make deductions from the applicant' s salary for the amounts already paid must be annulled. It will be for the Parliament to draw the appropriate conclusions from such annulment. 60 It follows that the claim for default interest at 8% per annum is premature. Decision on costs Costs 61 Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party' s pleadings. Since the defendant has failed in its submissions, it must be ordered to pay all the costs. Operative part On those grounds, THE COURT OF FIRST INSTANCE (Fifth Chamber) hereby: 1. Annuls the Parliament' s decision of 4 February 1991 to withdraw, as from 1 April 1990, the education allowance which the applicant received in respect of his son Laurent; 2. Annuls the Parliament' s decision to make deductions from the applicant' s salary pursuant to the decision of 4 February 1991; 3. Dismisses the remainder of the application; 4. Orders the Parliament to pay all the costs.

Mr Justice Norris : On 6 April 2005 Anderson Owen Limited ("the Company") was wound up by the court. Mr Merrygold was appointed liquidator. The Company had acted as an insurance intermediary, and had collected commissions when policies were incepted. Those commissions were the subject of "claw back" in the event that the policies lapsed. The business of the Company had been conducted fraudulently, and many of the policies had been taken out purely in order to collect the initial commission. The commissions were distributed by the company to its director and members, so that when the "claw back" obligations arose the Company was insolvent. Philip Bates was the director of the Company: and he has been convicted of fraudulent trading. Nicole Bates ("Mrs Bates") was the company secretary (and also a person authorised by the FSA to conduct the business of the Company). In December 2008 the liquidator commenced proceedings against Mrs Bates seeking a declaration pursuant to section 212 of the Insolvency Act 1986 ("IA 1986") that as an officer of the Company she had been guilty of misfeasance and/or breach of fiduciary duty and/or a duty to act in the interests of the Company in causing the Company to make a number of payments from 3 November 2003 to 13 August 2004 totalling over £1 million into the personal account of Mr Bates in Jersey. The Originating Application went on to allege, secondly, that Mrs Bates had beneficially received the Company's money (which was traceable). Specific payments were identified. Two payments of (£216,000 and of £500,112) were said to have been paid into Mrs Bates's Commerz Bank account: and a cheque for £450,000 was said to have been drawn upon an account in Monaco in favour of Mrs Bates. Whether any of these transactions represents an improper dealing with monies which belonged to the Company (or whether they represent the payment to Mrs Bates of the proceeds of sale of other assets which belonged personally to her) remains to be determined. I am simply describing the claim brought by Mr Merrygold against her. Mrs Bates lives in Germany. Mr Merrygold's originating application seeking relief under section 212 IA 1986 and in respect of breaches of fiduciary duty were "insolvency proceedings" within the meaning of Rule 13.7 of the Insolvency Rules 1986 ("IR"). By IR 12.12(1) "CPR Part 6 paragraphs 6.17 to 6.35 (service of process etc out of the jurisdiction)" do not apply in insolvency proceedings. Instead by IR 12.12(3):- "Where for the purposes of insolvency proceedings any process…is required to be served on a person who is not in England and Wales, the court may order service to be effected within such time, on such person, at such place and in such manner as it thinks fit…". It was established in Re Busytoday Limited [1992] 1 WLR 683 that the discretion granted by these words was so wide that the court was not obliged to order that service abroad must be in accordance with local law. On 13 November 2008 Regulation (EC) No. 1393/2007 ("the Service Regulation") took effect. On 10 December 2008 Chief Registrar Baister made an Order pursuant to IR 12.12(3) giving the liquidator permission to serve, by post, a sealed copy of the section 212 application on Mrs Bates in Germany. Service by that means would not have been good service according to German law: nor would it have complied with the provisions of the Service Regulation. Mrs Bates had previously retained the firm of Russell Jones & Walker as her English solicitors: but on 9 December 2008 they informed the liquidator that they had been unable to make contact with Mrs Bates and did not consider that they were still instructed by her. Mrs Bates had, however, also retained a firm of German lawyers ("Vogel"). On 22 December 2008 the liquidator's solicitors contacted Vogel, informed them of the permission that had been granted by the Chief Registrar, and requested that they be informed if the proceedings should be served on the German lawyers rather than Mrs Bates personally. To this they received the immediate response:- "We represent Mrs Nicole Bates. Any contact simply to our office." Vogel would appear to have made contact with Mrs Bates concerning this exchange, for the following day two communications occurred. First, Mrs Bates contacted the liquidator's solicitors to convey a request "that ALL correspondence goes directly and only to him…he is my main lawyer and acting for me in ALL countries…". Second, the liquidator's solicitors made a direct request to Mrs Bates for confirmation that Vogel had authority to accept service of proceedings on her behalf. Mrs Bates immediately responded "Yes of course he has". Accordingly on 23 December 2008 the liquidator's solicitors wrote to Vogel enclosing "by way of service" the liquidator's section 212 application. That same day the liquidator's solicitors also wrote to Mrs Bates enclosing "by way of service a further copy of the application", explaining that was in compliance with the order of the Chief Registrar. On 20 January 2009 Vogel wrote to the liquidator's solicitors to say that they "cannot accept receipt of the order" because they "cannot act for her before the British courts", and that they had advised her to instruct English solicitors. The first hearing of the section 212 application was listed before Registrar Derrett for hearing on 5 February 2009. The preceding day Messrs Woodfines wrote to the liquidator's solicitors to say that they had been instructed by Mrs Bates and that they "[did] not accept that service of the proceedings is valid or that Mrs Bates has submitted to the jurisdiction of the High Court". They also disputed that Vogel were authorised to accept service of the proceedings on behalf of Mrs Bates, on the basis that she had no understanding of the legal concept of "service" and could not therefore give informed consent. Woodfines did not attend (and Mrs Bates was not represented at) the hearing on 5 February 2009. At that hearing the Registrar ordered that Mrs Bates issue any application to challenge the service of the application (if so advised) by 4:00pm on 19 February 2009 and gave detailed case management directions I the event that no such application was issued (beginning with service of a Defence by 19 March 2009). This timetable had been agreed with Woodfines who had indicated that in agreeing joint directions Mrs Bates "did not concede jurisdiction". No application relating to service of the proceedings was issued by 16 February 2009. Mrs Bates disinstructed Woodfines. On 16 March 2009 Messrs George Davies, solicitors, wrote to the liquidator's solicitors to say that they had now been instructed by Mrs Bates, and that they had a copy of the Order of 5 February 2009. They noted that the Defence was due on 19 March and requested that time for service be extended by four weeks until 16 April. This was agreed. On 6 April 2009 (no extension of time having been previously obtained by agreement or by order) Mrs Bates issued the application now before me for an order that service be set aside and that the Chief Registrar's order also be set aside. This application came before the court on 27 May 2009 and was (at the request of Mrs Bates) adjourned. On 10 June 2009 notice was given by the court that the further hearing would be on 27 October 2009. On 22 October 2009 Messrs George Davies came off the record as acting for Mrs Bates (though there are hints in the correspondence that the process began on 2 October). Mrs Bates has thereafter been e-mailing the Court directly saying that the hearing must be postponed because she cannot argue any of the issues, is not a lawyer, and cannot make travel or child care arrangements at less than 14 days notice. In the course of the e-mails she does, however, say that she is as keen as the liquidator to sort the matter out, that she wants it resolved, and that she would appreciate it if the court could "take the view to end this matter in maybe one hearing and finally close the subject". The first question to be addressed is whether in the face of Mrs Bates's e-mails and her non-attendance at this hearing I should simply adjourn it and hope that the Court can find another date convenient to the parties in perhaps three months. This question must be approached from the standpoint of the interests of justice, that is to say, seeking to strike a fair balance between the interests of Mrs Bates, the interests of the liquidator (and the creditors whom he represents) and (not to be overlooked) the interests of the administration of justice. I articulate the principle upon which I am acting because it is important that litigants should not assume that if (shortly before a hearing) they part company with their legal representatives and decide to conduct the matter themselves (or indeed instruct a new legal team) they will obtain a postponement of the hearing almost as of course. Invariably the questions raised by those events are difficult. I have decided that I should not adjourn the application, but nor should I simply dismiss the application on the grounds that Mrs Bates has not appeared through a representative or personally to argue it. I consider that I should deal with the application on its merits, but that I should provide Mrs Bates with a limited opportunity (at her own risk in costs) to apply to the High Court to review, rescind or vary any order I make. I consider this a fair answer to the problem posed for the following reasons:- (a) This is Mrs Bates's application and the liquidator is entitled to require her to deal with it: (b) The application relates to an order that was made as long ago as 10 December 2008: (c) The application was itself brought out of time and has already been adjourned once: (d) Until the application is dealt with the section 212 application cannot be addressed, and that relates in part to events that occurred in 2004 and which ought to be examined sooner rather than later: (e) The application has been carefully prepared with evidence filed on behalf of Mrs Bates setting out the considerations she and her advisers consider relevant and I have already read the entirety of that material: (f) Delay is not only unacceptable to the liquidator and to the court but also (apparently) to Mrs Bates herself: (g) This hearing has been fixed since 10 June 2009 and the parting of the ways between client and solicitor so shortly before the hearing cannot have occurred without an appreciation of the disruption it would cause, and the party that caused the disruption must be ready to take the consequences: (h) Having regard to the nature of the question to be answered (which goes to the effectiveness of service and not to the existence of jurisdiction) it would be unfair to other litigants to devote any more court resources to it: (i) I can provide Mrs Bates with an opportunity for a review of my decision (falling short of an appeal) if she thinks I have gone seriously wrong in my appreciation of her case: but anyone considering such an application would have to think carefully about whether it was justified and about the costs consequences of bringing an unjustified application. I therefore turn to consider Mrs's Bates application. The first question is whether the order of Chief Registrar ought (whatever its legal merit) to be set aside on procedural grounds. Mrs Bates says that the order was obtained by means of material non disclosure. It is common ground that the liquidator did not draw to the attention of the Chief Registrar that the proceedings which it was intended should be served on Mrs Bates were, in fact, the second set of proceedings. There had been an earlier claim issued in support of an application for a freezing injunction against Mrs Bates. Such an order was granted but, at an inter partes hearing before Mr Justice Mann, was discharged. The basis of that application was that Mrs Bates was the company secretary and that it could be established that she had signed nineteen proposal forms for insurance policies that yielded £49,000 worth of commission, all of the policies having lapsed and none of the commission having been repaid. It was said that those two facts raised an inference that she was connected with the rest of the fraud and supported a freezing order in a sum of £950,000. Mr Justice Mann pointed out that that was not a summary of the case which appeared particularly cleanly anywhere in the material before the Court and that "it seems to me that when put forward in that way it is a weak case". Mrs Bates says that the underlying merits of the claim are an extremely important consideration for the Court in exercising its discretion as to whether to permit service abroad, and that the observation of Mr Justice Mann should have been brought to the attention of the Chief Registrar. She says that the Chief Registrar ought also to have been informed of the view of the Serious Fraud Office (in fact expressed in a document dated 5 February 2009 and so well after the hearing before the Chief Registrar) that an account held in Mont Carlo and belonging to an off shore company called Acorn Commercial Ventures Limited ("Acorn") contained a significant sum that could be shown to be directly derived from the Company, and that that is where the money can be traced to. (It is from that Acorn account that £450,000 was transferred to Mrs Bates). Further, Mrs Bates says the Chief Registrar was not told that her costs of the 2007 proceedings had not been paid. I am satisfied that there was no material non disclosure. The Chief Registrar did not have to enter into a detailed consideration of the merits of the claim. He was obliged to ask himself whether there was a real issue between the liquidator and Mrs Bates which a Court might reasonably be asked to try i.e. a claim that was properly arguable: Re: Howard Holdings Inc. [1998] BCC 549 at 553H. He was therefore bound to consider the present section 212 application. This advances a different case from that advanced in the first proceedings. In particular, a key part of the present proceedings is that Mrs Bates caused or procured or permitted or acquiesced in transfers of money into accounts of which she was the sole or joint holder (in particular that at Commerz Bank), and specific transfers are identified. The insurance policies signed in blank do not feature. The sums now claimed far exceed recovery of the commissions relating to those policies. There was no obligation to draw to the attention of the Chief Registrar the observations of Mr Justice Mann upon a different case. Nor would there have been an obligation to draw to the Chief Registrar the (as then unexpressed) views of the SFO about the money in the Acorn account. The fact that there is a significant sum in the Acorn account which might belong to the company does not mean that transfers out of the Acorn account into Mrs Bates's Commerz Bank account are somehow "untraceable". That is especially so where the SFO's views were actually expressed in the context of meeting a claim by Mr Bates that the money now in the Acorn account was not company money but belonged to his children. The point about non-payment of costs seems simply to have been wrong. I hold there was no material non-disclosure. The next issue for decision is whether the Chief Registrar was correct in law when he made the order for service that he did. The solicitors for Mrs Bates have in evidence submitted that the provisions of the Service Regulation apply to all "civil and commercial matters where a judicial…document has to be transmitted from one member state to another for service there". Direct service of the English proceedings by the liquidator's solicitors upon Mrs Bates using the postal system would not (it is submitted) have complied with the provisions of the Service Regulation: and so the Chief Registrar's order must be set aside as being incorrect in law. Confronted by a non-attending litigant in person, Counsel for the liquidator took the tactical decision to accept (for the purposes of the hearing before me) that this argument was correct. I shall decide the application on that basis. But I will express the view that I do not think the position taken by Mrs Bates is necessarily correct. Because the point has not been argued before me nor debated in academic context (other than in two or three articles) I will simply state the reasons why I am unwilling to accept, without qualification, the correctness of the point taken by Mrs Bates. 20. (a) I think the terms of the Service Regulation cannot be read in isolation (as Mrs Bates' advisers seek to do) but have to be read alongside those of Council Regulation (EC) 1346/2000 ("the Insolvency Regulation"). (b) The Insolvency Regulation provides that it is the law of the State which opens the insolvency proceedings which governs their conduct: this would suggest that it is the Insolvency Rules 1986 that govern the conduct of "insolvency proceedings" within the Insolvency Regulation. "Conduct" would include rules as to service. (c) Since the Service Regulation has direct application then it is necessary to identify what proceedings are "insolvency proceedings" for the purposes of the Insolvency Regulation and what proceedings are "civil and commercial proceedings" for the purposes of the Service Regulation. (d) In considering how the Insolvency Regulation, the Service Regulation and the Insolvency Rules 1986 all fit together the words "insolvency proceedings" may well not bear the same meaning in the Insolvency Regulation and in the Insolvency Rules 1986. This may well mean that some proceedings which are "insolvency proceedings" for the purposes of the Insolvency Rules 1986 are also such for the purposes of the Insolvency Regulation, whereas others are "civil and commercial proceedings" within the Service Regulation. (e) I would not regard the concession made by counsel for the liquidator for the purposes of the present hearing as being binding at the hearing any application to review the order I am going to make. If I proceed on the footing that the provisions Service Regulation do apply to the service of the section 212 proceedings on Mrs Bates in Germany (so that the service of the proceedings on Mrs Bates pursuant to the Chief Registrar's order was not in accordance with the Service Regulation) the question then arises whether it should be set aside. Mrs Bates's solicitors submit that it must be. The liquidator's solicitors rely on IR 7.55 which provides:- "No insolvency proceedings shall be invalidated by any formal defect or any irregularity, unless the court before which objection is made considers that substantial injustice has been caused by the defect or irregularity, and that the injustice cannot be remedied by any order of the court". In my judgment defective service is within the scope of this rule. The essential purpose of rules as to service is to ensure that a party has proper notice of proceedings brought and a fair opportunity to deal with them. Of course, they might also have significance in other contexts e.g. in founding jurisdiction or enabling a claim to be brought within a limitation period. Whether the court should insist upon strict compliance with them will be influenced by all such considerations: and guidance as to how to weigh them can be found in CPR 3.10. The evidence of Mrs Bates contains the submission that the Court should not permit service other than in accordance with the Service Directive without good reason, relying upon Knauf UK v British Gypsum [2002] 1 WLR 907. This concerned an application under CPR 6.8 for permission to effect service by "an alternative method" with the object of commencing proceedings against a German company by serving its London solicitors. The object was to commence English proceedings which would have priority over any subsequent German proceedings under Article 21 of Brussels Convention. This was later described in Phillips v Symes [2008] UKHL1 at paragraph 39 as "a naked attempt to use CPR Rule 6.8 to subvert the Brussels Convention". Unsurprisingly it failed. This is not such a case. The Chief Registrar was not asked to make an order so that the liquidator could grab jurisdiction: the Chief Registrar was asked to make an order so that proceedings properly commenced here could be progressed. In Phillips v Symes (supra) itself the question was whether the English court was "first seised", which in turn depended upon whether service in Switzerland had been effective. The papers were not in order because the claim form had been removed from the packet. The House of Lords addressed the question whether CPR Rule 3.10 enabled the court to determine that the documents actually served constituted sufficient service. Lord Brown of Eaton-Under-Heywood (with whom the other members of the House agreed) was of opinion that CPR 3.10 might well enable the court to order (on the facts of that case) that service had been effective, notwithstanding that it was not strictly in compliance with the Rules: and he considered that "The Golden Mariner" [1990] 2 Ll. Rep. 215 stood as authority for that proposition. In discharge of her duty to the Court Counsel for the liquidator drew to my attention a note at page 353 of the White Book to the effect that CPR Rule 3.10 should not be used retrospectively to cure a method of service which was defective under the law of the state where service was effected: but the authority for that proposition is the decision at first instance in Olafsson [2006] EWHC 3162 whereas that decision was reversed on appeal (see [2008] EWCA Civ 152). In my judgment nothing in that guidance indicates that the curative power conferred by IR 7.55 is not capable of being exercised so as to treat as valid service which was technically defective. The mode of service upon Mrs Bates was (on the footing that the Service Regulation applied to these proceedings) formally defective and irregular but I do not consider that it occasioned any substantial injustice, and such difficulty as it did occasion is capable of remedy by an order of the Court. These are my reasons for that view:- (a) The purpose of service was not to "grab" jurisdiction or the like, but was purely to bring to the attention of Mrs Bates the claim that was being brought against her: (b) The assumed defect can only have arisen from an error in categorisation, as to whether the claim fell within the Insolvency Regulation (as it was assumed to do, being "insolvency proceedings" for the purposes of the Insolvency Rules 1986) or within the Service Regulation (because the claim fell outside the definition of "insolvency proceedings" for the purposes of the Insolvency Regulation) – a question on which the rules, the precedents and the books provide no clear guidance: (c) The liquidator not only did as he was directed to do by the court and served Mrs Bates, but he also did as he was requested to do by Mrs Bates and served her German lawyers: (d) There is no doubt that what was done was actually effective to inform Mrs Bates of the existence and nature of the claim against her (for she was enabled to instruct English solicitors who have themselves been able to analyse the claim and assemble material which they say undermines it): (e) It is true that the documents served did not include any German translation and that Mrs Bates now asserts that this causes difficulty, but as against that (i) there has never been a request for a German translation, or any statement that it was fundamental to the presentation of any defence: (ii) the evidence includes at least one example of Mrs Bates translating a German legal letter into English: (iii) Mrs Bates was the company secretary of an English company, was authorised by the FSA to conduct insurance business, and told the FSA that she was in charge of an independent financial advisor's office, and it is not to be presumed that she took upon herself these roles without a sufficient facility with the English language competently to perform them: (f) To require re-service in accordance with the Service Regulation would secure no practical advantage and would incur extra cost and occasion further delay (delay which Mrs Bates herself does not want). There is a further reason for treating what was done as effective service, which operates both as an additional factor under IR 7.55 and itself provides a free-standing ground. I consider that Mrs Bates has really waived the right to complain about the mode of service. Guidance as to the correct test to apply in assessing whether any particular conduct amounts to a submission to the jurisdiction can be found in the judgment of the Chancellor in Global Multi Media International Limited v Ara Media Services [2006] EWHC 3107 at paragraph 27. The Chancellor there adopts the standard of whether a disinterested bystander with knowledge of the case would have regarded acts of the defendant as inconsistent with making and maintaining a challenge to the jurisdiction and holds:- "The test to be applied is an objective one and what must be determined is whether the only possible explanation for the conduct relied on is an intention on the part of the defendant to have the case tried in England". I find such conduct on the part of Mrs Bates in this case. Whilst she was instructing Messrs Woodfines she secured the opportunity to make an application to challenge service upon her, and the Court made directions as to the conduct of the case in the event that no such challenge was mounted. The mere agreement upon directions in default of an application challenging service plainly did not amount to a waiver of the right to make the application. By the time Messrs George Davies were instructed Mrs Bates no longer had the right of challenge which the order of 5 February 2009 had granted to her, and there were in force directions made by Court order for the conduct of the case. Messrs George Davies applied for an extension of time to serve the Defence. They then agreed further consequential variations to the timetable. They then agreed that the liquidator's solicitors could attend at the listing office on 7 April on behalf of both parties to set the matter down for trial. This conduct (when coupled with Mrs Bates's failure to exercise her right to challenge in accordance with the order of 5 February) is to my mind, on an objective analysis, consistent only with an intention as at 31 March 2009 to have the case proceed to trial and not to make or maintain a challenge that service had been ineffective. I hold that this conduct amounts to a waiver of the right to take the point about service (and on that ground Mrs Bates's application ought to be dismissed): or alternatively, that the conduct is a significant factor to be taken into account in assessing how to apply IR 7.55 and it (together with the other factors enumerated above) means that IR 7.55 should be applied in a way which validates the service on Mrs Bates and on Vogel in January 2009. For these reasons I would dismiss the application. So that the dismissal of the application and the recognition of effective service in January 2009 do not occasion any injustice to Mrs Bates I would extend the time for service of her Defence (which is now of time) until 4:00pm on 14 December 2009. The liquidator should serve any Reply by 4:00pm on 11 January 2010, with disclosure taking place no later than 28 January 2010. There shall be consequential amendments to the other dates set out in the order of 5 February 2009. I have specifically mentioned disclosure because I believe that an open and whole hearted discharge of disclosure obligations (without procedural wrangling and before the expense of preparation of witness statements) is likely to lead to an economic, expeditious and just disposal of the case. What is needed is complete disclosure of the relevant company banking documents (mandates, cheques, transfer instructions and relevant statements), and equivalent disclosure by Mrs Bates of the Jersey joint and sole Woolwich accounts, the Acorn account in Monaco, and her Commerz Bank account in Germany. It is analysis of this material by accountants that is likely to enable a conclusion to be drawn whether the sums which arrived in Mrs Bates's bank accounts are the traceable proceeds of company money or are the proceeds of sale of her own assets according to the rules of following or tracing. (In expressing that view I have of course formed no view on the substantive issues in the action and fully recognise that a tracing claim is not the only claim advanced by the liquidator, and that Mrs Bates' claim to ownership is by no means the only response open to her). I therefore propose:- (a) To dismiss Mrs Bates's application: (b) To declare pursuant to IR 7.55 that service upon Mrs Bates in January 2009 was effective: (c) To extend the time for service of her Defence (and adjust the consequential timings) in the manner indicated: (d) To order that (without prejudice to the liquidator's right to claim unrecovered costs as costs in the liquidation) the costs of and occasioned by Mrs Bates's application shall be the liquidator's costs in the section 212 proceedings (so that if the liquidator succeeds in the section 212 proceedings, then he is entitled to his costs of this present application, but not otherwise: and Mrs Bates shall not be entitled to her costs in any circumstances): (e) To direct that Mrs Bates has permission to apply under IR 7.47 to rescind or vary this order provided that such application is made by 4:00pm 27 November 2009 and that the making of such an application shall not operate as a stay on the procedural directions contained in this order. This judgment will be formally handed down at 10.00am on 11 November 2009. I do not expect any attendance. Arrangements will be made to e-mail a copy to Mrs Bates. Mr Justice Norris…………………………………………………...11 November 2009

S. Singhvi, J. Although, the prayers made in this petition filed under Article 32 of the Constitution are for quashing order dated 24.4.2011 passed by the Committee companystituted by the Chairman of the Council of States Rajya Sabha under Section 3 2 of the Judges Inquiry Act, 1968 for short, the Act and for grant of a declaration that the proceedings companyducted by the Committee on 24.4.2011 are null and void, the tenor of the grounds on which these prayers are founded shows that the petitioner is also aggrieved by the inclusion of respondent No.3-Shri P.P. Rao, Senior Advocate, Supreme Court of India in the Committee under Section 3 2 c of the Act. Fifty members of the Rajya Sabha submitted a numberice of motion for presenting an address to the President of India for removal of the petitioner, who was then posted as Chief Justice of the Karnataka High Court, under Article 217 read with Article 124 4 of the Constitution of India. The numberice enumerated the acts of misbehaviour allegedly companymitted by the petitioner and was accompanied by an explanatory numbere and documents in support of the allegations. After the motion was admitted, the Chairman of the Rajya Sabha hereinafter referred to as, the Chairman companystituted a Committee companyprising Mr. Justice V.S. Sirpurkar, Judge, Supreme Court of India, Mr. Justice A.R. Dave, the then Chief Justice of Andhra Pradesh High Court and respondent No.3. Immediately after issue of numberification dated 15.1.2010 under Section 3 2 of the Act, the newspapers carried reports suggesting that there was an objection to the inclusion of respondent No.3 in the Committee on the ground that he had given legal opinion to the petitioner in December, 2009. On reading the newspaper reports, respondent No.3 sent letter dated 19.1.2010 to the Chairman with the request that he may be relieved from the Committee. Paragraph 2 of that letter reads as under Although, there is numberconflict of duty and interest, as I did number render any professional service to him, there is a demand from certain quarters for my recusal which you might have numbericed in todays Hindustan Times. I am sure you will appreciate that justice should number only be done but also seen to be done. Even though I have numberofficial companymunication as yet about my numberination, it will number be proper for me to function as a member of the Committee in the fact of such objection. I request you to kindly relieve me forthwith and numberinate another jurist in my place and oblige. After due companysideration, the Chairman declined to accept the request of respondent No.3 and asked him to companytinue as member of the Committee. Thereupon, respondent No.3 sent letter dated 21.1.2010 and agreed to accept the assignment. On that very day, Convenor of the Campaign for Judicial Accountability and Reform sent a letter to the Vice-President wherein a demand was made in the garb of making suggestion that Mr. Justice V.S. Sirpurkar should recuse from the Committee because he had association with the petitioner as a Judge of the Madras High Court from 1997 to 2003. Similar suggestion-cum-demand was made qua respondent No.3 by stating that the petitioner had companysulted respondent No.3 and the latter had advised him to get a companymission of inquiry appointed to go into the charges. On being instructed by the Chairman, the Secretary General of the Rajya Sabha forwarded a companyy of the aforesaid letter to respondent No.3. In his response dated 27.1.2010, respondent No.3 detailed the background in which the petitioner had met him on 6.12.2009 and what transpired between them. The relevant paragraphs of that letter read as under I would like to place on record as to why Chief Justice Dinakaran met me at my residence with prior appointment on Sunday, the 6th December, 2009 at 0230 p.m. On Saturday, 28 Nov 09, there was a day-long National Seminar organized by The Bar Association of India under the Presidentship of Shri S. Nariman to discuss the problems of the Judiciary, in which the Honble Law Minister also participated briefly in the inaugural session. I am one of the Vice-Presidents. In the companyrse of my speech, I demanded that the Collegium should number proceed further with the recommendation to bring Chief Justice D. Dinakaran to the Supreme Court and there should be a public inquiry in which Chief Justice Dinkaran should clear himself of the charges levelled against by senior members of the Bar and during the inquiry, he should step down from his office and remain on leave. Many eminent members of the Bar including two former Attorney Generals for India namely, Shri Soli J. Sorabjee and Shri Ashok Desai, a former President of International Bar Association namely Shri RKP Shankar Dass and a former President of Law Asia namely, Shri Anil Divan, who participated in the seminar expressed the same view. Finally, on the request of the President of Bar Association of India, I drafted the Resolution which was touched up by him before it was passed unanimously by the members present. The speeches made at the seminar, including mine, were reported in the media. In the following week, Chief Justice Dinakaran visited Delhi, presumably to meet the Chief Justice of India, members of the Collegium and others. While in Delhi, he telephoned to me saying that he was surprised that I too believed that he was guilty of the charges levelled against him and he would like to meet me personally. When the Chief Justice of a High Court seeks appointment, it would be improper for any member of the legal profession to refuse it. When he met me on December 06, 2009 I told him that when serious allegations had been made against him by senior members of the Bar practicing at Chennai, Bangalore and Delhi, it was proper that there should be a public inquiry. When he said that he was totally innocent and he companyld companyvince me about it, I told him politely that he has to companyvince those who made the allegations on some basis and that will be possible only in a public inquiry. It was then I suggested that if he was innocent, he should himself invite an inquiry under the Commissions of Inquiry Act, 1952 and offer to proceed on leave during the Inquiry. There was neither companysultation on the merits of the charges number any opinion sought or given. He did number seek my professional services for his case. The matter ended there. What I told him in private when he met me at my residence was numberhing but what I had earlier demanded in public at the seminar. There is absolutely numberquestion of companyflict of interest and duty in such a case. When the Honble Chairman of Rajya Sabha, after due companysideration of my offer to quit, requested me to companytinue, I accepted the request most respectfully as it is a call to public duty from numberless a person than the Vice-President of India, which I shall number shirk. On 12.5.2010, the petitioner suo moto sent a letter to the Vice- President of India and Chairman, Rajya Sabha stating therein that through print and electronic media he had companye to know about companystitution of the Committee under Section 3 2 of the Act. The petitioner claimed that the allegations levelled against him were false and baseless. He expressed anguish on being prevented from performing his judicial work and prayed that the inquiry initiated against him may be companypleted expeditiously and his grievance be redressed at the earliest. For the sake of reference, letter dated 12.5.2010 is reproduced below 12th May, 2010 The Honble Vice President of India and Chairman, Rajya Sabha Parliament New Delhi Your Excellency, May I take this opportunity to present this supplication for kind companysideration of Your Excellency. Even though I have learnt through print and electronic media that an impeachment motion has been moved against me under Article 217 read with 124 4 of the Constitution of India before the Rajya Sabha by 75 Honble Members of Parliament, as on date, I have number received any official companymunication whatsoever in this regard till date. I have also learnt through print and electronic media that a Committee, as companytemplated under Section 3 b of The Judges Inquiry Act, 1968, has been companystituted by Your Excellency companysisting of Honble Mr. Justice V.S. Sirpurkar, Judge, Supreme Court of India Honble Mr. Justice A.R. Dave, the then Chief Justice, Andhra Pradesh High Court and Mr. P.P. Rao, Senior Advocate, Jurist, in January, 2010, but till date I have number officially heard anything in this companynection to enable me to explain my case. Now that Mr. Justice A.R. Dave is elevated to the Supreme Court of India, the Committee requires to be reconstituted. In the meanwhile, the print and electronic media had given wild publicity about the allegations made against me, causing irreparable damage to me and to my family personally and to the companystitutional position I am holding. All the allegations are made with an ulterior motive to stall my elevation to the Supreme Court, when the Honble companylegium of the Supreme Court recommended my name for elevating me to Supreme Court. It appears that Honble Rajya Sabha Members have been misled by the reports of the District Collector, Thiruvallur, State of Tamil Nadu dated 8th, 10th and 15th October, 2009 stating that myself and my wife have encroached 199.53 acres of lands at Kaverirajapuram, Tiruttani Taluk, Thiruvallur District, State of Tamil Nadu. As the said reports of the District Collector were specifically denied by me as baseless, the matter was referred to a Committee under the Chairmanship of Major General Dr. Siva Kumar, Survey of India, Department of Science and Technology, who, ultimately on 15th February, 2010, produced a survey map to my wife, Dr. K.M. Vinodhini Dinakaran, holding that there is numberencroachment of any government public lands either by me or by my wife. All the allegations leveled against me are false and baseless. Myself and my family members are humiliated and put into great hardship by the vested interest persons and I have been prevented to discharge my obligations under the companystitution to perform the judicial work, pending enquiry by the Committee. But, the enquiry is yet to companymence. Your Excellency may kindly appreciate that the enquiry initiated against me cannot be an endless wait. Having patiently waited all these days for an opportunity to explain my case that the allegations are baseless and there is numbermaterial and merit whatsoever, I earnestly request Your Excellency to do the needful, so that, my genuine grievance may kindly be redressed at the earliest and justice be rendered to me expeditiously. With kind regards, Yours sincerely, Sd - D. Dinakaran emphasis supplied In the meanwhile, Mr. Justice A.R. Dave, Chief Justice of the Andhra Pradesh High Court, was transferred to the Bombay High Court and was then elevated as Judge of this Court and in his place Mr. Justice J.S. Khehar, Chief Justice of the Uttarakhand High Court was included in the Committee. In September, 2010, Mr. Justice Aftab Alam, Judge, Supreme Court of India was appointed as Presiding Officer because Mr. Justice V.S. Sirpurkar recused from the Committee. After about two months of the aforesaid development, the petitioners wife, Dr. Mrs. K.M. Vinodhini Dinakaran, sent letter dated 27.11.2010 to the Presiding Officer and the members of the Committee with the request that investigation into the allegations levelled against her husband should be got done through unbiased officials. This request was made in the companytext of some inquiry having been made by Mr. Govindswamy, Village Administrative Officer, Kaverirajapuram Village, Tiruttani Taluk and Mr. Veeraraghavan, former Tahasildar Tiruttani. She claimed that both the officials were in companylusion with the then District Collector, Mr. Palani Kumar IAS, who was inimical to the petitioner. She requested that the investigating agency should number engage Mr. Govindswamy and Mr. Veeraraghavan because they had already acted with mala fides and bias against her family. After preliminary scrutiny of the material placed before it, which included documents summoned from Government departments and agencies instrumentalities of the State, the Committee issued numberice dated 16.3.2011, which was served upon the petitioner on 23.3.2011, requiring him to appear on 9.4.2011 to answer the charges. The numberice was accompanied by a statement of charges and lists of the documents and witnesses. Upon receiving the numberice, the petitioner submitted representation dated 8.4.2011 to the Vice-President of India and the Chairman, Rajya Sabha with the prayer that the order admitting numberice of motion may be withdrawn, the order companystituting the Inquiry Committee be rescinded and numberice issued by the Committee may be annulled. In that representation, the petitioner, for the first time, raised an objection against the inclusion of respondent No.3 in the Committee by alleging that the latter had already expressed views in the matter and declared him guilty of certain charges. The petitioner claimed that respondent No.3 had led a delegation of the advocates to meet the then Chief Justice of India and was a signatory to the representation made by the senior advocates against his elevation to the Supreme Court. The petitioner further claimed that he felt agitated by the attitude of respondent No.3 because earlier the said respondent had number only appreciated his work but even called upon him to companymunicate his appreciation and also sent companygratulatory message on his name being cleared for elevation to the Supreme Court. The petitioner also stated that he along with his wife and one K. Venkatasubbaraju met respondent No.3 at his residence and, during the meeting, respondent No.3 admitted that he was misled by certain vested interest in signing the representation. Paragraphs 6, 7 and 8 of the letter written by the petitioner are reproduced below Once I came to know that Shri P.P. Rao has led the delegation against me demanding that I should number be elevated, I was agitated by this attitude of Shri P.P. Rao. Earlier Shri P.P. Rao had always appreciated my work on the bench and even called on me to companymunicate the same. When I was a judge of the High Court of Judicature at Madras, Shri P.P. Rao called on me and appreciated my work as Judge. He also paid encomiums for my bold and independent approach. Soon after my name was companysidered and cleared for elevation to the Supreme Court of India Shri P.P. Rao companygratulated me in writing. Therefore, I I was aghast when I learnt about his opposition to my elevation. Shri K. Venkatasubbaraju, an Advocate who is a companymon friend of both of us spoke to Shri P.P. Rao and arranged for a meeting between us. Accordingly, I along with Shri K. Venkatasubbaraju accompanied by my wife called on Shri P.P. Rao at his residence and companyfronted him with the newspaper reports. Shri P.P. Rao admitted that he was misled by certain vested interests in signing the petition against me he even went to the extent of saying that he was forced to sign the petition as an office bearer of the Association. In the light of the said explanation I though it fit to leave the matter at that. In the meanwhile I was shocked to see Shri P.P. Raos name included in the Committee companystituted under the Chairmanship of Honble Mr. Justice V.S. Sirpurkar. Even before I companyld react to that the very same vested interests, who are instrumental in engineering false allegations against me, opposed the companystitution of the said Committee. They took specific objection to the inclusion of Shri P.P. Rao in the Committee while objecting to the appointment of the Chairman. It was on such opposition that Honble Mr. Justice V.S. Sirpurkar resigned as the Chairman of the Committee. Following suit, I expected, keeping in mind Shri P.P. Raos standing and reputation, that Shri P.P. Rao would also quit the Committee. In this background, it is clear that Shri P.P. Rao has already declared me guilty of certain charges on the basis of which he opposed my elevation to Apex Court tooth and nail. It is a travesty of justice that the Judges Inquiry Committee has been so companystituted with the same Shri P.P. Rao as a sitting member of the said Committee. This is opposed to all principles of justice and rule of law. It is, in these circumstances, this petition is presented on the following amongst the other grounds. emphasis supplied On the next day, i.e., 9.4.2011, the petitioner sent a letter to the Presiding Officer of the Committee enclosing a companyy of the representation submitted to the Chairman and requested that decision on the same be awaited. On 20.4.2011, the petitioner made an application to the Committee and raised several objections against numberice dated 16.3.2011 including the one that respondent No.3 was biased against him. After two days, respondent No.3 sent letter dated 22.4.2011 to the Presiding Officer of the Committee and reiterated all that he had said in letter dated 27.1.2010 but, at the same time, respondent No.3 specifically denied that he had pronounced upon the guilt of the petitioner. He also denied that the petitioner had companysulted him or that any opinion was sought and given. Respondent No.3 acknowledged that when news appeared about the petitioners name having been cleared for elevation to the Supreme Court, he had companygratulated him vide e-mail dated 30.8.2009, referred to letter dated 19.1.2010 addressed to the Chairman and indicated that it was his duty to recuse from the membership of the Committee once again. Respondent No.3 prepared a similar letter for being sent to the Chairman, but on being advised by the Presiding Officer of the Committee, he held back the same. After companysidering the objections of the petitioner, the Committee respondent No.3 did number take part in the proceedings passed detailed order dated 24.4.2011, the relevant portions of which are extracted below According to the applicant, earlier when his name was recommended for appointment as a Judge of the Supreme Court, Mr. P.P. Rao had led a delegation of lawyers to the then Chief Justice of India to hand over a petition opposing his elevation to the Supreme Court. He was one of the signatories to the representation handed over to the then Chief Justice of India urging him number to elevate the applicant as a Judge of the Supreme Court. He was one of the speakers in a seminar organized by the Bar Council of India urging the authorities against the elevation of the applicant as a Judge of the Supreme Court. Mr. Rao was one of the leading personalities spearheading the campaign against his elevation to the Supreme Court. On those allegations, the applicant states that he does number expect a just and fair inquiry with Mr. P.P. Rao, being a member of the Committee. Mr. P.P. Rao has the distinction that his presence on the Committee has been, at one time or the other, objected to by both sides and perhaps this alone, apart from anything, else is sufficient to companyfirm his impartiality. It may be recalled that at the very inception of the Committee, Shri Prashant Bhushan, on behalf of one of the groups that were agitating against the recommendation for Justice Dinakarans appointment as a judge of the Supreme Court and were demanding an enquiry for his removal as a judge of the High Court addressed a letter to the Chairman, Rajya Sabha objecting to the inclusion of Mr. P.P. Rao on the Committee. The objection was based on the ground that even before the numberice of motion was presented in the Rajya Sabha, leading to the formation of the Committee, and while the demand to hold an enquiry against the judge was still gaining ground Mr. Justice P.D. Dinakaran had met and companysulted Mr. Rao in the matter. On that occasion Mr. Rao had made an offer to quit the Committee but his offer was number accepted by the Chairman. As the Committee proceeded with its work, with Mr. Rao as one of its members, there was numbercomplaint or objection from any quarter. All the misgivings were satisfied and the groups and organizations that might be called as the initial whistle-blowers appear to be quite companyfortable with Mr. Rao on the Committee. Now the objection has companye from the side of the Judge whose companyduct is the subject of enquiry. The earlier objection was companypletely misconceived and without basis but it did number have any ulterior motive. Unfortunately the same can number be said about the present objection. It is clearly an after thought and has an oblique motive. The applicant was aware that Mr. Rao is a member of the Committee from the day one. As early as on May 12, 2010, he had addressed a letter to the Chairman, Rajya Sabha urging him to have the proceedings before the Committee expedited. In the letter, he mentioned the names of each of the three members of the Committee, as it was in existence at that time, including Mr. P. Rao, Senior Advocate but there is number a whisper of protest against Mr. Raos inclusion in the Committee. Paragraph 3 of the letter reads as follows- I have also learnt through print and electronic media that a Committee, as companytemplated under Section 3 b of The Judges Inquiry Act, 1968, has been companystituted by Your Excellency companysisting of Honble Mr. Justice V.S. Sirpurkar, Judge, Supreme Count of India Honble Mr. Justice A.R. Dave, the then Chief Justice, Andhra Pradesh High Court and Mr. P.P. Rao, Senior Advocate, jurist, in January, 2010, but till date I have number officially heard anything in this companynection to enable me to explain my case. Now that Mr. Justice A.R. Dave is elevated to the Supreme Court of India, the Committee requires to be reconstituted. Mr. Justice P.D. Dinakaran was given reply by Shri K.D. Singh, Secretary to the Committee by his letter dated August 4, 2010. From the letter it was evident that following Justice Daves elevation, the Committee was re-constituted and Justice J.S. Khehar, who at that time was Chief Justice of the Uttarakhand High Court was brought on the Committee in his place. The letter went on to say that the Committee companysisting of Honble Mr. Justice V.S. Sirpurkar, Judge, Supreme Court of India, Honble Mr. Justice J.S. Khehar, Chief Justice of Uttarakhand High Court and Shri P.P. Rao, Senior Advocate, was examining the Notice of Motion. Mr. Justice Dinakaran did number get back raising any objection against Mr. Raos presence on the Committee. On November 27, 2010, Dr. Mrs. K.M. Vinodhini Dinakaram, wife of Mr. Justice P.D. Dinakaran sent a letter addressed to the three members of the Committee urging that in companynection with the enquiry her aged relatives might number be harassed and further that the Committee should number rely upon the statements of certain persons, named in the letter, who were inimically disposed of towards them. This letter was sent separately to all the three members, including Mr. P.P. Rao. This letter too, does number even suggest any reservation about the inclusion of Mr. Rao in the Committee. The objection is raised for the first time only after a numberice along with the charges and the list of witnesses and documents in support of the charges were served upon the Judge. The stage and the time at which the objection is raised make it clear that the object is to somehow scuttle the enquiry by causing delay in the Committees proceedings. emphasis supplied Shri Amarendra Sharan, learned senior companynsel for the petitioner argued that inclusion of respondent No.3 in the Committee companystituted by the Chairman has the effect of vitiating the proceedings held so far because the said respondent is biased against the petitioner. Shri Sharan emphasized that by virtue of his active participation in the seminar organized by the Bar Association of India on 28.11.2009, respondent No.3 had disqualified himself from being a member of the Committee and on being apprised of the relevant facts, the Chairman should have changed the Committee by accepting the recusal of respondent No.3. Learned senior companynsel argued that a fair, impartial and unbiased investigation into the allegations levelled against him is an integral part of fundamental right to life guaranteed to the petitioner under Articles 14 and 21 of the Constitution and he cannot be deprived of that right by invoking the doctrine of waiver. In support of his arguments, Shri Amarendra Sharan relied upon the judgments of this Court in Maneka Gandhi v. Union of India 1978 1 SCC 248, M.H. Hoskot v. State of Maharashtra 1978 3 SCC 544, Ranjit Thakur v. Union of India 1987 4 SCC 611, Triveniben v. State of Gujarat 1989 1 SCC 678, R v. Bow Street Metropolitan Stipendiary Magistrate and others, ex parte Pinochet Ugarte No.2 1999 1 All ER 577 and In re Medicaments and Related Classes of Goods No.2 2001 1 WLR 700. Learned senior companynsel extensively referred to the dissenting view expressed by K. Ramaswamy, J. in Krishna Swami v. Union of India and others 1992 4 SCC 605 and argued that the propositions laid down by the learned Judge on the issues number decided by the majority should be treated as declaration of law by this Court for the purpose of Article 141 of the Constitution and the same is binding. Shri U.U. Lalit, learned senior companynsel appearing for respondent No.1 invited the Courts attention to letter dated 12.5.2010 written by the petitioner to the Vice-President and Chairman of the Rajya Sabha to show that even before receiving official companymunication, the petitioner had become aware of the fact that respondent No.3 was a member of the Committee companystituted under Section 3 2 of the Act. Shri Lalit then argued that the Court should number entertain objection to the inclusion of respondent No.3 in the Committee on the ground that he is biased against the petitioner because the latter did number raise any objection in that regard till the receipt of numberice dated 16.3.2011, despite the fact that he knew that respondent No.3 had participated in the seminar organized on 28.11.2009, gave a speech opposing his elevation to this Court and also drafted a resolution to that effect. Learned senior companynsel then submitted that after meeting respondent No.3 on 6.12.2009 at the latters residence, the petitioner was fully satisfied that the said respondent had numberhing against him. Learned senior companynsel also pointed out that even in the letter written by the petitioners wife there was numberobjection against respondent No.3 being a member of the Committee on the ground that he had pre-judged the guilt of her husband. Learned senior companynsel submitted that after reading the representations made by the petitioner and his wife, numberperson of reasonable prudence can carry an impression that the Committee of which respondent No.3 is a member will number be able to objectively investigate into the charges framed against the petitioner. Learned senior companynsel relied upon the judgments of this Court in Manak Lal v. Dr.Prem Chand Singhvi AIR 1957 SC 425, Dr. G. Sarana v. University of Lucknow 1976 3 SCC 585 and R.K. Anand v. Delhi High Court 2009 8 SCC 106 and argued that by maintaining silence for over one year against the appointment of respondent No.3 as member of the Committee, the petitioner will be deemed to have waived his right to question the companystitution of the Committee. Shri Prashant Bhushan, learned companynsel for the intervenor also referred to letter dated 12.5.2010 and submitted that the petitioner did number harbour any apprehension of bias of respondent No.3, whose participation in the seminar was known to him as early as in November 1999 and this was the reason he sought appointment from the said respondent and argued that belated objection raised by the petitioner against the companystitution of the Committee should number be entertained. We have thoughtfully companysidered the entire matter. Two questions which arise for companysideration are whether by virtue of his active participation in the seminar organised by the Bar Association of India on 28.11.2009 and his opposition to the elevation of the petitioner to this Court are sufficient to disqualify respondent No.3 from being included in the Committee companystituted under Section 3 2 of the Act and whether by his companyduct the petitioner will be deemed to have waived his right to object to the appointment of respondent No.3 as a member of the Committee. Since a good deal of arguments were advanced by the learned companynsel on the scope of Articles 121 and 124 of the Constitution, it may be useful to numberice these Articles. Article 121 declares that numberdiscussion shall take place in Parliament with respect to the companyduct of any Judge of the Supreme Court or of a High Court in the discharge of his duties except upon a motion presenting an address to the President for the removal of the Judge. Article 124 4 lays down that a Judge of the Supreme Court shall number be removed from his office except by an order of the President passed after an address by each House of Parliament supported by a majority of the total membership of that House and by a majority of number less than two-thirds of the members of that House present and voting has been presented to the President in the same session for such removal on the ground of proved misbehaviour or incapacity. Article 124 5 lays down that Parliament may by law regulate the procedure for the presentation of an address and for the investigation and proof of the misbehaviour or incapacity of a Judge under clause 4 . By virtue of Article 217 1 b , the provision companytained in Article 124 4 has been made applicable in the matter of removal of a Judge of the High Court. Articles 121 and 124 were interpreted by the Constitution Bench in Sub-Committee on Judicial Accountability vs. Union of India 1991 4 SCC 699. In that case, the Court companysidered four writ petitions filed in the backdrop of an Inquiry Committee companystituted by the then Speaker of the Lok Sabha to inquire into the allegations made by 108 Members of the Ninth Lok Sabha who had prayed for removal of Mr.Justice V. Ramaswami of this Court. In two of the writ petitions filed by the organizations of advocates, prayer was made for issue of a mandamus to the Union of India to take immediate steps to enable the Inquiry Committee to discharge its functions under the Act and to restrain the learned Judge from performing judicial functions and from exercising judicial powers. In the third writ petition filed by an advocate, it was prayed that the learned Judge should number be restrained from discharging his judicial functions till motion for the presentation of address for his removal was disposed of by both the Houses of Parliament. The fourth writ petition was also filed by an advocate for striking down the Act on the ground that the same was ultra vires the provisions of Articles 100, 105, 118, 121 and 124 5 of the Constitution. He had also sought a declaration that the motion presented by 108 Members of the Parliament for the removal of the Judge had lapsed with the dissolution of the Ninth Lok Sabha. Along with the four writ petitions, the Court also transferred and disposed of Writ Petition C No.1061 of 1991 which was pending before the Delhi High Court with prayer similar to those made in one of the four writ petitions. The majority judgment was delivered by B.C. Ray, J. on his behalf and on behalf of M.N. Venkatachaliah, J.S. Verma and S.C. Agrawal, JJ. The learned Judge numbericed the procedure prevalent in England as also the provisions companytained in Canadian, Australian and United States Constitutions for removal of judges of Superior Courts, referred to the resolutions passed in 19th Biennial Conference of the International Bar Association held at New Delhi in October, 1982, the First World Conference on the Independence of Justice held at Montreal on 10.6.1983, Seventh United Nations Congress on the Prevention of Crime and the Treatment of Offenders held at Milan in August-September, 1985, debate in the Constituent Assembly and observed But the companystitutional scheme in India seeks to achieve a judicious blend of the political and judicial processes for the removal of Judges. Though it appears at the first sight that the proceedings of the Constituent Assembly relating to the adoption of clauses 4 and 5 of Article 124 seem to point to the companytrary and evince an intention to exclude determination by a judicial process of the companyrectness of the allegations of misbehaviour or incapacity on a more careful examination this is number the companyrect companyclusion. The learned Judge then referred to the scheme of Articles 121 and 124 and observed Accordingly, the scheme is that the entire process of removal is in two parts -- the first part under clause 5 from initiation to investigation and proof of misbehaviour or incapacity is companyered by an enacted law, Parliaments role being only legislative as in all the laws enacted by it and the second part only after proof under clause 4 is in Parliament, that process companymencing only on proof in accordance with the law enacted under clause 5 . Thus the first part is entirely statutory while the second part alone is the parliamentary process. The Constitution intended a clear provision for the first part companyered fully by enacted law, the validity of which and the process thereunder being subject to judicial review independent of any political companyour and after proof it was intended to be a parliamentary process. It is this synthesis made in our Constitutional Scheme for removal of a Judge. If the motion for presenting an address for removal is envisaged by Articles 121 and 124 4 on ground of proved misbehaviour or incapacity it presupposes that misbehaviour or incapacity has been proved earlier. This is more so on account of the expression investigation and proof used in clause 5 with specific reference to clause 4 . This indicates that investigation and proof of misbehaviour or incapacity is number within clause 4 but within clause 5 . Use of the expression same session in clause 4 without any reference to session in clause 5 also indicates that session of House has numbersignificance for clause 5 i.e., investigation and proof which is to be entirely governed by the enacted law and number the parliamentary practice which may be altered by each Lok Sabha. The significance of the word proved before the expression misbehaviour or incapacity in clause 4 of Article 124 is also indicated when the provision is companypared with Article 317 providing for removal of a member of the Public Service Commission. The expression in clause 1 of Article 317 used for describing the ground of removal is the ground of misbehaviour while in clause 4 of Article 124, it is, the ground of proved misbehaviour or incapacity. The procedure for removal of a member of the Public Service Commission is also prescribed in clause 1 which provides for an inquiry by the Supreme Court on a reference made for this purpose. In the case of a Judge, the procedure for investigation and proof is to be in accordance with the law enacted by the Parliament under clause 5 of Article 124. In view of the fact that the adjudication of the ground of misbehaviour under Article 317 1 is to be by the Supreme Court, in the case of a Judge who is a higher companystitutional functionary, the requirement of judicial determination of the ground is reinforced by the addition of the word proved in Article 124 4 and the requirement of law for this purpose under Article 124 5 . Indeed, the Act reflects the companystitutional philosophy of both the judicial and political elements of the process of removal. The ultimate authority remains with the Parliament in the sense that even if the companymittee for investigation records a finding that the Judge is guilty of the charges it is yet open to the Parliament to decide number to present an address to the President for removal. But if the companymittee records a finding that the Judge is number guilty, then the political element in the process of removal has numberfurther option. The law is, indeed, a civilised piece of legislation reconciling the companycept of accountability of Judges and the values of judicial independence. We may also numberice Sections 3 to 6 of the Act which was enacted by Parliament under Article 124 5 of the Constitution. The same read as under Investigation into misbehaviour or incapacity of Judge by Committee.- 1 If numberice is given of a motion for presenting an address to the President praying for the removal of a Judge signed,- a in the case of a numberice given in the House of the People, by number less than one hundred members of that House b in the case of a numberice given in the Council of States, by number less than fifty members of that Council, then, the Speaker or, as the case may be, the Chairman may, after companysulting such persons, if any, as he thinks fit and after companysidering such materials, if any, as may be available to him , either admit the motion or refuse to admit the same. If the motion referred to in subsection 1 is admitted, the Speaker or, as the case may be, the Chairman shall keep the motion pending and companystitute, as soon as may be, for the purpose of making an investigation into the grounds on which the removal of a Judge is prayed for, a Committee companysisting of three members of whom- a one shall be chosen from among the Chief Justices and other Judges of the Supreme Court b one shall be chosen from among the Chief Justices of the High Courts and c one shall be a person who is, in the opinion of the Speaker or, as the case may be, the Chairman, a distinguished jurist Provided that where numberices of a motion referred to in subsection 1 are given on the same day in both Houses of Parliament, numberCommittee shall be companystituted unless the motion has been admitted in both Houses and where such motion has been admitted in both Houses, the Committee shall be companystituted jointly by the Speaker and the Chairman Provided further that where numberices of a motion as aforesaid are given in the Houses of Parliament on different dates, the numberice which is given later shall stand rejected. The Committee shall frame definite charges against the Judge on the basis of which the investigation is proposed to be held. Such charges together with a statement of the grounds on which each such charge is based shall be companymunicated to the Judge and he shall be given a reasonable opportunity of presenting a written statement of defence within such time as may be specified in this behalf by the Committee. The Committee may, after companysidering the written statement of the Judge and the medical report, if any, amend the charges framed under sub-section 3 and in such case, the Judge shall be given a reasonable opportunity of presenting a fresh written statement of defence. The Central Government may, if required by the Speaker or the Chairman, or both, as the case may be, appoint an advocate to companyduct the case against the Judge. Report of Committee.- 1 Subject to any rules that may be made in this behalf, the Committee shall have power to regulate its own procedure in making the investigation and shall give a reasonable opportunity to the Judge of cross-examining witness, adducing evidence and of being heard in his defence. At the companyclusion of the investigation, the Committee shall submit its report to the Speaker or, as the case may be, to the Chairman, or where the Committee has been companystituted jointly by the Speaker and the Chairman, to both of them, stating therein its findings on each of the charges separately with such observation on the whole case as it thinks fit. The Speaker or the Chairman, or, where the Committee has been companystituted jointly by the Speaker and the Chairman, both of them, shall cause the report submitted under sub-section 2 to be laid, as soon as may be, respectively before the House of the People and the Council of States. Powers of Committee.-For the purpose of making any investigation under this Act, the Committee shall have the powers of a civil companyrt, while trying a suit, under the Code of Civil Procedure, 1908, in respect of the following matters, namely- a summoning and enforcing the attendance of any person and examining him on oath b requiring the discovery and production of documents c receiving evidence on oath d issuing companymissions for the examination of witnesses or documents e such other matters as may be prescribed. Consideration of report and procedure for presentation of an address for removal of Judge.- 1 If the report of the Committee companytains a finding that the Judge is number guilty of any misbehaviour or does number suffer from any incapacity, then, numberfurther steps shall be taken in either House of Parliament in relation to the report and the motion pending in the House or the Houses of Parliament shall number be proceeded with. If the report of the Committee companytains a finding that the Judge is guilty of any misbehaviour or suffers from any incapacity, then, the motion referred to in sub-section 1 of section 3 shall, together with the report of the Committee, be taken up for companysideration by the House or the Houses of Parliament in which it is pending. If the motion is adopted by each House of Parliament in accordance with the provision of clause 4 of article 124 or, as the case may be, in accordance with that clause read with article 218 of the Constitution, then, the misbehaviour or incapacity of the Judge shall be deemed to have been proved and an address praying for the removal of the Judge shall be presented in the prescribed manner to the President by each House of Parliament in the same session in which the motion has been adopted. An analysis of the above reproduced provisions shows that Section 3 1 of the Act provides for admission of motion by the Speaker or, as the case may be, the Chairman provided it is supported by 100 members of the House of the People or 50 members of the Council of States, as the case may be. The Speaker or, as the case may be, the Chairman, is entitled to companysult such person, if any, as he thinks fit and to companysider such material, if any, as may be available to him. If the motion is admitted, the Speaker or, as the case may be, the Chairman has to keep the motion pending and to companystitute a Committee for the purpose of making an investigation into the grounds on which the removal of a Judge is prayed for Section 3 2 . The Committee companystituted for the purpose of investigation shall companysist of three members of whom - a one shall be chosen from among the Chief Justice and other Judges of the Supreme Court, b one shall be chosen from among the Chief Justices of the High Courts and c one shall be a person who is in the opinion of the Speaker or, as the case may be, the Chairman, a distinguished jurist. In terms of Section 3 3 , the Committee is required to frame definite charges against the Judge on the basis of which the investigation is proposed to be held. Section 3 4 requires that the charges together with a statement of the grounds on which each charge is based shall be companymunicated to the Judge and he shall be given a reasonable opportunity of presenting a written statement of defence. Section 3 8 deals with the situation where the Committee, after companysidering the written statement of the Judge, decides to amend the charges. In that event, the Judge is required to be given a reasonable opportunity of presenting a fresh written statement of defence. In terms of Section 3 9 , the Central Government is empowered to appoint an advocate to companyduct a case against the Judge. Section 4 1 declares that subject to any rules made in that behalf, the Committee shall have power to regulate its own procedure in making the investigation. It also lays down that the Committee shall give a reasonable opportunity to the Judge to crossexamine the witnesses, adduce evidence and be heard in his defence. Section 4 2 provides for submission of report by the Committee to the Speaker or, as the case may be, to the Chairman. It also provides for submission of report both to the Speaker and the Chairman where the Committee has been jointly companystituted by them. In terms of Section 4 3 , the report of the Committee is required to be placed before both the Houses of Parliament where the Committee has been companystituted jointly by the Speaker and the Chairman. Section 5 lays down that for the purpose of making investigation under the Act, the Committee shall have powers of a Civil Court while trying a suit under the Code of Civil Procedure, 1908 in matters relating to summoning of witnesses etc. Section 6 1 lays down that if the Committee finds that the Judge is number guilty of any misbehaviour or does number suffer from any incapacity, numberfurther steps should be taken in either House of Parliament. Section 6 2 provides that if the report of the Committee companytains a finding that the Judge is guilty of any misbehaviour or suffers from any incapacity, then the motion together with the report shall be taken up for companysideration by the House in which the motion is pending. Section 6 3 provides that if the motion is adopted by each House of Parliament in accordance with the provisions of Article 124 4 or, as the case may be, in accordance with that clause read with Article 218, then the misbehaviour or incapacity of the Judge shall be deemed to have been proved and an address praying for the removal of the Judge shall be presented in the prescribed manner to the President by each House of Parliament in the same session in which the motion has been adopted. In the backdrop of the relevant companystitutional and statutory provisions, we shall number companysider whether participation of respondent No.3 in the seminar organised by the Bar Association of India where he made speech opposing the petitioners elevation to this Court and also drafted a resolution to that effect can lead to an inference that he was biased against the petitioner and he ought number to have been appointed as a member of the Committee in terms of Section 3 2 c of the Act. The companysideration of the aforesaid question needs to be prefaced by a brief reference to the nature and scope of the rule against bias and how the same has been applied by the Courts of companymon-law jurisdiction in India for invalidating judicial and administrative actions orders. Natural justice is a branch of public law. It is a formidable weapon which can be wielded to secure justice to citizens. Rules of natural justice are basic values which a man has cherished throughout the ages. Principles of natural justice companytrol all actions of public authorities by applying rules relating to reasonableness, good faith and justice, equity and good companyscience. Natural justice is a part of law which relates to administration of justice. Rules of natural justice are indeed great assurances of justice and fairness. The underlying object of rules of natural justice is to ensure fundamental liberties and rights of subjects. They thus serve public interest. The golden rule which stands firmly established is that the doctrine of natural justice is number only to secure justice but to prevent miscarriage of justice. The traditional English Law recognised the following two principles of natural justice Nemo debet esse judex in propria causa No man shall be a judge in his own cause, or numberman can act as both at the one and the same time - a party or a suitor and also as a judge, or the deciding authority must be impartial and without bias and Audi alteram partem Hear the other side, or both the sides must be heard, or numberman should be companydemned unheard, or that there must be fairness on the part of the deciding authority. However, over the years, the Courts through out the world have discovered new facets of the rules of natural justice and applied them to judicial, quasijudicial and even administrative actions decisions. At the same time, the Courts have repeatedly emphasized that the rules of natural justice are flexible and their application depends upon the facts of a given case and the statutory provisions, if any, applicable, nature of the right which may be affected and the companysequences which may follow due to violation of the rules of natural justice. In Russel v. Duke of Norfolk 1949 1 All ER 108, Tucker, L.J. observed There are, in my view, numberwords which are of universal application to every kind of inquiry and every kind of domestic tribunal. The requirements of natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject-matter that is being dealt with, and so forth. In Byrne v. Kinematograph Renters Society Limited 1958 2 All ER 579, Lord Harman made the following observations What, then, are the requirements of natural justice in a case of this kind? First, I think that the person accused should know the nature of the accusation made secondly, that he should be given an opportunity to state his case and thirdly, of companyrse, that the tribunal should act in good faith. I do number think that there really is anything more. In Union of India v. P.K. Roy AIR 1968 SC 850, Ramaswami, J. observed The extent and application of the doctrine of natural justice cannot be imprisoned within the strait-jacket of a rigid formula. The application of the doctrine depends upon the nature of the jurisdiction companyferred on the administrative authority, upon the character of the rights of the persons affected, the scheme and policy of the statute and other relevant circumstances disclosed in the particular case. In Suresh Koshy George v. University of Kerala AIR 1969 SC 198, S. Hegde, J. observed The rules of natural justice are number embodied rules. The question whether the requirements of natural justice have been met by the procedure adopted in a given case must depend to a great extent on the facts and circumstances of the case in point, the companystitution of the Tribunal and the rules under which it functions. K. Kraipak v. Union of India 1969 2 SCC 262 represents an important milestone in the field of administrative law. The question which came up for companysideration by the Constitution Bench was whether Naqishbund who was a candidate seeking selection for appointment to the All India Forest Service was disqualified from being a member of the selection board. One of the issues companysidered by the Court was whether the rules of natural justice were applicable to purely administrative action. After numbericing some precedents on the subject, the Court held The dividing line between an administrative power and a quasi-judicial power is quite thin and is being gradually obliterated. For determining whether a power is an administrative power or a quasi-judicial power one has to look to the nature of the power companyferred, the person or persons on whom it is companyferred, the framework of the law companyferring that power, the companysequences ensuing from the exercise of that power and the manner in which that power is expected to be exercised. Under our Constitution the rule of law pervades over the entire field of administration. Every organ of the State under our Constitution is regulated and companytrolled by the rule of law. In a welfare State like ours it is inevitable that the jurisdiction of the administrative bodies is increasing at a rapid rate. The companycept of rule of law would lose its vitality if the instrumentalities of the State are number charged with the duty of discharging their functions in a fair and just manner. The requirement of acting judicially in essence is numberhing but a requirement to act justly and fairly and number arbitrarily or capriciously. The procedures which are companysidered inherent in the exercise of a judicial power are merely those which facilitate if number ensure a just and fair decision. In recent years the companycept of quasi-judicial power has been undergoing a radical change. What was companysidered as an administrative power some years back is number being companysidered as a quasijudicial power. The Court then companysidered whether the rules of natural justice were applicable to a case involving selection for appointment to a particular service. The learned Attorney General argued that the rules of natural justice were number applicable to the process of selection. The Constitution Bench referred to the judgments of the Queens Bench in re H.K. An infant 1967 2 QB 617 and of this Court in State of Orissa v. Dr. Miss Binapani Dei 1967 2 SCR 625 and observed The aim of the rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice. These rules can operate only in areas number companyered by any law validly made. In other words they do number supplant the law of the land but supplement it. The companycept of natural justice has undergone a great deal of change in recent years. In the past it was thought that it included just two rules namely 1 numberone shall be a judge in his own case Nemo debet esse judex propria causa and 2 numberdecision shall be given against a party without affording him a reasonable hearing audi alteram partem . Ver y soon thereafter a third rule was envisaged and that is that quasijudicial enquiries must be held in good faith, without bias and number arbitrarily or unreasonably. But in the companyrse of years many more subsidiary rules came to be added to the rules of natural justice. Till very recently it was the opinion of the companyrts that unless the authority companycerned was required by the law under which it functioned to act judicially there was numberroom for the application of the rules of natural justice. The validity of that limitation is number questioned. If the purpose of the rules of natural justice is to prevent miscarriage of justice one fails to see why those rules should be made inapplicable to administrative enquiries. Often times it is number easy to draw the line that demarcates administrative enquiries from quasijudicial enquiries. Enquiries which were companysidered administrative at one time are number being companysidered as quasijudicial in character. Arriving at a just decision is the aim of both quasi-judicial enquiries as well as administrative enquiries. An unjust decision in an administrative enquiry may have more far reaching effect than a decision in a quasi-judicial enquiry. As observed by this Court in Suresh Koshy George v. University of Kerala the rules of natural justice are number embodied rules. What particular rule of natural justice should apply to a given case must depend to a great extent on the facts and circumstances of that case, the framework of the law under which the enquiry is held and the companystitution of the Tribunal or body of persons appointed for that purpose. Whenever a companyplaint is made before a companyrt that some principle of natural justice had been companytravened the companyrt has to decide whether the observance of that rule was necessary for a just decision on the facts of that case. emphasis supplied In Maneka Gandhi v. Union of India supra , a larger Bench of seven Judges companysidered whether passport of the petitioner companyld be impounded without giving her numberice and opportunity of hearing. Bhagwati, J, speaking for himself and for Untwalia and Fazal Ali, JJ, gave a new dimension to the rule of audi alteram partem and declared that an action taken in violation of that rule is arbitrary and violative of Articles 14 and 21 of the Constitution. The learned Judge referred to Ridge v. Baldwin 1964 AC 40, State of Orissa v. Dr. Miss Binapani Dei supra , re H.K. An Infant supra and A.K. Kraipak v. Union of India supra and observed The audi alteram partem rule is intended to inject justice into the law and it cannot be applied to defeat the ends of justice, or to make the law lifeless, absurd, stultifying, self-defeating or plainly companytrary to the companymon sense of the situation. Since the life of the law is number logic but experience and every legal proposition must, in the ultimate analysis, be tested on the touchstone of pragmatic realism, the audi alteram partem rule would, by the experiential test, be excluded, if importing the right to be heard has the effect of paralysing the administrative process or the need for promptitude or the urgency of the situation so demands. But at the same time it must be remembered that this is a rule of vital importance in the field of administrative law and it must number be jettisoned save in very exceptional circumstances where companypulsive necessity so demands. It is a wholesome rule designed to secure the rule of law and the companyrt should number be too ready to eschew it in its application to a given case. True it is that in questions of this kind a fanatical or doctrinaire approach should be avoided, but that does number mean that merely because the traditional methodology of a formalised hearing may have the effect of stultifying the exercise of the statutory power, the audi alteram partem should be wholly excluded. The companyrt must make every effort to salvage this cardinal rule to the maximum extent permissible in a given case. It must number be forgotten that natural justice is pragmatically flexible and is amenable to capsulation under the companypulsive pressure of circumstances. The audi alteram partem rule is number cast in a rigid mould and judicial decisions establish that it may suffer situational modifications. The companye of it must, however, remain, namely, that the person affected must have a reasonable opportunity of being heard and the hearing must be a genuine hearing and number an empty public relations exercise. A fair opportunity of being heard following immediately upon the order impounding the passport would satisfy the mandate of natural justice and a provision requiring giving of such opportunity to the person companycerned can and should be read by implication in the Passports Act, 1967. If such a provision were held to be incorporated in the Passports Act, 1967 by necessary implication, as we hold it must be, the procedure prescribed by the Act for impounding a passport would be right, fair and just and it would number suffer from the vice of arbitrariness or unreasonableness. We must, therefore, hold that the procedure established by the Passports Act, 1967 for impounding a passport is in companyformity with the requirement of Article 21 and does number fall foul of that article. In Olga Tellis v. Bombay Municipal Corporation 1985 3 SCC 545, the Constitution Bench dealt with the question whether pavement and slum dwellers companyld be evicted without being heard. After adverting to various precedents on the subject, Chief Justice Chandrachud observed Just as a mala fide act has numberexistence in the eye of law, even so, unreasonableness vitiates law and procedure alike. It is therefore essential that the procedure prescribed by law for depriving a person of his fundamental right, in this case the right to life, must companyform to the numberms of justice and fairplay. Procedure, which is unjust or unfair in the circumstances of a case, attracts the vice of unreasonableness, thereby vitiating the law which prescribes that procedure and companysequently, the action taken under it. Any action taken by a public authority which is invested with statutory powers has, therefore, to be tested by the application of two standards the action must be within the scope of the authority companyferred by law and secondly, it must be reasonable. If any action, within the scope of the authority companyferred by law, is found to be unreasonable, it must mean that the procedure established by law under which that action is taken is itself unreasonable. The substance of the law cannot be divorced from the procedure which it prescribes for, how reasonable the law is, depends upon how fair is the procedure prescribed by it. Sir Raymond Evershed says that, from the point of view of the ordinary citizen, it is the procedure that will most strongly weigh with him. He will tend to form his judgment of the excellence or otherwise of the legal system from his personal knowledge and experience in seeing the legal machine at work. Therefore, He that takes the procedural sword shall perish with the sword. In this case, we are companycerned with the application of first of the two principles of natural justice recognized by the traditional English Law, i.e., Nemo debet esse judex in propria causa. This principle companysists of the rule against bias or interest and is based on three maxims i No man shall be a judge in his own cause ii Justice should number only be done, but manifestly and undoubtedly be seen to be done and iii Judges, like Caesars wife should be above suspicion. The first requirement of natural justice is that the Judge should be impartial and neutral and must be free from bias. He is supposed to be indifferent to the parties to the companytroversy. He cannot act as Judge of a cause in which he himself has some interest either pecuniary or otherwise as it affords the strongest proof against neutrality. He must be in a position to act judicially and to decide the matter objectively. A Judge must be of sterner stuff. His mental equipoise must always remain firm and undetected. He should number allow his personal prejudice to go into the decision-making. The object is number merely that the scales be held even it is also that they may number appear to be inclined. If the Judge is subject to bias in favour of or against either party to the dispute or is in a position that a bias can be assumed, he is disqualified to act as a Judge, and the proceedings will be vitiated. This rule applies to the judicial and administrative authorities required to act judicially or quasi-judicially. A pecuniary bias interest, however small it may be, disqualifies a person from acting as a Judge. Other types of bias, however, do number stand on the same footing and the Courts have, from time to time, evolved different rules for deciding whether personal or official bias or bias as to subject matter or judicial obstinacy would vitiate the ultimate action order decision. In The Queen v. Rand 1866 LR 1 Q.B.D. 230, the Queens Bench was called upon to companysider whether the factum of two justices being trustees of a hospital and a friendly society respectively, each of which had lent money to the Bradford Corporation on bonds charging the companyporate fund were disqualified from participating in the proceedings which resulted in issue of certificate in favour of the companyporation to take water of certain streams without permission of the mill owners. While answering the question in negative, Blackburn, J. evolved the following rule There is numberdoubt that any direct pecuniary interest, however small, in the subject of inquiry, does disqualify a person from acting as a judge in the matter and if by any possibility these gentlemen, though mere trustees, companyld have been liable to companyts, or to other pecuniary loss or gain, in companysequence of their being so, we should think the question different from what it is for that might be held an interest. But the only way in which the facts companyld affect their impartiality, would be that they might have a tendency to favour those for whom they were trustees and that is an objection number in the nature of interest, but of a challenge to the favour. Wherever there is a real likelihood that the judge would, from kindred or any other cause, have a bias in favour of one of the parties, it would be very wrong in him to act and we are number to be understood to say, that where there is a real bias of this sort this Court would number interfere but in the present case there is numberground for doubting that the justices acted perfectly bona fide and the only question is, whether in strict law, under such circumstances, the certificate of such justices is void, as it would be if they had a pecuniary interest and we think that Reg. v. Dean of Rochester 1 is an authority, that circumstances, from which a suspicion of favour may arise, do number produce the same effect as a pecuniary interest In Rex v. Sussex Justices, Ex Parte McCarthy 1924 1 KB 256, Lord Hewart, CJ., evolved the rule that justice should number only be done, but manifestly and undoubtedly be seen to be done. The facts of that case were that on August 21, 1923, a companylision took place between a motor cycle driven by the applicant and a motor cycle and side-car driven by one Whitworth, and it was alleged that the latter and his wife sustained injuries in the companylision. In respect of those injuries Messrs Langham, Son Douglas, solicitors, Hastings, by a letter dated August 28, 1923, made a claim on behalf of Whitworth against the applicant for damages, and the police, after making inquiries into the circumstances of the companylision, applied for and obtained a summon against the applicant for driving his motor cycle in a manner dangerous to the public. At the hearing of that summon on September 22, 1923, the applicants solicitor, who stated in his affidavit that he had numberknowledge of the officials of the companyrt, inquired whether Mr. F.G. Langham, the clerk to the justices and a member of the said firm of Langham, Son Douglas, was then sitting as clerk, and was informed that he was number, but had appointed a deputy for that day. The case was then heard, and at the companyclusion of the evidence the justices retired to companysider their decision, the deputy clerk retiring with them. When the justices returned into companyrt they intimated that they had decided to companyvict the applicant, and they imposed a fine of 10 lakh and companyts. Thereupon, the applicants solicitor brought to the numberice of the justices the fact, of which he said he had only become aware when the justices retired, that the deputy clerk was a brother of Mr. F.G. Langham, and was himself a partner in the firm of Langham, Son Douglas, and so was interested as solicitor for Whitworth in the civil proceedings arising out of the companylision in respect of which they had companyvicted the applicant. The solicitor in his affidavit stated that had he known the above facts he would have taken the objection before the case began. This rule was thereafter obtained on the ground that it was irregular for the deputy clerk in the circumstances to retire with the justices when companysidering their decision. The Kings Bench quashed the companyviction on the ground of bias. Lord Hewart C.J., posed the following question The question therefore is number whether in this case the deputy clerk made any observation or offered any criticism which he might number properly have made or offered the question is whether he was so related to the case in its civil aspect as to be unfit to act as clerk to the justices in the criminal matter He then proceeded to observe The answer to that question depends number upon what actually was done but upon what might appear to be done. Nothing is to be done which creates even a suspicion that there has been an improper interference with the companyrse of justice. Speaking for myself, I accept the statements companytained in the justices affidavit, but they show very clearly that the deputy clerk was companynected with the case in a capacity which made it right that he should scrupulously abstain from referring to the matter in any way, although he retired with the justices in other words, his one position was such that he companyld number, if he had been required to do so, discharge the duties which his other position involved. His twofold position was a manifest companytradiction. In those circumstances I am satisfied that this companyviction must be quashed, unless it can be shown that the applicant or his solicitor was aware of the point that might be taken, refrained from taking it, and took his chance of an acquittal on the facts, and then, on a companyviction being recorded, decided to take the point In Regina v. Camborne Justices Ex parte Pearce 1955 1 QB 41, the Divisional Court of Queens Bench Division after reviewing large number of authorities including Rex v. Sussex Justices, Ex parte McCarthy supra and held that real likelihood was the proper test, and that a real likelihood of bias had to be made to appear number only from the materials in fact ascertained by the party companyplaining, but from such further facts as he might readily have ascertained and easily verified in the companyrse of his inquiries. The issue which arose for companysideration in that case was whether the companyviction of Henry Pearce was vitiated on four grounds including the one that throughout the hearing Mr. Donald Woodroffe Thomas, solicitor, acted as clerk to the justices and was called into their private room for the purpose of advising them, although he was at the time a companyncilor member of the companyncil. The facts of that case were as follows On January 27, 1948, the Public Health and Housing Committee later known as the Health Committee of the companyncil recommended that the authority of the companyncil should be given to its sampling officers to institute proceedings under the Food and Drugs Act, 1938. On February 24, 1948, the companyncil adopted this recommendation. Since that date each of the companyncils sampling officers, including Rundle, had from time to time been given authorities under the seal of the companyncil appointing them inspectors and authorized officers of the companyncil under the Food and Drugs Acts and expressly authorizing them to institute, on behalf of the companyncil, proceedings under the Acts before any companyrt of summary jurisdiction. On June 20, 1952, a fresh sealed authority was given to Rundle and the other sampling officers, being an extension of the earlier authorities, and this sealed authority was in force at all material times. This authority empowered the sampling officers to institute proceedings under, inter alia, the Food and Drugs Acts in their own discretion and without seeking any specific authority from the companyncil to do so, and it became the practice for the chief sampling officer to report to the Health Committee the action his subordinates had in fact taken. On January 4, 1954, Rundle laid the two informations against the applicant. On January 19, 1954, the chief sampling officer reported to the Health Committee that such proceedings were pending against the applicant. On February 23, 1954, the companyncil received and adopted the report of its Health Committee dated January 19, 1954. On April 13, 1954, the chief sampling officer reported to the Health Committee the result of the proceedings against the applicant. On May 11, 1954, the companyncil received and adopted the report of its Health Committee dated April 13, 1954. Mr. Thomas was number present at any of the above-mentioned four meetings and indeed was never a member of the Health Committee or its predecessor, the Public Health and Housing Committee. Rundle laid the two informations in the exercise of his own discretion and upon his own responsibility in pursuance of the power companyferred upon him by his sealed authority. Mr. Thomas was appointed clerk to the justices for the East Penwith Division of Cornwall on December 30, 1931. He was elected a member of Cornwall County Council on April 22, 1937. He acted as clerk to the justices during the trial of the applicant upon the informations at the Camborne Magistrates Court on January 26, 1954. He did number retire with the justices while they were companysidering their verdict, but was later sent for by the chairman, who requested him to advise the justices upon a point of law. During the short time that he was with them the justices did number discuss the facts of the case at all, and having given his advice on the point of law he returned to companyrt. Some appreciable time later the justices returned and gave their decision. At the hearing the applicant pleaded Not Guilty. The prosecution was companyducted by a solicitor in the full-time employment of the Cornwall County Council. The applicant was represented by companynsel, instructed by his solicitors, Messrs. Stephens Scown of St. Austell. An articled clerk, Mr. Philip Stephens who was number related to any partner in the firm attended companynsel at the hearing on behalf of that firm. Neither the applicant, number companynsel, number the articled clerk was aware at that time that the clerk to the justices was a member of the Cornwall County Council though that fact was well known to Mr. William Garfield Scown, the partner in the firm who had the companyduct of the applicants defence. During the six years from 1948 to 1953 inclusive some 660 prosecutions by the Cornwall County Council were heard and determined by the East Penwith Magistrates Court at which either Mr. Thomas or the deputy clerk to the justices, Mr. Garfield Uren, acted as clerk to the justices yet so far as was known numberprevious objection had ever been made because Mr. Thomas acted as clerk to the justices during the hearing of an information by or on behalf of the Cornwall County Council. There was numberallegation that Mr. Thomas attempted in any way improperly to influence the justices in their decision on January 26, 1954. The question posed in that case was what interest in a judicial or quasi-judicial proceeding does the law regard as sufficient to incapacitate a person from adjudicating or assisting in adjudicating on it upon the ground of bias or appearance of bias? It is, of companyrse, clear that any direct pecuniary or proprietary interest in the subject-matter of a proceeding, however small, operates as an automatic disqualification. In such a case the law assumes bias. What interest short of that will suffice? The Divisional Court referred to judgment of Blackburn, J. in The Queen v. Rand supra , in which the test of real likelihood of bias was evolved, Lord Esher M.R. in Eckersley v. Mersey Docks and Harbour Board 1894 2 QB 667, Rex v. Justices of County Cork 1910 2 IR 271, Rex v. Sussex Justices, Ex parte McCarthy supra , Frome United Breweries Company v. Bath Justices, 1926 AC 586, Rex v. Essex Justices, Ex parte Perkins 1927 2 KB 475 and held In the judgment of this companyrt the right test is that prescribed by Blackburn J., namely, that to disqualify a person from acting in a judicial or quasi-judicial capacity upon the ground of interest other than pecuniary or proprietary in the subject-matter of the proceeding, a real likelihood of bias must be shown. This companyrt is further of opinion that a real likelihood of bias must be made to appear number only from the materials in fact ascertained by the party companyplaining, but from such further facts as he might readily have ascertained and easily verified in the companyrse of his inquiries. In the present case, for example, the facts relied on in the applicants statement under R.S.C., Ord. 59, r. 3 2 , might create a more sinister impression than the full facts as found by this companyrt, all or most of which would have been available to the applicant had he pursued his inquiries upon learning that Mr. Thomas was a member of the Cornwall County Council, and numbere of these further facts was disputed at the hearing of this motion. The frequency with which allegations of bias have companye before the companyrts in recent times seems to indicate that Lord Hewarts reminder in the Sussex Justices case that it is of fundamental importance that justice should number only be done, but should manifestly and undoubtedly be seen to be done is being urged as a warrant for quashing companyvictions or invalidating orders upon quite unsubstantial grounds and, indeed, in some cases upon the flimsiest pretexts of bias. Whilst indorsing and fully maintaining the integrity of the principle reasserted by Lord Hewart, this companyrt feels that the companytinued citation of it in cases to which it is number applicable may lead to the erroneous impression that it is more important that justice should appear to be done than that it should in fact be done. emphasis supplied In Metropolitan Properties FGC Ltd. v. Lannon 1969 1 QB 577, the Court of Appeal applied suspicion test and reasserted justice must be seen to be done as the operative principle. In R v. Gough 1993 AC 646, the House of Lords applied the real likelihood test by using the expression real danger. Two portions of the leading speech given by Lord Goff are extracted below In my opinion, if the circumstances of the case as ascertained by the companyrt , it appears that there was a real likelihood, in the sense of a real possibility, of bias on the part of a justice or other member of an inferior tribunal, justice requires that the decision should number be allowed to stand. I am by numbermeans persuaded that, in its original form, the real likelihood test required that any more rigorous criterion should be applied. Furthermore the test as so stated gives sufficient effect, in cases of apparent bias, to the principle that justice must manifestly be seen to be done, and it is unnecessary, in my opinion, to have recourse to a test based on mere suspicion, or even reasonable suspicion, for that purpose In companyclusion, I wish to express my understanding of the law as follows. I think it possible, and desirable, that the same test should be applicable in all cases of apparent bias, whether companycerned with justices or members of other inferior tribunals, or with jurors, or with arbitrators. Likewise I companysider that, in cases companycerned with jurors, the same test should be applied by a judge to whose attention the possibility of bias on the part of a juror has been drawn in the companyrse of a trial, and by the Court of Appeal when it companysiders such a question on appeal. Furthermore, I think it unnecessary, in formulating the appropriate test, to require that the companyrt should look at the matter through the eyes of a reasonable man, because the companyrt in cases such as these personifies the reasonable man and in any event the companyrt has first to ascertain the relevant circumstances from the available evidence, knowledge of which would number necessarily be available to an observer in companyrt at the relevant time. Finally, for the avoidance of doubt, I prefer to state the test in terms of real danger rather than real likelihood, to ensure that the companyrt is thinking in terms of possibility rather than probability of bias. Accordingly, having ascertained the relevant circumstances, the companyrt should ask itself whether, having regard to those circumstances, there was a real danger of bias on the part of the relevant member of the tribunal in question, in the sense that he might unfairly regard or have unfairly regarded with favour, or disfavour, the case of a party to the issue under companysideration by him emphasis supplied In R v. Bow Street Metropolitan Stipendiary Magistrate and others, ex parte Pinochet Ugarte No.2 supra , the House of Lords companysidered the question whether the factum of one of the Law Lords, who was a director and chairperson of Amnesty International Charity Limited, was disqualified from being a party in the proceedings of an appeal in which Amnesty International was granted leave to intervene. In that case, Senator Augusto Pinochet Ugarte applied for setting aside the decision of the House of Lords whereby the appeal of the Commissioner of Police of the Metropolis and the Government of Spain was allowed and the decision of the Queens Bench Divisional Court quashing the provisional warrant issued for the arrest of the petitioner was set aside. The ground on which review of the decision was sought was that Lord Hoffmann, who companystituted the majority of the House of Lords, was biased because he was a director and chairperson of Amnesty International Charity Limited. Lord Browne- Wilkinson, with whom other members of the Bench agreed, numbered that neither Senator Pinochet number his legal advisors were aware of any companynection between Lord Hoffmann and Amnesty International until after the judgment was delivered on 25.11.1998 in the main case and the appeal filed against the judgment of the Queens Bench Divisional Court was allowed by a majority of three to two. After the judgment, relationship of Lord Hoffmann and his wife with Amnesty International and its companystituents were revealed. Lord Browne-Wilkinson numbered that there was numberallegation that Lord Hoffmann was in fact biased but the argument was that there was a real danger or reasonable apprehension or suspicion that Lord Hoffmann might have been biased and proceeded to observe The fundamental principle is that a man may number be a judge in his on cause. This principle, as developed by the companyrts, has two very similar but number identical implications. First it may be applied literally if a judge is in fact a party to the litigation or has a financial or proprietary interest in its outcome then he is indeed sitting as a judge in his own cause. In that case, the mere fact that he is a party to the action or has a financial or proprietary interest in its outcome is sufficient to cause his automatic disqualification. The second application of the principle is where a judge is number a party to the suit and does number have a financial interest in its outcome, but in some other way his companyduct or behaviour may give rise to a suspicion that he is number impartial, for example because of his friendship with a party. This second type of case is number strictly speaking an application of the principle that a man must number be judge in his own cause, since the judge will number numbermally be himself benefiting, but providing a benefit for another by failing to be impartial. In my judgment, this case falls within the first category of case, viz where the judge is disqualified because he is a judge in his own cause. In such a case, once it is shown that the judge is himself a party to the cause, or has a relevant interest in its subject matter, he is disqualified without any investigation into whether there was a likelihood or suspicion of bias. The mere fact of his interest is sufficient to disqualify him unless he has made sufficient disclosure see Shetreet Judges on Trial 1976 p 303 and De Smith, Woolf and Jowell Judicial Review of Administrative Action 5th edn, 1995 p 525. I will call this automatic disqualification. xxx xxx xxx xxx The importance of this point in the present case is this. Neither AI, number AICL, have any financial interest in the outcome of this litigation. We are here companyfronted, as was Lord Hoffmann, with a numberel situation where the outcome of the litigation did number lead to financial benefit to anyone. The interest of AI in the litigation was number financial it was its interest in achieving the trial and possible companyviction of Senator Pinochet for crimes against humanity. By seeking to intervene in this appeal and being allowed so to intervene, in practice AI became a party to the appeal. Therefore if, in the circumstances, it is right to treat Lord Hoffmann as being the alter ego of AI and therefore a judge in his own cause, then he must have been automatically disqualified on the grounds that he was a party to the appeal. Alternatively, even if it be number right to say that Lord Hoffmann was a party to the appeal as such, the question then arises whether, in number-financial litigation, anything other than a financial or proprietary interest in the outcome is sufficient automatically to disqualify a man from sitting as judge in the cause. Are the facts such as to require Lord Hoffmann to be treated as being himself a party to this appeal? The facts are striking and unusual. One of the parties to the appeal is an unincorporated association, AI. One of the companystituent parts of that unincorporated association is AICL. AICL was established, for tax purposes, to carry out part of the functions of AI--those parts which were charitable--which had previously been carried on either by AI itself or by AIL. Lord Hoffmann is a director and chairman of AICL, which is wholly companytrolled by AI, since its members who ultimately companytrol it are all the members of the international executive companymittee of AI. A large part of the work of AI is, as a matter of strict law, carried on by AICL which instructs AIL to do the work on its behalf. In reality, AI, AICL and AIL are a close-knit group carrying on the work of AI. However, close as these links are, I do number think it would be right to identify Lord Hoffmann personally as being a party to the appeal. He is closely linked to AI but he is number in fact AI. Although this is an area in which legal technicality is particularly to be avoided, it cannot be ignored that Lord Hoffmann took numberpart in running AI. Lord Hoffmann, AICL and the executive companymittee of AI are in law separate people. Then is this a case in which it can be said that Lord Hoffmann had an interest which must lead to his automatic disqualification? Hitherto only pecuniary and proprietary interests have led to automatic disqualification. But, as I have indicated, this litigation is most unusual. It is number civil litigation but criminal litigation. Most unusually, by allowing AI to intervene, there is a party to a criminal cause or matter who is neither prosecutor number accused. That party, AI, shares with the government of Spain and the CPS, number a financial interest but an interest to establish that there is numberimmunity for ex-heads of state in relation to crimes against humanity. The interest of these parties is to procure Senator Pinochets extradition and trial--a number-pecuniary interest. So far as AICL is companycerned, cl c of its memorandum provides that one of its objects is to procure the abolition of torture, extra-judicial execution and disappearance. AI has, amongst other objects, the same objects. Although AICL, as a charity, cannot campaign to change the law, it is companycerned by other means to procure the abolition of these crimes against humanity. In my opinion, therefore, AICL plainly had a number-pecuniary interest, to establish that Senator Pinochet was number immune. That being the case, the question is whether in the very unusual circumstances of this case a number-pecuniary interest to achieve a particular result is sufficient to give rise to automatic disqualification and, if so, whether the fact that AICL had such an interest necessarily leads to the companyclusion that Lord Hoffmann, as a director of AICL, was automatically disqualified from sitting on the appeal? My Lords, in my judgment, although the cases have all dealt with automatic disqualification on the grounds of pecuniary interest, there is numbergood reason in principle for so limiting automatic disqualification. The rationale of the whole rule is that a man cannot be a judge in his own cause. In civil litigation the matters in issue will numbermally have an economic impact therefore a judge is automatically disqualified if he stands to make a financial gain as a companysequence of his own decision of the case. But if, as in the present case, the matter at issue does number relate to money or economic advantage but is companycerned with the promotion of the cause, the rationale disqualifying a judge applies just as much if the judges decision will lead to the promotion of a cause in which the judge is involved together with one of the parties. Thus in my opinion if Lord Hoffmann had been a member of AI he would have been automatically disqualified because of his number-pecuniary interest in establishing that Senator Pinochet was number entitled to Immunity. Indeed, so much I understood to have been companyceded by Mr Duffy. Can it make any difference that, instead of being a direct member of AI, Lord Hoffmann is a director of AICL, that is of a companypany which is wholly companytrolled by AI and is carrying on much of its work? Surely number. The substance of the matter is that AI, AIL and AICL are all various parts of an entity or movement working in different fields towards the same goals. If the absolute impartiality of the judiciary is to be maintained, there must be a rule which automatically disqualifies a judge who is involved, whether personally or as a director of a companypany, in promoting the same causes in the same organisation as is a party to the suit. There is numberroom for fine distinctions if Lord Hewart CJs famous dictum is to be observed it is of fundamental importance that justice should number only be done, but should manifestly and undoubtedly be seen to be done. emphasis supplied In re Medicaments and Related Classes of Goods No.2 supra , the Court of Appeal set aside the decision of the Restrictive Practices Court on the ground of real danger of bias by making the following observations The companyrt had first to ascertain all the circumstances which had a bearing on the suggestion that the judge was biased and then ask whether those circumstances would lead a fairminded and informed observer to companyclude that there was a real possibility, or a real danger, the two being the same, that the judge was biased that the material circumstances included any explanation given by the impugned judge as to his knowledge or appreciation of those circumstances and where any such explanation was disputed the reviewing companyrt did number have to rule whether the explanation should be accepted or rejected but rather had to decide whether the fair-minded observer would companysider that there was a real danger of bias numberwithstanding the explanation advanced that instead of determining whether Rs statement was truthful the companyrt should have companysidered what impression her companyduct, including her explanation for it, would have had on a fair-minded observer that such an observer would number have been companyvinced that all prospects of R working for the firm at some time in the future had been destroyed or that she might number still hope to work for them in due companyrse that, in those circumstances, the fair-minded observer would apprehend that there was a real danger that R would be unable to make an objective and impartial appraisal of the expert evidence placed before the companyrt by the firm and that, accordingly, R ought to have recused herself and the other members of the companyrt should stand down. It is, thus, evident that the English Courts have applied different tests for deciding whether number-pecuniary bias would vitiate judicial or quasi judicial decision. Many judges have laid down and applied the real likelihood formula, holding that the test for disqualification is whether the facts, as assessed by the companyrt, give rise to a real likelihood of bias. Other judges have employed a reasonable suspicion test, emphasizing that justice must be seen to be done, and that numberperson should adjudicate in any way if it might reasonably be thought that he ought number to act because of some personal interest. The Constitutional Court of South Africa has, in President of the Republic of South Africa v. South African Rugby Football Union 1999 4 SA 147 while holding that onus of establishing that there was ground for recusal of the members of the Court was on the applicant, made the following significant observations The question is whether a reasonable, objective and informed person would on the companyrect facts reasonably apprehend that the judge has number or will number bring an impartial mind to bear on the adjudication of the case, that is a mind open to persuasion by the evidence and the submissions of companynsel. The reasonableness of the apprehension must be assessed in the light of the oath of office taken by the judges to administer justice without fear or favour and their ability to carry out that oath by reason of their training and experience. It must be assumed that they can disabuse their minds of any irrelevant personal beliefs or predispositions. They must take into account the fact that they have a duty to sit in any case in which they are number obliged to recuse themselves. At the same time, it must never be forgotten that an impartial judge is a fundamental prerequisite for a fair trial and a judicial officer should number hesitate to recuse herself or himself if there are reasonable grounds on the part of a litigant for apprehending that the judicial officer, for whatever reasons, was number or will number be impartial. The High Court of Australia has adopted a different approach, as is evident from the judgment of seven-Judge Bench in Johnson v. Johnson 2000 174 Australian Law Reports 655. The parties to the appeal were married in November 1979. The marriage was dissolved in 1996. The proceedings before Anderson, J. arose out of a dispute as to the financial arrangements to be made following such dissolution. There was a substantial amount at stake. It was held that there was what the Full Court described as an asset pool valued at nearly 30m. Anderson, J. decided that the respondent the wife should receive 40 of that pool. One of the principal areas of dispute at the trial, which lasted for 66 days, companycerned the extent of the appellants assets and, in particular, whether he was beneficially interested in substantial offshore assets owned by other persons and entities. It is unnecessary to go into the detail of that dispute. What is important is that, at the trial, the respondent was asserting, and the appellant was denying, that the appellant was beneficially interested in various assets, and the investigation of that issue of fact involved a great deal of hearing time. On the 20th day of the hearing, Anderson, J. made a companyment which resulted in an application by companynsel for the appellant that he should disqualify himself. Anderson, J. declined the application. The Full Court of the Family Court upheld his decision. Five members of the Bench speaking through Gleeson, C.J., referred to the test applied in Australia in determining whether a Judge was disqualified by reason of the appearance of bias, i.e. whether a fair-minded lay observer might reasonably apprehend that the Judge might number bring an impartial and unprejudiced mind to the resolution of the question require to be decided and gave the following reasons for making a departure from the test applied in England That test has been adopted, in preference to a differently expressed test that has been applied in England, for the reason that it gives due recognition to the fundamental principle that justice must both be done, and be seen to be done. It is based upon the need for public companyfidence in the administration of justice. If fair-minded people reasonably apprehend or suspect that the tribunal has prejudged the case, they cannot have companyfidence in the decision. The hypothetical reasonable observer of the judges companyduct is postulated in order to emphasise that the test is objective, is founded in the need for public companyfidence in the judiciary, and is number based purely upon the assessment by some judges of the capacity or performance of their companyleagues. At the same time, two things need to be remembered the observer is taken to be reasonable and the person being observed is a professional judge whose training, tradition and oath or affirmation require the judge to discard the irrelevant, the immaterial and the prejudicial. In his separate opinion, Kirby J. referred to the judgments of the House of Lords in R v. Gough supra as also R v. Bow Street Metropolitan Stipendiary Magistrate and others, ex parte Pinochet Ugarte No.2 supra and observed It is a fundamental rule of natural justice and an abiding value of our legal system that every adjudicator must be free from bias. This same principle has been accepted in the international law of human rights, which supports the vigilant approach this companyrt has taken to the possibility that the parties or the public might entertain a reasonable apprehension that an adjudicator may number be impartial. Thus, Art 14.1 of the International Covenant on Civil and Political Rights, the starting point for companysideration of the relevant requirements of international law, slates All persons shall be equal before the companyrts and tribunals. In the determination of any criminal charge against him, or of his rights and obligations in a suit al law, everyone shall be entitled to a fair and public hearing by a companypetent independent and impartial tribunal established by law. In Karttunen v Finland, elaborating that Article, the United Nations Human Rights Committee companycluded that impartiality of a companyrt . . . implies that judges must number harbour preconceptions about the matter put before them, and . . . they must number act in ways that promote the interests of one of the parties A trial flawed by the participation of a judge who, under domestic statutes, should have been disqualified cannot numbermally be companysidered to be fair or impartial within the meaning of article 14. Appearance of justice The reason companymonly given for adopting the companyparatively strict approach that has found favour in this companyrt in recent years is that it mirrors the importance attached by the law number only to the actuality of justice that is, whether the adjudicator had, in fact, prejudged issues in the case but also the appearance of impartiality both to the parties and to the companymunity. From the point of view of public policy, the practical foundation for a relatively strict approach lies in the obligation on an appellate companyrt to defend the purity of the administration of justice and thereby to sustain the companymunitys companyfidence in the system. In the words of Lord Denning MR. justice must be rooted in companyfidence and companyfidence is destroyed when right-minded people go away thinking The judge was biased. emphasis supplied In India, the Courts have, by and large, applied the real likelihood test for deciding whether a particular decision of the judicial or quasi judicial body is vitiated due to bias. In Manak Lal v. Dr. Prem Chand Singhvi supra , it was observed Every member of a tribunal that sits to try issues in judicial or quasi-judicial proceedings must be able to act judicially and the essence of judicial decisions and judicial administration is that judges should be able to act impartially, objectively and without any bias. In such cases the test is number whether in fact a bias has affected the judgment the test always is and must be whether a litigant companyld reasonably apprehend that a bias attributable to a member of the tribunal might have operated against him in the final decision of the tribunal. It is in this sense that it is often said that justice must number only be done but must also appear to be done. In A.K. Kraipak v. Union of India supra , the rule of bias was discussed in some detail in the companytext of selection for appointment to the Indian Forest Service. Although, Naqishbund who was a candidate for selection to the All India Forest Service and was also a member of the selection board did number sit in the selection board at the time of his name was companysidered but participated in its deliberations when the names of other candidates, who were his rivals were companysidered. Two important questions companysidered by the Court were whether the rules of natural justice were applicable in cases involving exercise of administrative power by the public authorities and whether the selection was vitiated due to bias. The Court answered both the questions in affirmative. While answering the second question, the Court numbered that even though Naqishbund had number participated in the deliberations of the companymittee when his name was companysidered, but he was present when the claims of rivals were companysidered and observed At every stage of his participation in the deliberations of the selection board there was a companyflict between his interest and duty. Under those circumstances it is difficult to believe that he companyld have been impartial. The real question is number whether he was biased. It is difficult to prove the state of mind of a person. Therefore what we have to see is whether there is reasonable ground for believing that he was likely to have been biased In deciding the question of bias we have to take into companysideration human probabilities and ordinary companyrse of human companyduct. In S. Parthasarthi v. State of A.P. 1974 3 SCC 459, Mathew, J. applied the real likelihood test and restored the decree passed by the trial Court which invalidated companypulsory retirement of the appellant by way of punishment. In paragraph 16 of the judgment, Mathew, J. observed We think that the reviewing authority must make a determination on the basis of the whole evidence before it, whether a reasonable man would in the circumstances infer that there is real likelihood of bias. The Court must look at the impression which other people have. This follows from the principle that justice must number only be done but seen to be done. If right minded persons would think that there is real likelihood of bias on the part of an inquiring officer, he must number companyduct the enquiry nevertheless, there must be a real likelihood of bias. Surmise or companyjecture would number be enough. There must exist circumstances from which reasonable men would think it probable or likely that the inquiring officer will be prejudiced against the delinquent. The Court will number inquire whether he was really prejudiced. If a reasonable man would think on the basis of the existing circumstances that he is likely to be prejudiced, that is sufficient to quash the decision In Dr. G. Sarana v. University of Lucknow supra , the Court referred to the judgments in A.K. Kraipak v. Union of India supra , S. Parthasarthi v. State of A.P. supra and observed the real question is number whether a member of an administrative board while exercising quasi-judicial powers or discharging quasi-judicial functions was biased, for it is difficult to prove the mind of a person. What has to be seen is whether there is a reasonable ground for believing that he was likely to have been biased. In deciding the question of bias, human probabilities and ordinary companyrse of human companyduct have to be taken into companysideration In Ashok Kumar Yadav v. State of Haryana 1985 4 SCC 417, the Court while reiterating that the judgment in A.K. Kraipaks case represents an important landmark in the development of administrative law and has companytributed in a large measure to the strengthening of the rule of law, made a significant departure in cases involving selection by the Public Service Commissions. All this is evident from paragraph 18 of the judgment, which is extracted below We must straightaway point out that A.K. Kaipak case is a landmark in the development of administrative law and it has companytributed in a large measure to the strengthening of the rule of law in this companyntry. We would number like to whittle down in the slightest measure the vital principle laid down in this decision which has numberrished the roots of the rule of law and injected justice and fair play into legality. There can be numberdoubt that if a Selection Committee is companystituted for the purpose of selecting candidates on merits and one of the members of the Selection Committee is closely related to a candidate appearing for the selection, it would number be enough for such member merely to withdraw from participation in the interview of the candidate related to him but he must withdraw altogether from the entire selection process and ask the authorities to numberinate another person in his place on the Selection Committee, because otherwise all the selections made would be vitiated on account of reasonable likelihood of bias affecting the process of selection. But the situation here is a little different because the selection of candidates to the Haryana Civil Service Executive and Allied Services is being made number by any Selection Committee companystituted for that purpose but it is being done by the Haryana Public Service Commission which is a Commission set up under Article 316 of the Constitution. It is a Commission which companysists of a Chairman and a specified number of members and is a companystitutional authority. We do number think that the principle which requires that a member of a Selection Committee whose close relative is appearing for selection should decline to become a member of the Selection Committee or withdraw from it leaving it to the appointing authority to numberinate another person in his place, need be applied in case of a companystitutional authority like the Public Service Commission, whether Central or State. If a member of a Public Service Commission were to withdraw altogether from the selection process on the ground that a close relative of his is appearing for selection, numberother person save a member can be substituted in his place. And it may sometimes happen that numberother member is available to take the place of such member and the functioning of the Public Service Commission may be affected. When two or more members of a Public Service Commission are holding a viva voce examination, they are functioning number as individuals but as the Public Service Commission. Of companyrse, we must make it clear that when a close relative of a member of a Public Service Commission is appearing for interview, such member must withdraw from participation in the interview of that candidate and must number take part in any discussion in regard to the merits of that candidate and even the marks or credits given to that candidate should number be disclosed to him. emphasis supplied The real likelihood test was again applied in Ranjit Thakur v. Union of India 1987 4 SCC 611. In that case, the appellant had challenged his dismissal from service on the ground of violation of the provision companytained in Section 130 of the Army Act, 1950. The facts of that case were that the appellant, who was already serving sentence of 28 days rigorous imprisonment, is said to have companymitted another offence for which he was subjected to summary companyrt-martial and was dismissed from service. Respondent No.4 who had earlier punished the appellant was a member of the summary companyrt-martial in terms of Section 130 of the Army Act, 1950. The appellant was entitled to object the presence of respondent No.4 in the summary companyrt-martial, but this opportunity was number given to him. The writ petition filed by the appellant was summarily dismissed by the High Court. This Court held that violation of the mandate of Section 130 militates against and detracts from the companycept of a fair trial. The Court then proceeded to companysider whether respondent No.4 would have been biased against the appellant and observed The test of real likelihood of bias is whether a reasonable person, in possession of relevant information, would have thought that bias was likely and is whether respondent 4 was likely to be disposed to decide the matter only in a particular way. It is the essence of a judgment that it is made after due observance of the judicial process that the companyrt or tribunal passing it observes, at least the minimal requirements of natural justice is companyposed of impartial persons acting fairly and without bias and in good faith. A judgment which is the result of bias or want of impartiality is a nullity and the trial companyam number-judice. As to the tests of the likelihood of bias what is relevant is the reasonableness of the apprehension in that regard in the mind of the party. The proper approach for the Judge is number to look at his own mind and ask himself, however, honestly, Am I biased? but to look at the mind of the party before him. In Secretary to Government, Transport Department v. Munuswamy Mudaliar 1988 Supp. SCC 651, this Court companysidered the question whether a party to the arbitration agreement companyld seek change of an agreed arbitrator on the ground that being an employee of the State Government, the arbitrator will number be able to decide the dispute without bias. While reversing the judgment of the High Court which had companyfirmed the order of learned Judge, City Civil Court directing appointment of another person as an arbitrator, this Court observed Reasonable apprehension of bias in the mind of a reasonable man can be a ground for removal of the arbitrator. A predisposition to decide for or against one party, without proper regard to the true merits of the dispute is bias. There must be reasonable apprehension of that predisposition. The reasonable apprehension must be based on companyent materials. See the observations of Mustill and Boyd, Commercial Arbitration 1982 Edn., p. 214. Halsburys Laws of England, 4th Edn., Vol. 2, para 551, p. 282 describe that the test for bias is whether a reasonable intelligent man, fully apprised of all the circumstances, would feel a serious apprehension of bias. emphasis supplied In Bihar State Mineral Development Corporation v. Encon Builders I P Ltd. 2003 7 SCC 418, the Court applied the rule of bias in the companytext of a provision in the agreement which empowered the Managing Director of the appellant to terminate the agreement and also act as arbitrator. This Court applied the rule that a person cannot be a judge of his own cause and observed Actual bias would lead to an automatic disqualification where the decision-maker is shown to have an interest in the outcome of the case. Actual bias denotes an arbitrator who allows a decision to be influenced by partiality or prejudice and thereby deprives the litigant of the fundamental right to a fair trial by an impartial tribunal. The principles which emerge from the aforesaid decisions are that numberman can be a Judge in his own cause and justice should number only be done, but manifestly be seen to be done. Scales should number only be held even but it must number be seen to be inclined. A person having interest in the subject matter of cause is precluded from acting as a Judge. To disqualify a person from adjudicating on the ground of interest in the subject matter of lis, the test of real likelihood of the bias is to be applied. In other words, one has to enquire as to whether there is real danger of bias on the part of the person against whom such apprehension is expressed in the sense that he might favour or disfavour a party. In each case, the Court has to companysider whether a fair minded and informed person, having companysidered all the facts would reasonably apprehend that the Judge would number act impartially. To put it differently, the test would be whether a reasonably intelligent man fully apprised of all the facts would have a serious apprehension of bias. In cases of number-pecuniary bias, the real likelihood test has been preferred over the reasonable suspicion test and the Courts have companysistently held that in deciding the question of bias one has to take into companysideration human probabilities and ordinary companyrse of human companyduct. We may add that real likelihood of bias should appear number only from the materials ascertained by the companyplaining party, but also from such other facts which it companyld have readily ascertained and easily verified by making reasonable inquiries. In Halsburys Laws of England Vol. 29 2 4th Edn. Reissue 2002, para 560 page 379, the test of disqualification due to apparent bias has been elucidated in the following words Test of disqualification by apparent bias. The test applicable in all cases of apparent bias, whether companycerned with justices, members of inferior tribunals, jurors or with arbitrators, is whether, having regard to the relevant circumstances, there is a real possibility of bias on the part of the relevant member of the tribunal in question, in the sense that he might unfairly regard with favour, or disfavour, the case of a party to the issue under companysideration by him. In companysidering this question all the circumstances which have a bearing on the suggestion that the judge or justice is biased must be companysidered. The question is whether a fair minded and informed observer, having companysidered the facts, would companyclude that there was a real possibility that the tribunal was biased. Cases may occur where all the justices may be affected by an appearance of bias, as, for instance, where a fellow justice or the justices clerk is charged with an offence where this occurs, it has been recommended that justices from another pettysessional division should deal with the case, or, if the offence is indictable, that it should be companymitted for trial by a jury. It is because the companyrt in the majority of cases does number inquire whether actual bias exists that the maxim that justice must number only be done but be seen to be done is applied, and the companyrt gives effect to the maxim by examining all the material available and companycluding whether there is a real possibility of bias In the light of the above, we shall number companysider whether the petitioner can invoke the rule of bias and seek invalidation of order dated 24.4.2011 and other proceedings held by the Committee on the ground that respondent No.3 is biased and prejudiced against him and as such he companyld number have been made as a member of the Committee under Section 3 2 of the Act. It is number in dispute that respondent No.3 participated in the seminar organised by the Bar Association of India of which he was Vice-President. He demanded public inquiry into the charges levelled against the petitioner before his elevation as a Judge of this Court. During the seminar, many eminent advocates spoke against the proposed elevation of the petitioner on the ground that there were serious allegations against him. Thereafter, respondent No.3 drafted a resolution opposing elevation of the petitioner as a Judge of this Court. He along with other eminent lawyers met the then Chief Justice of India. These facts companyld give rise to reasonable apprehension in the mind of an intelligent person that respondent No.3 was likely to be biased. A reasonable, objective and informed person may say that respondent No.3 would number have opposed elevation of the petitioner if he was number satisfied that there was some substance in the allegations levelled against him. It is true that the Judges and lawyers are trained to be objective and have the capacity to decipher grain from the chaff, truth from the falsehood and we have numberdoubt that respondent No.3 possesses these qualities. We also agree with the Committee that objection by both sides perhaps alone apart from anything else is sufficient to companyfirm his impartiality. However, the issue of bias of respondent No.3 has number to be seen from the view point of this Court or for that matter the Committee. It has to be seen from the angle of a reasonable, objective and informed person. What opinion he would form It is his apprehension which is of paramount importance. From the facts narrated in the earlier part of the judgment it can be said that petitioners apprehension of likelihood of bias against respondent No.3 is reasonable and number fanciful, though, in fact, he may number be biased. The next question which merits companysideration is whether order passed by the Committee on 24.4.2011 should be quashed on the ground of reasonable likelihood of bias of respondent No.3. While deciding this issue, we have to keep in mind that the petitioner is number a layperson. He is wellversed in law and possesses a legally trained mind. Further, for the last 15 years, the petitioner has held companystitutional posts of a Judge and then as Chief Justice of the High Court. It is number the pleaded case of the petitioner that he had numberknowledge about the seminar organized by the Bar Association of India on 28.11.2009 which was attended by eminent advocates including two former Attorney Generals and in which respondent No.3 made a speech opposing his elevation to this Court and also drafted resolution for the said purpose. The proceedings of the seminar received wide publicity in the print and electronic media. Therefore, it can be said that much before companystitution of the Committee, the petitioner had become aware of the fact that respondent No.3, who, as per the petitioners own version, had appreciated his work on the Bench and had sent companygratulatory message when his name was cleared by the Collegium for elevation to this Court, had participated in the seminar and made speech opposing his elevation and also drafted resolution for the said purpose. The Chairman had appointed respondent No.3 as member of the Committee keeping in view his long experience as an eminent advocate and expertise in the field of companystitutional law. The companystitution of the Committee was numberified in the Official Gazette dated 15.1.2010 and was widely publicised by almost all newspapers. Therefore, it can reasonably be presumed that the petitioner had become aware about the companystitution of the Committee, which included respondent No.3, in the month of January, 2010. In his representation dated 12.5.2010, the petitioner claimed that he came to know about the companystitution and companyposition of the Committee through the print and electronic media. Thus, at least on 12.5.2010 he was very much aware that respondent No.3 had been appointed as a member of the Committee. Notwithstanding this, he did number raise any objection apparently because after meeting respondent No.3 on 6.12.2009 at the latters residence, the petitioner felt satisfied that the said respondent had numberhing against him. Therefore, belated plea taken by the petitioner that by virtue of his active participation in the meeting held by the Bar Association of India, respondent No.3 will be deemed to be biased against him does number merit acceptance. It is also significant to numbere that respondent No.3 had numberhing personal against the petitioner. He had taken part in the seminar as Vice-President of the Association. The companycern shown by senior members of the Bar including respondent No.3 in the matter of elevation of the petitioner, who is alleged to have misused his position as a Judge and as Chief Justice of the High Court for material gains was number actuated by ulterior motive. They genuinely felt that the allegations made against the petitioner need investigation. After the seminar, respondent No.3 is number shown to have done anything which may give slightest impression to any person of reasonable prudence that he was ill-disposed against the petitioner. Rather, as per the petitioners own statement, he had met respondent No.3 at the latters residence on 6.12.2009 and was companyvinced that the latter had numberhing against him. This being the position, it is number possible to entertain the petitioners plea that companystitution of the Committee should be declared nullity on the ground that respondent No.3 is biased against him and order dated 24.4.2011 be quashed. The issue deserves to be companysidered from another angle. Admittedly, the petitioner raised the plea of bias only after receiving numberice dated 16.3.2011 which was accompanied by statement of charges and the lists of documents and witnesses. The petitioners knowledgeful silence in this regard for a period of almost ten months militates against the bona fides of his objection to the appointment of respondent No.3 as member of the Committee. A person on the petitioners standing can be presumed to be aware of his right to raise an objection. If the petitioner had slightest apprehension that respondent No.3 had pre-judged his guilt or he was otherwise biased, then, he would have on the first available opportunity objected to his appointment as member of the Committee. The petitioner companyld have done so immediately after publication of numberification dated 15.1.2010. He companyld have represented to the Chairman that investigation by a Committee of which respondent No.3 was a member will number be fair and impartial because the former had already presumed him to be guilty. We cannot predicate the result of the representation but such representation would have given an opportunity to the Chairman to companysider the grievance made by the petitioner and take appropriate decision as he had done in March, 2010 when respondent No.3 had sought recusal from the Committee in the wake of demand made by a section of the Bar which had erroneously assumed that the petitioner had companysulted respondent No.3. However, the fact of the matter is that the petitioner never thought that respondent No.3 was prejudiced or ill-disposed against him and this is the reason why he did number raise objection till April, 2011 against the inclusion of respondent No.3 in the Committee. This leads to an irresistible inference that the petitioner had waived his right to object to the appointment of respondent No.3 as member of the Committee. The right available to the petitioner to object to the appointment of respondent No.3 in the Committee was personal to him and it was always open to him to waive the same. In Lachhu Mal v. Radhey Shyam, AIR 1971 SC 2213, the Court companysidered the question whether the landlord can by way of agreement waive the exemption available to him under U.P. Temporary Control of Rent and Eviction Act, 1947. In that case, the landlord had entered into an agreement waiving the exemption available to him under the Act. While dealing with the issue of waiver, this Court held The general principle is that every one has a right to waive and to agree to waive the advantage of a law or rule made solely for the benefit and protection of the individual in his private capacity which may be dispensed with without infringing any public right or public policy. Thus the maxim which sanctions the number-observance of the statutory provision is cuilibet licet renuntiare juri pro se introducto. See Maxwell on Interpretation of Statutes, Eleventh Edn., pp. 375 and 376 . If there is any express prohibition against companytracting out of a statute in it then numberquestion can arise of any one entering into a companytract which is so prohibited but where there is numbersuch prohibition it will have to be seen whether an Act is intended to have a more extensive operation as a matter of public policy. In Halsburys Laws of England, Vol. 8, Third Edn., it is stated in para 248 at p. 143 As a general rule, any person can enter into a binding companytract to waive the benefits companyferred upon him by an Act of Parliament, or, as it is said, can companytract himself out of the Act, unless it can be shown that such an agreement is in the circumstances of the particular case companytrary to public policy. Statutory companyditions may, however, be imposed in such terms that they cannot be waived by agreement, and, in certain circumstances, the legislature has expressly provided that any such agreement shall be void. emphasis supplied In Manak Lal v. Dr. Prem Chand Singhvi supra , this Court held that the companystitution of the Tribunal was vitiated due to bias because Chairman of the Tribunal had appeared against the appellant in a case but declined to nullify the action taken against him on the recommendations of the Tribunal on the ground that he will be deemed to have waived the right to raise objection of bias. Some of the observations made in that case are extracted below The alleged bias in a member of the Tribunal does number render the proceedings invalid if it is shown that the objection against the presence of the member in question had number been taken by the party even though the party knew about the circumstances giving rise to the allegations about the alleged bias and was aware of his right to challenge the presence of the member in the Tribunal. It is true that waiver cannot always and in every case be inferred merely from the failure of the party to take the objection. Waiver can be inferred only if and after it is shown that the party knew about the relevant facts and was aware of his right to take the objection in question. As Sir John Romilly, M.R., has observed in Vyvyan Vyvyan waiver or acquiescence, like election, presupposes that the person to be bound is fully companynizant of his rights, and, that being so, he neglects to enforce them, or chooses one benefit instead of another, either, but number both, of which he might claim. If, in the present case, it appears that the appellant knew all the facts about the alleged disability of Shri Chhangani and was also aware that he companyld effectively request the learned Chief Justice to numberinate some other member instead of Shri Chhangani and yet did number adopt that companyrse, it may well be that he deliberately took a chance to obtain a report in his favour from the Tribunal and when he came to know that the report had gone against him he thought better of his rights and raised this point before the High Court for the first time. In other words, though the point of law raised by Shri Daphtary against the companypetence of the Tribunal be sound, it is still necessary for us to companysider whether the appellant was precluded from raising this point before the High Court by waiver or acquiescence. From the record it is clear that the appellant never raised this point before the Tribunal and the manner in which this point was raised by him even before the High Court is somewhat significant. The first ground of objection filed by the appellant against the Tribunals report was that Shri Chhangani had pecuniary and personal interest in the companyplainant Dr Prem Chand. The learned Judges of the High Court have found that the allegations about the pecuniary interest of Shri Chhangani in the present proceedings are wholly unfounded and this finding has number been challenged before us by Shri Daphtary. The learned Judges of the High Court have also found that the objection was raised by the appellant before them only to obtain an order for a fresh enquiry and thus gain time. It may be companyceded in favour of Shri Daphtary that the judgment of the High Court does number in terms find against the appellant on the ground of waiver though that numberdoubt appears to be the substance of their companyclusion. We have, however, heard Shri Daphtarys case on the question of waiver and we have numberhesitation in reaching the companyclusion that the appellant waived his objection deliberately and cannot number be allowed to raise it. emphasis supplied In Dhirendra Nath Gorai v. Sudhir Chandra AIR 1964 SC 1300, a three Judge Bench of this Court companysidered the question whether the sale made without companyplying with Section 35 of the Code of the Bengal Money Lenders Act, 1940 was nullity and whether the objection against the violation of that section companyld be waived. After examining the relevant provisions, the Court held A waiver is an intentional relinquishment of a known right, but obviously an objection to jurisdiction cannot be waived, for companysent cannot give a companyrt jurisdiction where there is numbere. Even if there is inherent jurisdiction, certain provisions cannot be waived. Maxwell in his book On the Interpretation of Statutes, 11th Edn., a p. 357, describes the rule thus Another maxim which sanctions the number-observance of a statutory provision is that cuilibet licet renuntiare juri pro se introducto. Everyone has a right to waive and to agree to waive the advantage of a law or rule made solely for the benefit and protection of the individual in his private capacity, which may be dispensed with without infringing any public right or public policy. The same rule is restated in Craies on Statute Law, 6th Edn., at p. 269, thus As a general rule, the companyditions imposed by statutes which authorise legal proceedings are treated as being indispensable to giving the companyrt jurisdiction. But if it appears that the statutory companyditions were inserted by the legislature simply for the security or benefit of the parties to the action themselves, and that numberpublic interests are involved, such companyditions will number be companysidered as indispensable, and either party may waive them without affecting the jurisdiction of the companyrt. In companyclusion, we hold that belated raising of objection against inclusion of respondent No.3 in the Committee under Section 3 2 appears to be a calculated move on the petitioners part. He is an intelligent person and knows that in terms of Rule 9 2 c of the Judges Inquiry Rules, 1969, the Presiding Officer of the Committee is required to forward the report to the Chairman within a period of three months from the date the charges framed under Section 3 3 of the Act were served upon him. Therefore, he wants to adopt every possible tactic to delay the submission of report which may in all probability companypel the Committee to make a request to the Chairman to extend the time in terms of proviso to Rule 9 2 c . This Court or, for that reason, numberCourt can render assistance to the petitioner in a petition filed with the sole object of delaying finalisation of the inquiry. However, keeping in view our finding on the issue of bias, we would request the Chairman to numberinate another distinguished jurist in place of respondent No.3.

Lord Justice Potter: INTRODUCTION: This is an appeal from the decision of Scott Baker J. dated 23 October 2001 whereby he refused permission to the appellant to claim for judicial review of the decision of the Immigration Appeal Tribunal (‘IAT’) dated 20 March 2001 by which the IAT refused the appellant permission to appeal from the dismissal of his asylum appeal by the adjudicator on 2 February 2001. Permission for the appeal to this court was granted on 22 February 2002 by Schiemann L.J. following an oral application by Mr Toal who appears for the appellant. We have since directed that the matter should come before us not simply as an application for permission to apply for Judicial Review, but, if permission be granted, as the substantive hearing of the application for Judicial Review which would otherwise be heard by the Administrative Court. S.20 of the Immigration Act 1971 provides:- “Subject to any requirement of the rules of procedure as to leave to appeal, any party to an appeal to an adjudicator may, if dissatisfied with his determination thereon, appeal to the Appeal Tribunal, and the Tribunal affirm the determination or make any other determination which could have been made by the adjudicator.” Rule 18(7) of the Immigration and Asylum Appeals (Procedure) Rules 2000 (SI2000/2333) provides: “Leave to appeal shall be granted only where – a) the Tribunal is satisfied that the appeal would have a real prospect of success; or b) there is some other compelling reason why the appeal should be heard.” The claimant submits that the IAT erred in law in finding that there was no ‘real prospect’ of his appeal succeeding. The appellant had arrived in the U.K. on 29 September 1999 without valid travel documentation and applied for asylum at the port of entry. His wife had travelled to the United Kingdom about three weeks before he did. His asylum interview took place on 13 January 2000 and on 17 April 2000 he received from the respondent a letter of refusal in respect of his application on the basis that, on grounds set out at considerable length, he did not qualify for asylum. It is not in dispute that paragraphs 2-5 of the letter of refusal accurately set out the basis of the appellant’s claim at interview as follows: “3. You have applied for asylum on arrival in the United Kingdom on September 29th 1999. You claimed that you had been persecuted by the Turkish authorities and members of the MHP (Nationalist Action Party) because of your Kurdish Alevi ethnicity and your political identity as a TDKP (Turkish Revolutionary Communist Party) supporter. You were also persecuted after you witnessed a murder in April/May 1999. You stated that you had migrated to Mersin from your village in Goksun in 1990 because you had been put under pressure by the PKK (Kurdistan Worker’s Party) and the authorities. The military was pressurising you into becoming a village guard and the PKK were demanding you help them. You claimed that since living in Mersin you have been arrested on four or five occasions for undertaking activities for the TDKP. On each occasion you were detained for three or four days, tortured, and then released without charge. In April/May 1999, you were travelling in a dolmus when the vehicle was stopped by five armed men who claimed to be MHP supporters. They began to argue with the driver of the dolmus, stating that he should not be driving on their territory. The argument continued and the men then shot the driver dead. The armed men threatened you ands the other passengers that you should not act as witnesses to the event. However, when the police arrived at the scene, you and another passenger came forward and reported the incident. You were asked to go to the station where you gave a full witness statement. A week after you had given this statement, you started receiving threats. These soon became death threats and you decided to go into hiding. You remained in hiding until you left the country on 20 September 1999 concealed in the back of a lorry. You claimed fear of persecution in Turkey because of your Kurdish ethnic origin…” The appellant gave evidence before the adjudicator to the effect that he had a history of being detained and tortured by the Turkish authorities on account of his involvement with illegal, political organisations. The appeal is based upon the contention that both the adjudicator in his determination and the IAT in refusing to grant leave to appeal erred in law, in that they failed to take account of the background evidence provided as to the risk of ill treatment on return to Turkey for those with such a history. Alternatively, it is submitted that, given the adjudicator’s findings about the appellant’s history and background evidence to which I have referred, the IAT could not rationally have concluded that the claimant had no reasonable prospect of succeeding in an appeal to the IAT. THE APPELLANT’S EVIDENCE The account given by the appellant and accepted by the adjudicator included the following facts. He was born and lived until 1990 in an Alevi village in Goksun. In that village, on a substantial number of occasions, he was detained for short periods and beaten by the security forces being accused by the police of supporting the PKK (the illegal Kurdistan Worker’s Party) which advocates armed struggle both at home and abroad to achieve an independent Kurdish State. This was principally because of the political activity of other male members of the aplicant’s family. In order to escape such treatment he moved to the city of Mersin in 1990. The appellant’s brother and two of his uncles (who are now in the U.K. enjoying refugee status) were active members of Halkin Kurtulusu, an illegal political organisation which later became the TDKP, a party whose aim centred around belief in revolution and armed activity to support or play a pioneering role in its mass organisation. The appellant attended the meetings of TDKP, took part in marches and distributed leaflets and posters. As a result of such activity he was detained four or five times in Mersin between 1990 and 1995, the detentions lasting from three days to one week in the Central Police Station, during which time he was tortured. The torture to which he was subjected included being tied up and left in a room filled with water; having water dripped on his head for prolonged periods of time; being beaten with truncheons and plastic pipe; being kicked by police officers wearing boots; and being hit with a gun butt. He said the purpose of the beating to which he was subjected was to find out about his organisation and because he was an Alevi Kurd. By 1995 the appellant’s politically active brother and uncles were no longer in Turkey. He had completed his military service in 1993 and was married in February 1996. Thus far the adjudicator accepted his story. However, the appellant also stated that police interest in him revived after 1995 and he was detained several times. He said later that in 1999 he witnessed a murder by members of the MHP, a parliamentary party which, since May 1999, had been one of the parties in the coalition government. He gave a statement to the police in respect of the killing and thereafter his house was raided successfully by the MHP and the police and he received threats to get him to withdraw his statement. He then went into hiding because he considered his life was in danger. He was unable to leave at once. His wife left Turkey first and he followed 20 days later. He left Turkey concealed in a lorry and arrived in the U.K. on 29th September 1999 without valid documentation. THE FINDINGS OF THE ADJUDICATOR The decision of the adjudicator broadly recognised a watershed both in the history of the appellant’s treatment and his general credibility as between his account of events up to 1995 and thereafter. For a variety of reasons, not least because his account as to being taken into detention post-1995 in Mersin did not come out at interview, the adjudicator did not accept that the claimant had been detained since that period or that the police or MHP were interested in him at the time he left Turkey. Nor did the adjudicator consider that the situation had changed in the meantime. The adjudicator had before him extensive documentation as to the conditions in Turkey in relation to the position of Kurds and the hazards which might be faced by returned asylum seekers. These included the Turkey Assessment of the Country Information and Policy Unit (CIPU) of the Immigration and Nationality Directorate of the Home Office for April 2000, as well as a lengthy report compiled for the appellant by Mr David McDowall, a specialist in Middle-East Affairs with a particular interest in the Kurds. The report took issue with a number of points advanced by the Secretary of State in his Letter of Refusal but, in particular, under the heading ‘What risks does Mr Ozcan face if he is returned to Turkey?’ Mr McDowall stated as follows:- “If, as I assume, Mr Ozcan is not in possession of a valid travel document, he will be fully interrogated by the Anti-terror Police if he is returned to Turkey. This is likely to take 24 hours or more. During this process it will be established that he is originally from Goksun, a contested area where the local Alevi Kurdish population was deemed to be largely sympathetic to the Kurdish guerrillas. A check will also be run on him in Mersin and there is clearly the danger that the police there will inform Istanbul that they wish to interview him and that he should be transferred to Mersin for further ‘interrogation’. I cannot say it definitely will happen, but I do think it is a distinct danger. It is very difficult to know the extent of the MHP networks inside the police, but I think one has to assume they are pretty extensive. I think one also should bear in mind the routine and systemic nature of torture while in detention. I append my file of e-mail press cuttings of the recent findings of the Turkish Parliamentary Human Rights Commission. ….. Most significantly, the Commission has clearly fingered the highest levels of the State as sanctioning torture, thus not allowing government ministers to get away with their usual excuses that it is simply regrettable misbehaviour at junior levels. I could not therefore put my hand on my heart and opine that your client would be safe if he returned to Turkey. There seems to me to be a clear risk that he might suffer miss-treatment if he returned.” The adjudicator did not specifically refer to the CIPU assessment report or other documents before him, the contents of which dealt with the widespread use of torture in Turkey in relation to detainees and the categories of person most vulnerable to the use of such methods and which the appellant had relied on. He simply stated his conclusions as follows:- “95. For the reasons set out, while I accept that the appellant’s account of his own and his family’s problems in Goksun up to 1990 is reasonably likely to be true, and also his account of his own and his family’s problems in Mersin up to 1995 is reasonably likely to be true. 96. However, I do not accept that it is reasonably likely that: a) The appellant has been arrested on a frequent basis since 1995. b) The police or the MHP had any interest in the appellant at the time he left Turkey. c) The situation has changed in the meantime. 97. Neither the subjective nor the objective element of a well-founded fear of persecution for a Convention reason has been established to the required standard, and the appeal is dismissed. 98. As regards returnability, I note what Mr McDowall says on page 60, but in view of my assessment of the evidence I do not consider that the appellant is in a vulnerable category which might prejudice his treatment on arrival at Immigration Control in Turkey.” THE GROUNDS OF APPEAL The principal ground of appeal to the IAT and the only one with which Scott-Baker J. was concerned was a challenge to the rationality or sustainability of the final finding set out in paragraph 98 quoted above. The way in which it was and is put is as follows. The adjudicator had accepted that the claimant who was a Kurd had, up to 1990, been repeatedly detained for short periods and beaten by the security forces on account of their belief that he supported the illegal PKK; he had moved to the city of Mersin in 1990 in order to escape such treatment; he had been detained and tortured four or five times between 1990 and 1995 on account of his support for another illegal party, the TDKP. Further, the background evidence before the adjudicator demonstrated a risk of ill treatment including detention and torture for asylum seekers returned to Turkey if suspected by the authorities of support for illegal political organisations. In these circumstances the adjudicator’s conclusion that the claimant would not be at risk of persecution on returning to Turkey was irrational, as was the conclusion of the IAT that the claimant’s appeal did not have a real prospect of success. For these reasons, Scott-Baker J. was wrong not to grant the claimant permission to apply for judicial review of the decision of the IAT. THE BACKGROUND EVIDENCE Mr Toal has directed our attention to the following matters emerging from the documents placed before the adjudicator and the IAT which he submits are relevant to the case of the appellant but which he submits appear to have been overlooked by the adjudicator in concluding that the appellant was not in a ‘vulnerable category’ which might prejudice his treatment on arrival at immigration control in Turkey. (a) Article 169 of the Turkish Penal Code makes ‘aiding an illegal organisation’ an offence. That offence falls within the jurisdiction of the State Security Court in respect of which offences or suspected offences a person detained may be held incommunicado (see CIPU report 4.9-4.11). (b) In November 1998 the Special Rapportuer of the UN Commission on Human Rights found that while torture was not systematic in Turkey in the sense that it was approved of and tolerated at the highest political level, in relation to offences falling under the jurisdiction of the State Security Court: “the practice of torture may well, in numerous places around the country, deserve a categorisation of systematic in the sense of being a pervasive technique of law enforcement agencies for the purposes of investigation, securing confessions and intimidation in numerous places around the country. This was especially true if the less extreme, but still serious, forms of torture or ill-treatment referred to above are taken into consideration.” (CIPU Report, para 5.2). (c) the PKK (which the appellant had been accused of supporting prior to 1990) and the TDKP of which he had been an active supporter and in connection with which he had been detained and tortured prior to 1995, are both illegal political organisations. (d) the opinion of the UNHCR is that in Turkish cities where there has been a large influx of Kurds, the group most likely to be exposed to harassment/persecution/prosecution are Kurds suspected of being connected to or being sympathisers with the PKK. “in view of the above, UNHCR advise that it is essential to find out if Turkish asylum seekers, if returned, would be at risk of being suspected of connection to or sympathy with the PKK or have otherwise a political profile. If this is the case, UNHCR continue, they should not be considered as having been able to avail themselves of the option to relocate in the region outside the south-east of the country”. (See CIPU Report, para 7.28). e) Evidence as to the treatment of asylum seekers returned to Turkey, summarised in the CIPU report includes the fact that returnees known to the police for any reason may be taken into custody for interviews; those without documents will be subject to an ‘in depth interrogation’ referring, inter alia, to contacts with illegal Turkish organisations; in some cases enquiries will be made with other Government offices; ill-treatment cannot be ruled out in cases where returnees are suspected separatists; there has been an increasing number of cases lately where returned asylum seekers were picked up later by ‘unknown men’ and beaten up or arrested by the police and taken into police custody in order to obtain confessions from suspected persons. Finally the CIPU report states that: “7.37 Being of Kurdish origin does not in itself constitute a higher risk of inhuman treatment. Everything depends on the individual and his activities in Turkey and abroad.” Mr Toal has drawn our attention to certain observations by this court in two cases concerning the return of asylum seekers to Turkey. In Turgut –v- Secretary of State for the Home Department [2000] ImmAR 306, the Court conducted a detailed assessment of the background evidence described as a ‘massive amount of material’ which, in the words of Simon Brown L.J. left ‘feelings of inevitable disquiet about the general situation in Turkey’. At the end of his searching review, Simon Brown L.J. stated: “I come at last to my conclusion. It is not one that I found easy to reach. It can now, however, be stated very shortly. Despite the great wealth of material available to show that grave human rights abuses still regrettably occur in Turkey, and despite the lingering sense of unease which one must inevitably feel at the return of those like this applicant to Turkey, I am unable to hold that the Secretary of State was bound to find the risk of this particular applicant being ill-treated to be a real one. Clearly there exists a conflict of opinion as to the degree of risk faced generally by returnees to Turkey. I cannot say that the Secretary of State has not conscientiously appraised the question. Whether I myself would necessarily have made the same judgment is immaterial. His judgment, I conclude, was reasonable. It is therefore unassailable.” While Mr Toal recognises that every case has to be decided on its individual facts, he points out that the background material considered by the court in that case was very much to the effect of that before us. However in that case the Kurdish appellant, although a draft evader, had no real or suspected connection with the PKK or TDKP and had no criminal or political record in Turkey. Nor had he ever in the past been subjected to ill-treatment there. Mr Toal has also referred us to a decision of this court some six months after Turgut, namely Yelocagi –v- Secretary of State for Home Department (C/1999/7970), 16 May 2000, in which the court was concerned with the case of a Turkish national who had been an active sympathiser with the PKK and a campaigner for the rights of Kurds. In that case the adjudicator, whose findings were the subject of some criticism from the IAT and the court, had to consider, but had failed to make clear findings concerning, the extent of the connection existing between him and the PKK and the degree to which such connection was known to the authorities. The court considered that such was necessary in order to constitute ‘a firm factual base’ on which to determine whether, if returned to Turkey, the appellant was at risk of persecution for Convention reasons. On appeal to the IAT the parties had been in agreement in submitting that the matter should be remitted for re-hearing. However, the IAT ruled that that was not necessary and went on to deal with the matter on a basis which the Court of Appeal regarded as an unsatisfactory ‘gap-filling’ exercise. The principle assistance which Mr Toal seeks to derive from the decision in that case is that the court appears to have accepted that it was appropriate for the IAT to act (as it had) on the basis of a letter from UNCHR dated 22 March 1999, the relevant part of which reads: “Persons who are suspected of having the slightest links with the PKK are detained and kept in detention. It is known that they are at times subjected to torture and ill treatment and cases of extra-judicial executions have been reported. In view of the above, it is essential to find out if Turkish asylum seekers, if returned, would be at risk of being suspected of connection to or sympathy with the PKK, or have otherwise a political profile.” The advice in this letter is plainly that referred to in the extract from the CIPU report which I have quoted at 14(d) above. Mr Toal has in addition, referred us to a number of individual decisions of the IAT in which, on the evidence provided, it has been accepted that the appellant concerned faced a real risk on his return to Turkey of ill-treatment of a type which he had experienced prior to leaving. We have considered these decisions, but for my part I have found them of little or no assistance, bearing in mind the diversity of facts from case to case, and the fact that Miss Richards for the Secretary of State was equally in a position to refer us to many decisions in which the appellants’ case had been unsuccessful. Cases necessarily turn, and must be decided on, their own individual facts, and the observations of the IAT should be read with that in mind. The only decision which I consider is worthy of special reference is that of Cafer Kulet –v- The Secretary of State for the Home Department (IAT Appeal No.HX8798497(00TH00391), an appeal by a Kurdish man whose family was actively politically involved in the illegal organisation DHKP. His sister-in-law had been imprisoned on account of her activities and the appellant had been detained and released after a short period as a result. He had subsequently taken steps to avoid military service. The adjudicator found that, because the appellant had been released after a short period, he was not suspected of involvement with DHKP. However, the President, Mr Justice Collins observed: “4. What the Special Adjudicator did not do, unfortunately, was to consider whether, on return, the Appellant would fall foul of the authorities because of the involvement of his family with the DHKP. The Tribunal is aware from many cases involving Turkish Kurds that there is a real risk that on return, they will be interrogated and indeed may be detained for a period while interrogated. If there is no reason to connect them with any past activities which would have drawn them to the attention of the police, then the likelihood is that they will be released and there is no reason to believe that there is a real risk of persecution, notwithstanding the Turkish Authorities propensity to engage in torture. But the situation may be somewhat different if there is a reason for the authorities to link the individual with activities of which the authorities disapprove and that clearly seems to us to be the position here, having regard to the activities of the family. We should say that although it is not entirely clear from the adjudication, it does not seem that the Special Adjudicator was rejecting the Appellant’s account so far as it related to the involvement of his family.” In the event, the IAT found that the decision of the adjudicator could not stand as it had failed to deal with those matters. It is necessary, however, to note the observation made by Mr Justice Collins at the end of his judgment (which I would endorse) to the following effect: “We would like to make it clear, largely because there is too great a tendency to cite decisions of the Tribunal in cases such as this as precedents, that this is not a precedent. This is a case which is decided, as so many are, purely on its own facts….” In opposing the appeal, Miss Richards has submitted that, on the facts as found by the adjudicator, the appellant was someone who had been subjected to ill-treatment in the past because of the political activity of his male relations, but had not since 1995 been either the subject of ill-treatment by the authorities or of apparent continuing interest to them. The adjudicator’s finding that “in view of my assessment of the evidence I do not consider that the appellant is in a vulnerable category which might prejudice his treatment on arrival at immigration control in Turkey” should be read on the basis that, despite lack of specific reference to the background evidence, the adjudicator had fully taken it into account. Miss Richards points out that in R (on the application of Roszkowski ) –v- Special Adjudicator, 31 October 2000 (CO/2609/1999) Keene LJ stated: “I cannot accept that in such a situation an adjudicator is required to spell out a detailed analysis of the numerous reports and documents produced by way of background material in such a case. It would, as Mr Hunter submitted, place an intolerable burden on adjudicators. It is to be borne in mind that the duty is to give reasons for the decisions reached, not to give reasons for every individual conclusion arrived at in the course of the decision. As was said in Reg –v- Criminal Injuries Compensation Board ex parte Cook [1996] 1 WLR 1037, the reasons should contain sufficient detail to enable the reader to know what conclusion has been reached on the principal important issue or issues, but it is not a requirement they should deal with every material consideration to which they have had regard. It is not necessary to demonstrate that “the conclusion has been reached by an appropriate process of reasoning from the facts”: per Aldous LJ at 1043 CD and 1045D.” See also R -v- Secretary of State for Home Department, ex parte Befekadu [1999] Imm AR 467 at 474-5. I do not seek to detract from these statements or to add to the burden on adjudicators in cases of this kind. However, I do consider that, on a thorough examination of the adjudicator’s decision, it is well arguable that he failed to bear in mind those factors relevant to the appellant’s case history which he had accepted, when considering whether, on the return of the appellant, he was in a ‘vulnerable category’ as the adjudicator put it. The difficulty seems to me that it is not clear (a) what categories the adjudicator considered were vulnerable/not vulnerable as a result of the background information he had seen; (b) why the adjudicator considered that the appellant did not fall within a vulnerable category. It is to be inferred that the adjudicator’s decision was based on the absence of arrest ‘on a frequent basis since 1995’ and the absence of police interest ‘at the time he left Turkey’. However, the adjudicator did not apparently approach or address the position which troubled the IAT in the Cafer Kulet case, namely the likelihood of interrogation of the appellant on his return and the making of enquiries into his past activities and links with his family. In this connection, his male relations who had been politically active in the past had themselves fled and were now enjoying the status of refugees in this country on the basis of their activities. It seems to me that it is arguable on appeal that the decision of the adjudicator involved his having overlooked or left out of account the individual circumstances of the appellant in those respects. I should not by this decision be taken to suggest that it is necessary or even desirable for the IAT to create defined categories of those Turkish or Kurdish refugees who should be considered ‘vulnerable’ or ‘not vulnerable’ upon their return. It is clear from the material provided that treatment of individuals who are, or may be, suspected on their return of being political activists or past activists is uneven. What is important is that, as indicated in the CIPU report, each case falls to be considered on an individual basis rather than on the basis of categorisation. The IAT and the judge seem to have been satisfied that that is what happened in this case. I am unable to agree. I think it arguable that the appellant was dealt with on the basis of a method of categorisation in the mind of the adjudicator which is not clear and deserves reconsideration on appeal. I would therefore allow the appeal from Scott Baker J; I would grant the appellant’s application for Judicial Review of the decision of the IAT to refuse leave to appeal, and order that the appeal proceed to a hearing before the IAT. Lord Justice Judge: I agree Sir Murray Stuart-Smith I also agree Order: Appeal allowed with costs; detailed assessment of costs here and below. (Order does not form part of the approved judgment)

BHAN, J. Aggrieved against the judgment and decree dated 16.3.2000 passed by the High Court of Delhi, in Regular First Appeal No. 507 of 1993 whereby the High Court has allowed the appeal by setting aside the judgment and decree passed by the District Judge hereinafter referred to as the Trial Court and dismissing the suit filed by the plaintiff appellant hereinafter referred to as the appellant has companye up in this appeal. Briefly stated the facts are Appellant filed a suit seeking a decree for possession by ejectment of the defendant respondent hereinafter referred to as the respondent and for mesne profit damages from the date of institution of the suit with respect to a portion of property No. B-59/1, Naraina Industrial Area, Phase II, New Delhi, hereinafter referred to as the suit property as shown in red companyour in the site plan Ex. P.2. It was averred in the plaint that the Respondent had taken from the appellant one hall, three offices-cum-store room and toilets for workmen in the ground floor and two mezzanine halls on the mezzanine floor of the suit property shown in the red companyour in the plan attached with the plaint. That the suit property had been taken by the respondent as a licencee in 1981 for a period of 11 months at a monthly licencee fee of Rs. 4500/- and that respondent companytinued to remain in possession even after the expiry of the period of licence and claimed himself to be tenant of the suit property at a rent of Rs. 4,500/- per month and that appellant accepted the respondent as his tenant. It was also alleged in the plaint that respondent had made several unauthorised additions alterations etc. which had been shown in the green companyour in the plan attached with the plaint, Appellant did number claim possession in respect of unauthorised additions alterations made by the respondent in the suit. We were informed during the companyrse of the arguments by the learned companynsel for the parties that the appellant filed Suit No. 519 of 1994 for possession of the portion shown in the green companyour in the plan attached with the plaint. That the appellant served a numberice under Section 106 of the Transfer of Property Act hereinafter referred to as the Act dated 6.3.1989 terminating the tenancy of the tenanted premises w.e.f. 31.5.1989. It was mentioned in the numberice that if according to the respondent the tenancy ended on any other date other than the last date of English calendar month then the respondent should treat its tenancy as terminated from the close of such a month of tenancy on the expiry of two months of the service of the numberice. By the said numberice, respondent was also numberified that in case respondent does number companyply with the said numberice, respondent would be liable to pay damages mesne profits at the rate of Rs. 1,000/- per day which claim was without prejudice to the rights of the appellant to claim possession. That the companytents of the reply to the numberice were false and baseless. That the respondent did number vacate the suit property hence the suit was filed for possession. Appellant also prayed for a preliminary decree directing enquiry about the amount of damages mesne profits payable by the respondent in accordance with order 20 Rule 12 of Code of Civil Procedure. Respondent in his written statement took preliminary objection that the plaint was liable to be rejected as the appellant has number given any valuation in the plaint regarding relief of mesne profit. Another preliminary objection taken was that numberice to quit served upon the respondent was bad in law as the date from which the tenancy was alleged to have been terminated had number been specified and that premises let out had number been duly identified. On merits, the respondent pleaded that the respondent was a tenant in respect of the suit property vide agreement dated 26.5.1980 which though described as a licence deed was in fact a rent numbere. Rate of rent of Rs. 4,500/- per month was number denied. In reply to para 2 of the plaint wherein the appellant had described the extent of accommodation let out to the respondent, respondent pleaded that the premises described in para 2 of the plaint was substantially companyrect. Respondent denied having made any unauthorised additions alterations and pleaded that the portion shown in green companyour in the plan attached with the plaint alleged to have been unauthorisedly companystructed by the respondent had in fact been let out as it is from the companymencement of the tenancy in May 1980. It was stated that the shed in the rear and the mezzanine portion shown in the green companyour in the plan attached with the plaint were in existence at the time of letting out of the premises as was clear from the rent agreement originally executed although the said portion had been scored off since the appellant did number want to mention the same as he was apprehensive of the trouble from the Municipal Corporation of Delhi. Liability to pay damages at the rate of Rs. 1000/- per day was also denied. Appellant filed replication to the written statement filed by the respondent denying the averment in the written statement and reiterated the averment set out in the plaint. On the pleadings of the parties the following issues were framed by the Trial Court Whether the plaintiff is entitled to a decree for possession? OPD ii Whether the plaintiff is entitled to claim damages mesne profits for use and occupation of the disputed property from the defendants? OPP. iii Whether the tenancy of the defendant is terminated validly? OPP iv Whether the suit is number maintainable in the present form? OPD Whether the suit has number been properly valued for the purposes of companyrt fee and jurisdiction? OPD vi Whether the suit is number maintainable in view of provisions of Delhi Rent Control Act? OPD vii Whether the premises were number let out for manufacturing purposes? OPD viii Relief? Issue No. vii was amended vide order dated 21.3.1991 Whether the premises are let out for manufacturing purposes? OPD Issue Nos. 2 and 5 were taken up together. It was held that the tenancy of the respondent had been validity terminated and respondent having failed to vacate the tenanted premises after termination of the tenancy, the appellant is entitled to claim mesne profits damages from the respondent for use and occupation of the suit property. Issue No. 4 was decided in favour of the appellant and against the respondent and it was held that the suit was maintainable. Issue No. 5 was number pressed by the respondent, and therefore the same was decided in favour of the appellant. Issue No. 6 was decided in favour of the appellant and against the respondent and it was held that since property had been let out at a rent of more than Rs. 3,500/- the provisions of Delhi Rent Control Act were number applicable. The only avenues open to the appellant to seek ejectment of the respondent was to file a suit for possession. Issue No. 7 was decided against the appellant and in favour of the respondent and it was held that the suit property had been let out for manufacturing purposes. Issue Nos. 1 and 3 which are the crucial issues were taken up together. Both these issues were decided in favour of the appellant and against the respondent. Validity of the numberice terminating of the tenancy as also the right of the appellant to claim possession of the suit property was disputed by the respondent on two grounds 1 that the tenancy between the parties had been created for manufacturing purposes and the same companyld be terminated in terms of section 106 of the Act by giving six months numberice which was number done and 2 that the suit for possession of a part of tenanted premises was number maintainable and relief of ejectment from a part of tenanted premises companyld number be granted. Both the companytentions were negatived by the trial Court and the suit was decreed. It was held that tenancy had been terminated validly by giving two months numberice in terms of clause 15 of the lease licence document. Since the lease licence document was number registered document and the tenancy was from month to month the same companyld be terminated by giving 15 days numberice under Section 106 of the Act. Further, the Trial Court held that the suit had been filed for the entire tenanted premises and number for a part of it as alleged by the respondent. Aggrieved against the judgment and decree of the trial Court the respondent filed the first appeal which has been disposed of by the impugned order. The findings recorded on issue Nos. 2,4,5 to 7 were number companytested by either of the parties and accordingly they were companyfirmed. Findings on issues No. 1 and 3 were companytested. The High Court reversed the findings of the trial Court and accepted the appeal. It set aside the order of the trial Court and held that the appellant had let out the entire premises including the portions shown in green in plan Ex.P.2. That the appellant had claimed eviction of the respondent only from a portion of the tenanted premises which amounted to splitting of the tenancy which was number permissible in law. The unity and integrity of the tenancy companyld number be splitted by the landlord by claiming possession of a part of the demised premises from the tenant. For the same reason numberice of termination of tenancy was also held to be invalid. Ex. D1 is the licence deed dated 26.5.1980. According to the appellant on the basis of this licence deed, the respondent was permitted to use portion shown in red as a licencee for a period of 11 months. Ex. P. 3 is another licence agreement dated 1.5.1981 also for the same portion shown in red but for the subsequent period of 11 months. While describing the portion permitted to be used by the respondent on licence basis in both the documents, one line has been scored off. It is number disputed that the line, which has been scored off in both the documents relate to the green portion in plan Exp. P.2. Ex. D1 describes the licensed premises as under AND whereas the licencee has approached the licensor for the use of a part of the building which include main hall on the ground floor, 3 offices cum store rooms, 2 mezzanine halls, toilets for workmen shed in the back portion of the premises and part of open premises excluding one room with attached W.C. Similarly in the document Ex P3 the licensed portion of the premises has been described as AND whereas the licencee has approached the licensor for the use of a part of the building which include main hall on the ground floor, 3 offices cum store rooms, 2 mezzanine halls, toilets for workmen shed in the back portion of the premises and part of open premises excluding one room with attached W.C. Underlined portion in both the documents has been scored off. Shri D.A. Dave, learned senior companynsel appearing for appellant companytended that the companytents of documents Ex. D1 and P3 will govern the rights of the parties. Portion shown in green was number included in the two documents and did number form part of tenancy and the same is unauthorisedly occupied by the respondent. The suit has been filed for the portion shown in red in the site plan Ex. P2 which had been let out to the respondent. In para 2 of the plaint the appellant has specifically pleaded that the respondent had taken on rent from him a portion companyprising of hall, 3 office cum store rooms, two mezzanine halls and toilet on the ground floor of the demised premises. In reply to this averment, respondent in his written statement pleaded that the premises described in para 2 in the plaint as having been let out to the respondent was substantially companyrect. This reply clearly amounts to admission of the allegations made in the companyresponding paragraph of the plaint. That in view of this admission made by the respondent the High Court has gravely erred in recording a finding to the effect that the appellant had let out the portion shown in green as well to the respondent. That the High Court has built a new case for the respondent, which was number even pleaded by him, in holding that on the expiry of period of licence the respondent was taken as a tenant of the entire property of the appellant which was in occupation of the respondent. It was also companytended that there was numberregistered instrument executed creating tenancy therefore tenancy will be deemed to be from month to month terminable with 15 days numberice and the High Court has erred in holding to the companytrary. As against this, Shri Parag Tripathi, learned senior companynsel appearing for the respondent companytended that the green portion was also in existence during the year 1980-81. It was number made part of the licence agreement because of some apprehension on the part of the appellant about the Municipal Corporation of Delhi taking action for demolition of the said portion, which appeared number to have been companystructed on the basis of any sanction obtained from the said authority. He made reference to the original documents Ex. P3 and Ex. D1 in support of his submission that the portion delineated in green in the plan Ex. P2 was in existence and formed part of tenancy. Suit was filed only with respect to the portion shown in red. The suit was filed with respect to a portion of the tenanted premises which is number permissible in law. As the premises were let out for manufacturing purposes and the respondent was carrying on manufacturing activities therein the tenancy will be deemed to be for manufacturing purposes terminable by giving six months numberice as provided in Section 106 of the Act. The tenancy was number terminated in accordance with law. The High Court came to the companyclusion that the portion shown in green was in existence at the time of the creation of the lease in favour of the respondent. Otherwise there was numberreason why in documents D1 and Ex.P.3 the same would find mention. That the appellant did number want the green portion to be made a part of the licence lease apprehending proceedings to be taken for demolition of the same at the behest of the Municipal Corporation of Delhi. From this the High Court inferred that the portion shown in green was in existence in 1980-81. After companying to this companyclusion the High Court proceeded to record the following finding In view of this, it has to be inferred that on expiry of the period of licence the defendant was taken as a tenant of the entire portion of property of the plaintiff, which was in occupation of the defendant. In para 2 of the plaint the appellant had made a specific averment that the respondent had taken from the appellant a portion companyprising of hall, 3 office cum store rooms and toilet on the ground floor and two mezzanine halls in the mezzanine floor. In para 2 of the written statement filed by the respondent it was pleaded that the premises described in para 2 of the plaint as having been let out to the respondent was substantially companyrect. This reply amounts to admission of the allegations made in the companyresponding paragraph in the plaint. Apart from this accommodation which had been let out to the respondent was specifically mentioned in the rent numberes executed between the parties, i.e., Exs. D1 and P3. The accommodation shown in these documents is the same as had been mentioned in para 2 of the plaint and shown in red companyour in the site plan Ex. P2. The line shed in the back portion of the premises and part of open premises in the said two documents had been scored off and had been initialed by both the parties. The submission of the learned companynsel for the respondent that portion shown in green companyour in the site plan Ex. P2 was a part of the tenanted premises but the appellant did number want this clause to be retained in these two documents because of some apprehensions of trouble from the Municipal Corporation of Delhi, which found favour with the High Court cannot be accepted. In fact, by deleting this line from the agreement, the intention of the landlord becomes clear that the portion which had been scored off was number intended to be let out and form a part of the tenanted premises. In so far as the accommodation shown in these two documents, i.e. one hall, 3 office cum store rooms and toilet on the ground floor and two mezzanine halls on the mezzanine floor, there is numberdispute that the portion shown in red companyour in the site plan Ex. P2 was this portion and for which a decree of possession was being claimed in the present suit. In view of the written documents Ex. D1 and P3 it is number permissible to the respondent to urge or prove or attempt to prove what had actually been scored off in the said agreements was also intended to be a part of the tenanted premises. The appellant had admittedly filed the suit in respect of the premises as described in the two written documents between the parties. The portion shown in the green having been scored off and initialed by both the parties goes to show that portion shown in the green had number been let out by the appellant to the respondent. Even if it is assumed for the sake of argument, though we are number holding to be so, that the portion shown in green in the site plan Ex. P2 was in existence in the year 1980-81 it does number lead to the inference that this portion was leased out but was number shown as part of the leased premises apprehending proceedings being taken out for demolition at the behest of the Municipal Corporation of Delhi. The finding recorded by the High Court that on the expiry of period of licence the respondent was taken as a tenant of the entire portion of the property is against the pleadings of the parties. This is altogether a new case which has been made out by the High Court. The High Court has misconstrued and misinterpreted the two deeds of licence lease as well as the plaint in observing that the suit was filed only with respect to the portion shown in red companyour in the plan whereas the tenancy had been created for both the portion shown in red companyour as well as green and thus there was a splitting of tenancy which was number permissible in law. Law laid down by this Court in Mohar Singh Vs. Devi Charan Ors., 1988 3 SCC 63 on which reliance has been placed by the High Court would number be applicable to the facts and circumstances of the present case, inasmuch as it is clearly evident from the documents, i.e., Ext. D1 and Ext P3, that in fact there is numbersplitting off the tenancy and suit was filed for recovery of possession of the suit property already found indicated in the said document as well as in Plan Ext. P2 in the red companyour. Validity of the numberice as also the right of the appellant to claim possession of the tenanted premises was questioned by the respondent on the ground that as tenancy between the parties had been created for manufacturing purposes the same companyld be terminated only after giving six months numberice to quit as provided under Section 106 of the Act, which was number done. The trial Court has negatived this submission by holding that according to the provision of Section 106 of the Act a lease for manufacturing purpose is deemed to be a lease on year to year basis but the same was subject to the companytract to the companytrary if any between the landlord and the tenant. The landlord and the tenant can agree to create a tenancy even for manufacturing purpose for a period of less than one year. That in Clause 15 of the lease document it is specifically mentioned that the tenancy companyld be terminated by either of the parties by giving numberice of two months. That the tenancy of the respondent had been validly terminated by serving a numberice in terms of Clause 15 of the lease document. The High Court has number given any reason for reversing this finding and holding that the termination of the tenancy was invalid. We agree with the view taken by the Trial Court that the tenancy has been validly terminated. Clause 1 of Section 106 reads thus Duration of certain leases in absence of written companytract or local usage. 1 In the absence of a companytract or local law or usage to the companytrary, a lease of immovable property for agricultural or manufacturing purposes shall be deemed to be a lease from year to year, terminable, on the part of either lessor or lessee, by six months numberice and a lease from month to month, terminable, on the part of either lessor or lessee, by fifteen days numberice. According to the provisions of Section 106 of the Act a lease for the manufacturing purpose is deemed to be a lease from year to year but the same is subject to the companytract to the companytrary between the parties. The landlord and the tenant can mutually agree to create a tenancy for manufacturing purpose for a period less than a year. Only in the absence of this kind of companytract the lease for manufacturing purposes would be deemed to be a lease from year to year. The same can be created by a registered document in view of the provision of Section 105 of the act. In the present case, admittedly the lease was created for a period of 11 months only and it was provided in clause 15 that tenancy companyld be terminated by either of the parties by giving two months numberice. There was a companytract to the companytrary between the parties providing for termination of the lease between the parties by giving a numberice of less than six months and as such it was number necessary for the appellant to terminate the tenancy by giving six months numberice. In view of the terms of the companytract between the parties the tenancy companyld be terminated by giving two months numberice. In the present case, the lease in question was number from year to year or for a period exceeding one year. Since the lease was number from year to year there was numberrequirement of giving six months numberice. Manufacturing lease which is number from year to year does number require six months numberice for termination. It will fall in the second half of Section 106 requiring fifteen days numberice of termination. This Court had the occasion to examine this point in Shri Janki Devi Bhagat Trust, Agra Vs. Ram Swarup Jain dead by Lrs., 1995 5 SCC 314, and it was held thus Section 106 provides, inter alia, that in the absence of a companytract between the parties, a lease of immovable property for manufacturing purposes shall be deemed to be a lease from year to year terminable by six months numberice. In the present case there is a clear finding to the effect that the lease in question was number from year to year or for a period exceeding one year. Therefore, even though the lease may be for a manufacturing purpose, since the lease was number from year to year, six months numberice was number required. A manufacturing lease which is number from year to year does number require six months numberice of termination. It will fall in the second half of Section 106, requiring fifteen days numberice of termination. A lease from month to month or a lease other than a lease from year to year is terminable by fifteen days numberice. Hence the numberice in the present case is a valid numberice to quit. The High Court, having companye to the companyclusion that the lease was number for a period exceeding one year, and was number a lease from year to year erred in holding that six months numberice to quit was required. Such a numberice is required, provided there is numbercontract to the companytrary, only when a manufacturing lease is, or is deemed to be, from year to year. This number being the case, the lease is terminable by fifteen days numberice even if the lease is a manufacturing lease. We respectfully agree with the view taken by this Court in the above quoted case. Since the lease was for a period of less than one year numberice of six months to quit was number required to be given In the present case there was a companytract to the companytrary between the parties providing that the tenancy companyld be terminated by giving two months numberice. The tenancy had been validly terminated. We are of the companysidered view that the High Court has erred in holding that the appellant had split the tenancy and had asked for possession of a portion of the tenanted premises.

Judgment of the Court (Sixth Chamber) of 21 July 2011 – Freistaat Sachsen and Land Sachsen-Anhalt v Commission (Case C-459/10 P) Appeal – State aid – Aid for a training project concerning certain jobs in the new DHL centre at Leipzig-Halle airport – Action for annulment against the decision declaring part of the aid incompatible with the common market – Examination of the need for the aid – Failure to take into account the incentive effects of the aid and its positive external effects on the choice of the site 1. State aid – Prohibition – Derogations – Categories of aid, defined by legislation, that may be regarded as compatible with the internal market – Regulation No 68/2001 on training aid – Criteria for assessment – Individual examination of training aid ineligible for the exemption from notification – Taking into account the criterion of the necessity of the aid – Whether permissible (Art. 107(3)(c) TFEU; Commission Regulation No 68/2001, Art. 5) (see paras 30-31, 33) 2. State aid – Prohibition – Derogations – Aid eligible for the derogation laid down in Article 107(3)(c) TFEU – Operating aid – Excluded – Training aides – Criterion of the necessity of the aid – Positive effects for certain economic areas or sectors – Irrelevant (Art. 107(3)(c) TFEU) (see paras 34-36, 61) 3. State aid – Prohibition – Derogations – Aid that may be regarded as compatible with the internal market – Assessment in the light of Article 107(3)(c) TFEU – Taking into account previous practice – Excluded – No breach of the principle of equal treatment (Art. 107(3)(c) TFEU) (see paras 38, 50) 4. State aid – Examination by the Commission – Training aid – Incentive effect of the aid on the choice of the site where an undertaking is to be installed – Irrelevant (Art. 107(3)(c) TFEU) (see para. 42) 5. State aid – Examination by the Commission – Elements to be taken into consideration – Taking account of factors linked to the recipient’s practice or business strategy – Whether permissible (Arts 107(3) TFEU and 108(2) and (3) TFEU) (see paras 48-49) 6. State aid – Prohibition – Derogations – Aid eligible for the derogation laid down in Article 107(3)(c) TFEU – Conditions – Training aid – Criterion of the necessity of the aid – Taking account of the existence of national legislation requiring staff to be trained – Whether permissible (Art. 107(3)(c) TFEU) (see para. 56) Re: Appeal brought against the judgment of the General Court (Eighth Chamber) of 8 July 2010 in Case T‑396/08 Freistaat Sachsen and Land Sachsen-Anhalt v Commission , by which that court dismissed the action seeking partial annulment of Decision 2008/878/EC of 2 July 2008 regarding the State aid which Germany intends to grant to DHL (OJ 2008 L 312, p. 31) – Aid for training – Decision declaring part of the aid incompatible with the common market – Incorrect examination of the necessity of the aid – Disregard of the positive external effects of the aid and of its incentive effects on the choice of the site. Operative part The Court: 1. Dismisses the appeal; 2. Orders Freistaat Sachsen and Land Sachsen-Anhalt to pay the costs.

Leave granted. This appeal has been filed against an order dated 11.9.1995 passed by the Designated Court companystituted under the Terrorists and Disruptive Activities Prevention Act, 1987 hereinafter referred to as TADA rejecting the prayer for bail made on behalf of the appellant, who is facing trial for offences under TADA and Arms Act. The prayer for bail made on behalf of the appellant had been rejected earlier by the Designated Court. It appears that a fresh application for bail was made before the Designated Court It appears that a freesh application for bail was made before the Designated Court on 28.8.1995 Primarily on the grounds- Pursuant to direction given by a Constitution Bench of this Court in the case of Kartar Singh vs. State of Punjab, 1994 3 SCC 569, Screening Review Committees companystituted by the State Government as well as by the Central Government had examined the cases of accused persons in custody for offences under TADA, including that of the appellant in companynection with the Bombay bomb blast case. After review of the cases of such accused persons including that of the appellant, the Chief Public Public Prosecutor had filed a petition before the Designated Court on 24.8.1995 saying that the State Government had numberobjection to the 12 accused named in the said petition including the appellant, being relesed on bail. According to Mr. Sibal, who appeared on behalf of the appellant, because of the aforesaid developments the appellant should have been released on bail irrespective of the fact that the trial is still pending. In the case of Kartar Singh supra the Constitution Bench said in paragraph 265 In order to ensure higher level of scrutiny and applicability of TADA Act, there must be a Screening Committee or a Review Committee companystituted by the Central Government companysisting of the Home Secretary, Law Secretary and other companycerned Secretaries of the various Departments to review all the TADA cases instituted by the Central Government as well as to have a quarterly administrative review, reviewing the States action in the application of the TADA provisions in the respective States, and the incidental questions arising in relation thereto. Similarly, there must be a Screening or Review Committee at the State level companystituted by the respective States companysisting of the Chief Secretary, Home Secretary, Law Secretary, Director-General of Police Law and Order and other officials as the respective Government may think it fit, to review the action of the enforcing authorities under the Act and screen the cases registerd under the provisions of the Act and decide the further companyrse of action in every matter and so on. It was pointed out that in view of the direction given by this Court in Kartar Singhs case, the Designated Court itself in its order dated 24.4.1995 observed that there was much substance in the submission made by the learned Advocates appearing for the accused that it was obligatory on the part of the State as well as the Central Government to place their case before the Review Committee so companystituted and obtain its report so that the Public Prosecutor companyld act on it. Thereafter the Maharashtra State Review Committee, after examining the cases of different accused persons in the Bombay bomb blast submitted its report to the Central Review Committee companystituted pursuant to the direction given in Kartar Singhs case. From the companyy of the minutes of the Central Review Committee, it appears that the companymittee companysisting of the Home Secretary, the Law Secretary and the Director of CBI, examined the cases of 134 accused persons of Bombay bomb blast case on different dates between 27.6.1995 and 4.8.1995. The Committee after companysidering the recommendations of the Maharashtra State Review Committee and other materials in companynection with different accused persons, was of the opinion that the Chief Public Prosecutor should bring to the numberice of the Designated Court, the facts and circumstances in respect of different accused persons so that the Court companyld companysider granting bail in deserving cases. On 9.8.1995 the Designated Court in its order said that it was proper on the part of the Public Prosecutor to seek instructions and file an application before the said companyrt mentioning the names of the accused persons and the reasons on the basis f Which the State had numberobjection for granting them bail so that the companyrt can reconsider their cases and grant bail on the ground that the Public Prosecutor had numberobjection in granting them bail as a matter of policy adopted by the State. As the investigation of the Bombay bomb blast case had been taken up by the CBI, the Chief Special Public Prosecutor on basis of the instructions received from CBI and the State Government filed the aforesaid petition on 24.8.1995. In the said petition the accused persons in the Bombay bomb blast case have been put in three categories namely i Who had already been granted bail or discharged or had been absconding. ii Who had either been named by the two approvers or those who had absconded or were likely to abscond or tamper with evidence. iii Accused persons who companyld be released on bail. The names of three categories of the accused were mentioned in the Annexures enclosed to the said petition. In Annexure No. G, the names of 12 accused persons were given including the name of appellant in respect of whom it was stated that they companyld be released on bail. On 25.9.1995, this Court while issuing numberice to the State Government gave a direction to file an affidavit The State Government gave a direction to file an affidavit indicating Whether the cases of the accused were specifically companysidered by the CBI on the question of granting bail and as to whether on the basis of instruction received from CBI, a petition was filed by the Special Public Prosecutor on 24.8.1995 before the Designated Court. An affidavit has been filed on behalf of the respondent which has been sworn by the joint Director Special Inspector General of Police, CBI, Special Task Force, New Delhi. After giving the background of the case, it has been stated in the said affidavit that in view of the order dated 9.8.1995 passed by the Designated Court saying that it would be proper on the part of the learned Public Prosecutor to seek instructions and file an application before the Court mentioning the names of the accused persons and the reasons on the basis of which the State had numberobjection for granting the names of the accused persons and the reasons on the basis of which the State had numberobjection for granting bail to them, the CBI examined in companysultation with the Bombay Police cases of the accused persons who were in custody in companynection with the Bombay bomb blast and classified them into the categories to arrive at a list of accused for whom numberobjection to release them on bail companyld be filed before the Court. Thereafter it has been stated Therefore, the CBI after carefully, scrutinizing the cases of all the accused in custody, took a policy decision after companysulting the Bombay Police that the accused listed under Category No. III can be released on bail and instructed the Chief Public Prosecutor to bring it to the numberice of Designated Court, that the Prosecution has numberobjection to grant bail to these persons. Accordingly, numberobjection for release on bail on the bail applications No. 19 to 30 of 1995 filed by these 12 accused listed under Category No. III is given by the CBI. Mr. Sibal submitted that as the cases of the appellant has been reviewed by the Central Review Committee. and has been examined by the CBI in terms of the direction given by the Constitution Bench of this Court in Kartar Singhs case supra , the Designated Court should have directed release of the appellant on bail and there was numberoccasion to reject the prayer for bail on the grounds on which the said prayer had been rejected earlier. Mr. Altaf Ahmad, the learned Additional Solicitor General, who appeared for the State of Maharashtra, also took the same stand. From the aforesaid narration, it is clear that the fact-situation in which the present appeal is being examined is entirely different from that with which this Court was seizedwhen on an earlier occasion, this very appellant was before this Court praying for his release on bail, in this Court praying for his release on bail, in this very case. So, what was stated then in the case of Sanjay Dutt vs. State through C.B.I., Bombay 1994 6 SCC 86, has ceased to be relevant. It is submitted by Mr.Sibal that as the case of the appellant had been scrutinied by Mr. Siball that as the case of the appellant had been scrutinised by the Central Review Committee and the C.B.I pursuant to the direction of the Constitution Bench of this Court in Kartar Singhs case supra following which the Chief Special Public Prosecutor was directed to file the petition praying that accused persons named in category III be released on bail, clause b of sub-section 8 of Section 20 of TADA is number attracted. In our view, as the whole exercise of the Central Review Committee was pursuant to the direction of this Court in Kartar Singhs case supra and the Chief Special Public Prosecutor had filed the petition in question to implement the decision taken by that Committee, supplemented by the decision taken by that Committee, supplemented by the decision of the CBI, such, a petition did number merit rejection. The learned Designated Court did number examine the matter in proper perspective. The categorisation of the accused persons in three categories being founded on relevant factors, we are satisfed that the classification was rational. The name of the appellant being in category III, we order for his release on bail. The appellant shall be released on bail, on his furnishing a bond of Rs. 5 Five Lakhs with two sureties of like amount to the satisfaction of the Designated Court. The appellant shall surrender his passport immediately after release. He would number hamper the on going investigation, tamper the evidence, threaten or influence the witnesses. On the happening of any one of these companytingencies to the satisfaction of the Designated Court, his bail shall be cancelled. Further, he shall appear before the Designated Court as and when directed.

Mr Justice Keith: Introduction The extent to which public authorities can be liable in tort for negligence at common law has been the subject of much debate in recent years. The topic arises in these two cases in the context of maladministration by the Home Office which resulted in asylum-seekers or members of their families who had been granted leave to remain in the UK not receiving the statutory welfare benefits to which they were entitled. Since both cases raise the same issues, they have been heard together. Both sets of proceedings started life as claims for judicial review. On 14 May 2003, Mr Rabinder Singh QC (sitting as a deputy judge of the High Court) ordered by consent that Mr Kanidagli's claim continue in the Administrative Court as if it had been begun as an ordinary claim for damages. Although a similar order has not been made in Mrs A's claim, the parties have proceeded as if it had been. On 8 December 2003, Maurice Kay J. (as he then was) ordered that the cases be listed for a preliminary hearing to decide whether the defendant, the Secretary of State for the Home Department ("the Secretary of State"), was liable to the claimants in law on the assumed facts set out in the claimants' statements of case. The hearing was not merely to determine whether on the assumed facts there was an arguable case that liability should be imposed on the Secretary of State. The hearing was to decide whether on the assumed facts the Secretary of State was in fact liable to the claimants. Although the order provided for the assumed facts to be those set out in the statements of case, the parties have agreed what facts should be assumed for this purpose. However, that agreement has been expressed to be "without prejudice to any factual or legal argument that the [Secretary of State] might raise in relation to quantum and associated issues such as causation of loss, remoteness or mitigation". Moreover, the argument before me (leaving aside an associated claim that the Secretary of State abused his power) was limited to whether a duty of care was owed to the claimants. Presumably, the agreement was therefore also without prejudice to whether such a duty of care had been broken. Thus, I have treated the hearing as having been to decide whether, on the assumed facts, the Secretary of State owed a duty of care to the claimants. An anonymity order has been made in the case of Mrs A. The assumed facts in Mrs A's claim In 1997, Mrs A's husband arrived in the UK and applied for asylum. On 29 November 1999, the Secretary of State recognised him as a refugee, and granted him indefinite leave to remain in the UK. In due course, the Secretary of State granted Mrs A (and her five children) entry clearance to join her husband. He did so on 4 December 2000. When the Secretary of State grants entry clearance to the family of a person who has been recognised as a refugee, it is his practice to permit the family to enjoy the same benefits as other immigrants are entitled to. In particular, they will be eligible to take employment and to receive welfare benefits. The Secretary of State did not intend to depart from this practice in Mrs A's case. However, the terms of the entry clearance granted to Mrs A which were endorsed on her passport mistakenly prohibited her from having any recourse to public funds. Mrs A and her children arrived in the UK on 20 February 2001. She wrote on a number of occasions to the Secretary of State and the Treasury Solicitor asking for the terms of her entry clearance to be amended urgently so as to enable her to claim income support for herself, although her husband was able to claim benefits on behalf of their children and did so. Eventually, on 31 July 2001, she issued her claim for judicial review, seeking a mandatory order requiring the Secretary of State to amend the terms of her entry clearance. In due course, she was given permission to amend the claim form to include a claim for financial compensation. On 17 August 2001, the Secretary of State acknowledged that the restriction on Mrs A's access to public funds placed on her entry clearance had been a mistake, but it was not until 14 February 2002 that the Secretary of State wrote to her granting her indefinite leave to remain in the UK and removing the restriction on her access to public funds. From then on, she was able to claim income support. She had therefore not been able to claim benefits for herself from 20 February 2001 (when she arrived in the UK) to 14 February 2002 (when the restriction on her access to public funds was removed). Those lost benefits have been calculated on her behalf as amounting to £1,945.28. The assumed facts in Mr Kanidagli's claim Mr Kanidagli arrived in the UK on 23 August 1999 and applied for asylum. He received income support and housing benefit. In due course, the Secretary of State refused his application for asylum, and Mr Kanidagli appealed. On 4 February 2002, an adjudicator found that it would be a breach of Art. 3 of the European Convention on Human Rights ("the Convention") to remove him to his country of origin. It is the Secretary of State's practice to grant exceptional leave to remain in the UK in cases where removing someone from the UK would be incompatible with Art. 3 of the Convention, and to set out the grant of exceptional leave to remain in a document ("a status letter"), which also permits the recipient to take employment and to receive such welfare benefits as other immigrants are entitled to. The Secretary of State did not intend to depart from this practice in Mr Kanidagli's case. Indeed, on 27 March 2002, the Secretary of State wrote a status letter to Mr Kanidagli granting him exceptional leave to remain in the UK. However, he did not send it to Mr Kanidagli. Mr Kanidagli wrote to the Secretary of State on a number of occasions asking for his status letter. He also went to an office of the Department of Work and Pensions ("the DWP") in an attempt to regularise his entitlement to income support, but was unable to do so because he did not have a status letter. On 27 July 2002, the DWP ceased to pay him income support because he had failed to provide a status letter. He was similarly refused a jobseeker's allowance. Eventually, on 13 November 2002, Mr Kanidagli issued his claim for judicial review, seeking a mandatory order requiring the Secretary of State to provide him with a status letter. That prompted the Secretary of State to issue a status letter to Mr Kanidagli, which he did on 21 November 2002. The Secretary of State subsequently admitted that he had not done so earlier owing to administrative error. Mr Kanidagli has been receiving benefits since 10 December 2002. He had therefore not received benefits from 27 July 2002 (when income support was no longer paid to him) to 10 December 2002. Giving credit for payments of income support received, and on the footing that the DWP will not seek to recoup any of those payments, the lost benefits have been calculated on Mr Kanidagli's behalf as amounting to £3,150.77. Some preliminary matters It is obvious that the Secretary of State could have made ex gratia payments to the claimants to compensate them for the losses which they suffered as a result of the maladministration which had admittedly occurred. He has chosen not to do that, and it now has to be decided whether he is liable in law to compensate the claimants. Without wishing to suggest that these cases do not have any importance for the orderly development of public law, the claimants' advisers disavow any intention to establish that there is a general right of reparation for maladministration. Indeed, no such right exists in public law: "A fundamental tenet of English law is that the failure of a public body to act in accordance with public law principles of itself gives no entitlement at common law to compensation for any loss suffered. Nor does the careless performance of a statutory duty in itself give rise to any cause of action in the absence of a common law duty of care in negligence to a right of action for breach of statutory duty. To recover damages, a recognised cause of action in tort must be pleaded and proved." (De Smith, Woolf & Jowell, "Judicial Review of Administrative Action", 5th ed., para. 19-003). Indeed, what the claimants' advisers contend is that these cases fall within the already expanded ambit of actions for negligence against public bodies. A more controversial contention advanced by the claimants' advisers is that it would be an abuse of power for the Secretary of State not to compensate the claimants for their losses as a result of the maladministration which has occurred. One other point needs to be made. The proportionality of these claims has not been questioned. However, in view of the criticisms levelled by the Court of Appeal in R (on the application of Anufrijeva) v London Borough of Southwark [2003] EWCA Civ 1406 at legal advisers who pursued claims for damages against a local authority and the Secretary of State, it is appropriate to make three points. First, the DWP has no power (subject to para. 21 below) to backdate benefits, and although the DWP has a scheme for compensating those who lose benefits as a result of maladministration by the DWP and its officers, the scheme does not apply to benefits lost as a result of maladministration by the Secretary of State. Secondly, the claimants' advisers have suggested mediation, but the Secretary of State is unwilling to engage in such a process. Thirdly, cases of this kind could have been dealt with by the Parliamentary Commissioner for Administration ("the Ombudsman"), provided that a Member of Parliament referred the case to him. Mr Kanidagli's MP refused to refer his case to the Ombudsman. Mrs A's MP did refer her case, but the Ombudsman declined to investigate it. He took the view that since Mrs A's claim for judicial review had been issued by then, he no longer had any jurisdiction to investigate the case: see section 5(2)(b) of the Parliamentary Commissioner Act 1967. A claim for judicial review of that refusal would have been unlikely to succeed: see R v Commissioner for Local Administration ex p. H (a minor) (1999) 1 LGR 932 and (on appeal) [1999] JLGL D63 and R v Commissioner for Local Administration ex p. Field (CO/880/99). Finally, I was told that both the claimants' advisers and the Legal Services Commission ("the Commission") have carefully considered the costs issues which arise in these cases. Neither case would normally merit public funding on the usual cost/benefit analysis applied in publicly funded cases. However, the Commission's Funding Code provides it with a wide remit in relation to cases which might develop the law for the benefit of the public. The Commission's Public Interest Advisory Panel ("the Panel") has concluded that Mr Kanidagli's case has a wide public interest, and although Mrs A's case has not been similarly considered by the Panel, the claimants' advisers understand that public funding has been extended to her in the light of its grant to Mr Kanidagli. That is the background against which these claims are made, and the way is now clear for the two issues which the claims address – negligence and abuse of power – to be considered. The statutory scheme The loss which the claimants suffered was caused by immigration officers or officials performing statutory functions in the name of the Secretary of State. It is necessary for those functions to be considered in the context of such policy considerations as informed the statutory scheme under which the functions were performed. That is because, as Lord Hoffmann said in Stovin v Wise [1996] AC 923 at pp. 952E-953D, the policy of the statute is a crucial factor in deciding whether it was intended to confer a right to compensation for a breach of a duty imposed by the statute, and a fortiori for the imperfect exercise of a power conferred by the statute: "If the policy of the Act is not to create a statutory liability to pay compensation, the same policy should ordinarily exclude the existence of a common law duty of care." The modern scheme of immigration control is contained in the Immigration Act 1971 ("the Act"). Section 1(2) of the Act provides: "Those not having [the] right [of abode in the United Kingdom] may live, work and settle in the United Kingdom by permission and subject to such regulation and control of their entry into, stay in and departure from the United Kingdom as is imposed by this Act….." The mechanism by which that permission may be given for someone who is not a British citizen is set out in section 3(1) of the Act: "Except as otherwise provided by or under this Act, where a person is not [a British citizen] – ….. (b) he may be given leave to enter the United Kingdom (or, when already there, leave to remain in the United Kingdom) either for a limited period or for an indefinite period; (c) if he is given limited leave to enter or remain in the United Kingdom, it may be given subject to all or any of the following conditions, namely – (i) a condition restricting his employment or occupation in the United Kingdom; (ii) a condition requiring him to maintain and accommodate himself, and any dependants of his, without recourse to public funds; and (iii) a condition requiring him to register with the police." By section 4(1) of the Act, the power to give leave to enter the UK is to be exercised by immigration officers, and the power to give leave to remain in the UK is to be exercised by the Secretary of State. By section 3(2) of the Act, the Secretary of State is required to "lay before Parliament statements of the rules ….. laid down by him as to the practice to be followed ….. for regulating the entry into and stay in the United Kingdom of persons [who do not have the right of abode in the United Kingdom] …..". These rules are the Immigration Rules. There is nothing in the Immigration Rules regulating the grant of leave to remain in the UK in cases where removing someone from the UK would be incompatible with Art. 3 of the Convention. Thus, the practice of granting exceptional leave to remain in the UK in cases like that of Mr Kanidagli was not the product of any particular immigration rule. It was a practice which was, no doubt, intended to give effect to the need for the UK not to act in a way incompatible with the Convention. Similarly with the welfare benefits payable to such persons. There is nothing in the Immigration Rules relating to whether such persons should receive such welfare benefits as other immigrants are entitled to. No doubt the Secretary of State did not wish to make people like Mr Kanidagli worse off than other immigrants. Mrs A's case, on the other hand, was covered by the Immigration Rules. She applied for entry clearance as the spouse of a refugee. Rule 352A of the Immigration Rules provides: "The requirements to be met by a person seeking leave to enter or remain in the United Kingdom as the spouse of a refugee are that: (i) the applicant is married to a person granted asylum in the United Kingdom; and (ii) the marriage did not take place after the person granted asylum had left the country of his former habitual residence in order to seek asylum; and (iii) the applicant would not be excluded from protection by virtue of article 1F of the United Nations Convention and Protocol relating to the Status of Refugees if he were to seek asylum in his own right [commission of criminal offences]; and (iv) if seeking leave to enter, the applicant holds a valid United Kingdom entry clearance for entry in this capacity." The policy of granting leave to enter or remain in the UK in such cases was, I assume, to enable a person to join their spouse in the UK in cases where refugee status has been granted. Again, it is not the Secretary of State's practice to make the leave of such a person to enter or remain in the UK subject to a condition that he or she is not to have recourse to public funds. If it was otherwise, that would have been provided for in rule 352A or elsewhere in the Immigration Rules. Accordingly, a person who has been granted entry clearance as the spouse of a refugee is entitled to receive such welfare benefits as other immigrants. No doubt the Secretary of State did not want to make people like Mrs A worse off than other immigrants. Two points should be made in the light of these provisions. First, the mistakes which were made in the cases of Mr Kanidagli and Mrs A were administrative failures to implement decisions which had been made pursuant to those practices which the Secretary of State had decided to adopt for determining how he should exercise his statutory power to grant persons who are not British citizens leave to enter and remain in the UK and on what conditions. Secondly, there is nothing in the statutory scheme which shows that it was intended to prohibit a right to compensation for administrative failures of the kind which occurred. In the interests of completeness, I should add that the provision which governs the payment to immigrants of welfare benefits, including income support and a jobseeker's allowance, is section 115 of the Immigration and Asylum Act 1999. As a result of subsections (1), (3) and (9), an immigrant is only excluded from such benefits (unless he or she falls within such category or description, or satisfies such condition, as may be prescribed) if he is "….. a person who is not a national of an EEA State and who – (a) requires leave to enter or remain in the United Kingdom but does not have it; (b) has leave to enter or remain in the United Kingdom which is subject to a condition that he does not have recourse to public funds; (c) has leave to enter or remain in the United Kingdom given as a result of a maintenance undertaking; or (d) has leave to enter or remain in the United Kingdom only as a result of paragraph 17 of Schedule 4 [leave pending appeal]." This provision therefore did not prevent Mr Kanidagli from being entitled to income support and a jobseeker's allowance. However, condition (b) prevented Mrs A from being entitled to income support, a condition which would not have applied to her case had an inappropriate condition not mistakenly been applied to the terms of her entry clearance. The absence of a power to backdate the benefits An important preliminary point was taken by Mr Sean Wilken for the Secretary of State. The claimants would not have suffered any loss as a result of the mistakes which had occurred if the DWP had had the power to backdate the payment of income support and a jobseeker's allowance to them. The fact that Parliament has not given the DWP such a power was said to show that Parliament must have intended that liability to pay compensation consisting of the loss of those benefits should not be imposed even if mistakes (whether by officers of the DWP or otherwise) had resulted in those benefits not being paid. I cannot accept this argument, but to understand why it is necessary to look at the scheme of the relevant regulations – the Social Security (Claims and Payments) Regulations 1987 (SI 1968 of 1987) ("the Regulations") – in some detail. Income support and a jobseeker's allowance (along with a number of other welfare benefits) have to be claimed on the first day of the period for which the claim is made: reg. 19(1) and paras. 1 and 6 of sch. 4. The time for claiming these benefits may be extended up to a maximum of 3 months if, as a result of the circumstances referred to in reg. 19(5), the claimants could not reasonably have been expected to make the claim earlier: reg. 19(4). Some of the circumstances referred to in reg. 19(5) relate to physical difficulties which the claimant may have had. Others relate to circumstances outside the claimant's control, such as a domestic emergency or bad weather. But there is also a set of circumstances which relate to information or advice which the claimant has received. If the claimant was given "information" by an officer of the DWP (reg. 19(5)(d)), or "advice" by a solicitor or other professional adviser, a medical practitioner, a local authority, or a person working in a Citizen's Advice Bureau or similar advice agency (reg. 19(5)(e)), or "information" about the claimant's income or capital by his employer or former employer or by a bank or building society (reg. 19(5)(f)), the time for making the claim is extended if the information or advice "led the claimant to believe that a claim for benefit would not succeed". In none of these circumstances is the claimant required to prove that the person who gave him the advice or information was negligent. Thus, it would not have been accurate to say that the DWP does not have the power to backdate the payment of income support and a jobseeker's allowance. These benefits can, in practical terms, be backdated for up to three months in a number of clearly identified circumstances. Moreover, they can be backdated in those cases where the claimant relied on information or advice without the claimant having to prove negligence on the part of the person who gave him that information or advice. What the Regulations did was to acknowledge that there were a number of common situations in which late claims for benefits might be made, but which should not result in the claimants being deprived of those benefits for a limited period. In those situations, such claimants could obtain backdated benefits for a limited period without proof of negligence. That does not mean that the Regulations manifest a Parliamentary intention to prohibit claims of negligence in respect of benefits which were not covered by the circumstances expressly provided for by the Regulations. If such claims were to be prohibited, it would have to because the law of negligence – in particular the need to show the existence of a duty of care – prohibited such claims. The claim in negligence There is no previous case in which the Secretary of State has been held liable in negligence on facts comparable to the claimants' claims. Accordingly, it is necessary to start with first principles. In Caparo Industries Plc v Dickman [1990] 2 AC 605, Lord Bridge said at pp.617H-618A that what emerged from the authorities which he reviewed was that "…..in addition to the forseeability of damage, necessary ingredients in any situation giving rise to a duty of care are that there should exist between the party owing the duty and the party to whom it is owed a relationship characterised by the law as one of 'proximity' or 'neighbourhood' and that the situation should be one in which the court considers it fair, just and reasonable that the law should impose a duty of a given scope upon the one party for the benefit of the other." These three criteria – forseeability of damage, proximity of relationship, and fairness, justice and reasonableness – often overlap. As Lord Oliver said in Caparo at p.633B-C, "…..it is difficult to resist a conclusion that what have been treated as three separate requirements are, at least in most cases, in fact merely facets of the same thing, for in some cases the degree of forseeability is such that it is from that alone that the requisite proximity can be deduced, whilst in others the absence of that essential relationship can most rationally be attributed simply to the court's view that it would not be fair and reasonable to hold the defendant responsible." Moreover, the courts are required to evaluate the consequences of imposing liability in a particular situation, and they must be sure that that is what justice requires. As a check against the hasty development of the law, Brennan J. said in Sutherland Shire Council v Heyman (1985) 60 ALR 1 at p.43, "the law should develop novel categories of negligence incrementally and by analogy with established categories". Phillips L.J. (as he then was) explained this approach in Reeman v Department of Transport [1997] PNLR 618 at p. 625 as follows: "When confronted with a novel situation the court does not ….. consider these matters [forseeability, proximity and fairness] in isolation. It does so by comparison with established categories of negligence to see whether the facts amount to no more than a small extension of a situation already covered by authority, or whether a finding of the existence of a duty of care would effect a significant extension to the law of negligence. Only in exceptional cases will the court accept that the interests of justice justifies such an extension." There are three features of the claimants' claims which are uncontroversial. First, the Secretary of State would have been aware of the effect which the maladministration in these two cases would have. Both the claimants would be denied the benefits to which they would otherwise have been entitled but for the mistakes which individual immigration officers and officials made. Had an inappropriate condition for entry clearance not been endorsed on Mrs A's passport, she would have had access to public funds. So too would Mr Kanidagli if the status letter had been sent to him. The mistakes were compounded by the delay in remedying them. It is plain that the losses which the claimants would suffer could reasonably have been foreseen by the Secretary of State. Secondly, the mistakes which the individual immigration officers and officials made were purely administrative in nature. Once the decision had been made to grant Mrs A entry clearance and Mr Kanidagli exceptional leave to remain in the UK, no decision-making of any kind nor the exercise of any discretionary judgment was called for. What was required was merely the operational implementation of practices which were well established: the endorsement on Mrs A's passport of entry clearance without any inappropriate conditions attached to it, and the issue of the appropriate letter to Mr Kanidagli. Thirdly, in the absence of the imposition of liability, the claimants would be left without a remedy. That is not to say that public policy requires all wrongs to be redressed, but as Sir Thomas Bingham M.R. (as he then was) said in X (Minors) v Bedfordshire County Council [1995] 2 AC 633 at p. 663D, "the rule of public policy which has first claim on the loyalty of the law [is] that wrongs should be remedied". As ever, though, there are a number of competing considerations. First, the loss which the claimants suffered is said by the Secretary of State to have arisen as a result of pure omissions on the part of immigration officers or his officials – an omission to remove the inappropriate conditions from Mrs A's passport and an omission to send Mr Kanidagli a status letter. In Smith v Littlewoods Organisation Ltd. [1987] 1 AC 241, Lord Goff said at p.271B that "the common law does not impose liability for what are called pure omissions". Secondly, the loss which the claimants suffered was purely economic loss, and the courts have taken a more restrictive approach to the imposition of a duty of care in relation to economic loss than in respect of physical injury or damage. Thirdly, as I have already said, the loss which the claimants suffered was caused by immigration officers or officials performing statutory functions in the name of the Secretary of State. It is said by the Secretary of State that the relationship between those immigration officers and officials and individual members of the public is insufficiently proximate for liability for a duty of care to arise. I can deal relatively shortly with the first of these considerations, namely that the loss which the claimants suffered is said to have arisen as a result of pure omissions. The omissions which Lord Goff was referring to were omissions where there was no duty to take affirmative action of any kind at all. That is very far from this case. The immigration officers and officials had decided to grant Mrs A leave to enter the UK and Mr Kanidagli leave to remain in the UK, in circumstances in which they were entitled to have recourse to public funds. In each of their cases, attempts were made to enable them to apply for public funds. In Mr Kanidagli's case, a status letter was written to him which, had it been sent, he could have shown to the DWP to get the income support and jobseeker's allowance to which he was entitled. The error was in not posting the letter to him. In Mrs A's case, the grant of entry clearance was endorsed on her passport, which (had it not had the additional words about her not having recourse to public funds) she could have shown to the DWP to get the income support to which she was entitled. The error was to add additional words which the Secretary of State had not intended to include. These were therefore not cases in which the Secretary of State had omitted to take action. The immigration officers and officials had taken action, but their action had been carried out so imperfectly that they had not managed to achieve the results which had been intended. The second consideration – namely, that the loss which the claimants suffered was purely economic loss – is an important one. But the reasons why the courts have taken a more restrictive approach to the imposition of a duty of care in cases of economic loss alone should not be overlooked. The duty is more likely to be owed to an indeterminate class of people, and liability could be established for an indeterminate amount. Moreover, economic loss usually arises in circumstances where the parties have a greater opportunity to use contracts to determine the level of risk which they need to take and the degree of protection which they require, even though that opportunity was not available to the claimants. Having said that, the fact that the loss which the claimants suffered was purely economic is a factor to be taken into account in applying the second and third of the Caparo criteria – proximity of relationship, and fairness, justice, and reasonableness – to the claimants' cases. The third consideration – namely, that the loss which the claimants suffered was caused by persons performing statutory functions – requires more analysis. The authorities show that one of the factors which has been regarded as determining whether the person in whose name the functions are performed owes a duty of care in the performance of those functions is whether the issue which the case raises is justiciable. A duty of care will often not arise when the performance of the function involves the formulation of policy or the making of a judgment or the exercise of a discretion. That is because, as Lord Slynn said in Barrett v Enfield London Borough Council [2001] 2 AC 550 at p. 571F-G: "….. the ultimate question is whether the particular issue is justiciable or whether the court should accept that it has no role to play …..The greater the element of policy involved, the wider the area of discretion accorded, the more likely it is that the matter is not justiciable so that no action in negligence can be brought." However, Lord Slynn did not exclude the possibility of an action in negligence even if there was an element of discretion in the decision which gives rise to the claim. At p. 572B, he said: "A claim of negligence in the taking of a decision to exercise a statutory discretion is likely to be barred, unless it is wholly unreasonable so as not to be a real exercise of the discretion, or if it involves the making of a policy decision involving the balancing of different public interests; acts done pursuant to the lawful exercise of the discretion can, however, in my view be subject to a duty of care, even if some element of discretion is involved." Lord Hutton said much the same thing at p. 583C-D: "It is only where the decision involves the weighing of competing public interests or is dictated by considerations which the courts are not fitted to assess that the courts will hold that the issue is non-justiciable on the ground that the decision was made in the exercise of a statutory discretion." A graphic illustration of this principle in operation is afforded by A v Essex County Council [2003] EWCA Civ 1848. Adoptive parents brought an action in negligence against the local authority adoption agency for failing to inform them about the disruptive behaviour of the boy who they subsequently adopted. It was held that there was no general duty owed by an adoption agency or its staff when deciding what information was to be given to prospective adopters (unless that decision was one which no agency could reasonably have taken). That was a policy issue for the agency to decide. However, once the agency had decided what information should be given, there was a duty on the agency to take reasonable care to ensure that that information was given. It is not contended that the issue which arises in the present case is not justiciable. Mr Wilken realistically acknowledged that the mistakes which had been made were purely operational, in the sense that, once the decision had been made to give Mrs A entry clearance and Mr Kanidagli exceptional leave to remain in the UK, no discretionary judgment was thereafter called for in endorsing the appropriate conditions of Mrs A's entry clearance on her passport and sending Mr Kanidagli a status letter. Rather, the Secretary of State's opposition to the imposition of a duty of care in their cases arises out of the fact that the claimants belonged to a large and indeterminate class of persons, and there had been no assumption by the immigration officers and officials who dealt with their cases of responsibility towards them. For that reason, it is said that the relationship between the immigration officers and officials, on the one hand, and the claimants is insufficiently proximate for a duty of care to have arisen. At first blush, this is an unpromising line of attack for the Secretary of State. The claimants undoubtedly belonged to large classes of persons. Mrs A belonged to the class of persons who were seeking entry clearance as the spouse of a refugee. Mr Kanidagli belonged to the class of persons who were seeking exceptional leave to remain in the UK on the basis that their removal from the UK would be incompatible with the Convention. But these classes were only indeterminate in the sense that other people would join these classes and leave them as their personal circumstances dictated. The classes to which the claimants belonged were clearly defined, and the fact that many people may be members of those classes should not in principle affect the question whether a duty of care should be imposed on those who deal with them. The size of the class is more relevant to the nature and extent of the duty of care rather than to its existence. Moreover, the errors which were made in the claimants' cases were made in the context of the handling of their particular cases by immigration officers and officials. It is difficult to see why, in non-legal terms, the individual immigration officers and officials were not responsible for the errors which were made. Is this stance in line with the authorities? Mr Wilken said that it was not, and he relied principally on Stovin v Wise in this connection. In that case, the first defendant had driven her car carelessly from a side road onto a main road. She collided with the plaintiff who had been riding his motorcycle on the main road. She argued that the junction was dangerous, because a raised area on land by the road obscured the view for those entering the main road. The local authority knew about it, and was joined as second defendant. The allegation against it was that it had failed to use its statutory powers to compel the owner of the land to remove the obstruction. That allegation was held by a majority of the House of Lords not to give rise to a duty of care on the part of the local authority. Stovin v Wise was obviously decided in a wholly different factual context from the present case. But over and above that, two distinguishing features are readily apparent. First, the class of persons to whom the duty of care was allegedly owed was truly a large and indeterminate class of persons – namely, all members of the public who found themselves in that junction, whether as drivers, passengers or pedestrians. Secondly, the alleged breach of duty did not occur in the context of the handling of the case of particular individuals by officers of the local authority. It occurred in the context of their general functions relating to the safety of highways. On the facts alone, the result in Stovin v Wise gives no indication whatever about what the result in the claimants' cases should be. Lord Hoffmann gave the speech for the majority in Stovin v Wise. His speech had important things to say about liability for pure omissions (which this was), about the need for something other than reasonable foreseeability of loss to be established before a duty of care can arise, and about the need for the statutory scheme to be examined to see if it was intended to confer a right to pay compensation in the event of a breach of statutory duty or the non-exercise of a statutory power. Those issues have already been touched upon in this judgment, and Lord Hoffmann's conclusion at p. 953D-E was: "In summary, therefore, I think that the minimum preconditions for basing a duty of care upon the existence of a statutory power, if it can be done at all, are, first, that it would in the circumstances have been irrational not to have exercised the power, so that there was in effect a public law duty to act, and secondly, that there are exceptional grounds for holding that the policy of the statute requires compensation to be paid to persons who suffer loss because the power was not exercised." The first of these preconditions has indirectly been brought into question by the court's reluctance to bring concepts of administrative law into the law of negligence: see X (Minors) v Bedfordshire County Council (per Lord Brown-Wilkinson at p. 736F), and Barrett v Enfield London Borough Council (per Lord Slynn at pp. 571H-572A and Lord Hutton at p. 586C). But that need not detain us because there was no rational reason to distinguish between Mrs A and Mr Kanidagli, on the one hand, and other persons whose cases were indistinguishable from theirs. Indeed, no different treatment of the claimants had been intended. For present purposes, what is important is what Lord Hoffmann had to say about the extent to which, if at all, an expectation that the statutory power would be exercised could amount to exceptional reasons for holding that the policy of the statute requires compensation to be paid to persons who suffer loss because the power is not exercised. Lord Hoffmann addressed that issue in the passage in his speech at pp. 953E-955C headed "Particular and general reliance". The effect of that passage was summarised in Clerk & Lindsell on Torts, 18th ed., para. 12-33 as follows: "….. in a public authority context, such 'exceptional grounds' would usually have to be found either in a reasonably held general reliance by the community as a whole that the discretionary service in question would be provided to all of them or in a similarly reasonably held particular reliance on the part of an individual that the service would be provided for him." I agree with that summary, though in its application to the present case, it should be remembered that this was not a case of the Secretary of State deciding not to exercise a statutory power which he had, but a case of the Secretary of State exercising his power imperfectly. Applying, therefore, Lord Hoffmann's view to the present case, the community as a whole, and Mrs A in particular, would, I am sure, assume that if the invariable practice of the Secretary of State was to take the necessary steps to enable the spouse of a refugee who had been granted entry clearance the opportunity to claim welfare benefits, he would abide by that practice in all cases. Similarly, the community as a whole, and Mr Kanidagli in particular, would assume that, if the invariable practice of the Secretary of State was to take the necessary steps to enable the person who has been granted exceptional leave to remain in the UK because his removal from the UK would be incompatible with the Convention to claim welfare benefits, he would abide by that practice in all cases. It follows that I see nothing in Stovin v Wise which mandates the conclusion that the relationship between Mrs A and Mr Kanidagli, on the one hand, and the immigration officers and officials who handled their cases was insufficiently proximate for a duty of care to arise. There are four other points which I should make. First, Barrett v Enfield London Borough Council was regarded by Mr Stephen Knafler for the claimants as the high water mark of his case. The reliance he placed on it was understandable on the question whether the issues which the claimants' claims raise are justiciable. But I have not found it helpful on the sufficiency of the proximity of the relationship. I am not convinced that Barrett dealt with that issue, perhaps not surprisingly because proximity was not really in contention. In Barrett, a boy who had been in care sued the local authority in whose care he had been for negligence in the way in which the authority had looked after him. It is difficult to think of a relationship more proximate than a local authority and a child in its care. Secondly, Mr Wilken placed considerable reliance on the decision of the Court of Appeal in W v The Home Office [1997] Imm AR 302. The plaintiff was from Liberia. He claimed asylum on his arrival in the UK and was detained. The immigration officer was not prepared to consider either his release from detention or his temporary admission to the UK (while his claim for asylum was being considered) until he had established that he was a citizen of Liberia. His detention was prolonged because it had been thought that, while in detention, he had only scored three out of a possible fifteen points on a test of his knowledge of Liberia, and that true Liberians would have found it easy to answer all the questions. It was subsequently discovered that he had not taken a test at all, and that the test given to someone other than the plaintiff had mistakenly been placed on the plaintiff's file. Immediately before the mistake had been discovered, the plaintiff had taken the test and had passed it easily. It was that which prompted the enquiries which revealed the mistake which had been made. The plaintiff was immediately released from detention and granted temporary admission to the UK. Even though this was a case of operational error, the Court of Appeal held that a duty of care had not arisen. In my judgment, this case is distinguishable from the present one. Although this was a case of operational error, the error occurred prior to the making of the judgment as to whether the plaintiff was Liberian. In other words, it occurred in the context of the enquiries which were being made to determine a question of fact on which the future detention of the plaintiff depended. The Court of Appeal regarded that consideration as decisive. At p. 312, Lord Woolf MR (giving the judgment of the Court) said: "The process whereby the decision-making body gathers information and comes to its decision cannot be the subject of an action in negligence. It suffices to rely on the absence of the required proximity. In gathering information, and taking it into account the defendants are acting pursuant to their statutory powers and within that area of their discretion where only deliberate abuse would provide a private remedy. For them to owe a duty of care to immigrants would be inconsistent with the proper performance of their responsibilities as immigration officers." It is questionable whether this thinking is consistent with the observations in Barrett about justiciability: whether the mistake in filing the test was negligent was, on the face of it, a justiciable issue. But the reason why a duty of care did not arise was because the mistake occurred in the course of the exercise of a judgment which the immigration officer had to make. Compare that with the cases of Mrs A and Mr Kanidagli: the errors in their cases were made after the judgment call had been made. All that was left was the implementation of the decision to which that judgment had related. Thirdly, I have been very conscious of the fact that the three criteria identified in Caparo – foreseeability of damage, proximity of relationship, and fairness, justice and reasonableness – have a tendency to shade into each other. I have already referred to what Lord Oliver said in Caparo at p. 633B-C. The loss which the claimants would suffer as a result of the mistakes which were made were not just foreseeable. Until those mistakes were corrected, it was absolutely inevitable that they would lose out in the way they did, and an outsider looking on would have seen that. This may be one of those cases in which the certainty of loss was such that "from that alone ….. the requisite proximity can be deduced", though I prefer to base my decision on the more principled analysis to which I have endeavoured to subject the authorities. Indeed, the fact that the loss which the claimants suffered was the obvious and inevitable consequence of the mistakes which were made undermines the reliance placed by Mr Wilken on the fact that the loss was economic loss only. Fourthly, my attention was drawn to a number of other cases. I intend no discourtesy to counsel by not referring to them expressly. The cases to which I have referred were the principal cases on which counsel relied, and have been sufficient for me to reach a concluded view on whether the relationship between Mrs A and Mr Kanidagli, on the one hand, and the immigration officers and officials who handled their cases were sufficiently proximate for a duty of care to arise. And bearing in mind the need for the law to develop incrementally, I do not regard the finding of the existence of a duty of care in their cases as effecting a significant extension to the law of negligence. I turn finally to whether it would be just, fair and reasonable for the law to impose a duty of care on those responsible for the administrative implementation of immigration decisions of the kind which have been made in the case of the claimants. A number of points were made by Mr Wilken in support of his contention that it would not be just, fair or reasonable for a duty of care to be imposed in their cases. Some of them I have already considered – for example, his contention that there is nothing in the statutory scheme to suggest that mistakes of the kind which were made in their cases should give rise to a right of compensation. But four of his points need to be addressed specifically: (i) It is said that the claimants had viable alternative remedies by way of judicial review. Mrs A could have sought judicial review of the endorsement on her passport of an inappropriate condition on her entry clearance, and Mr Kanidagli could have sought judicial review of the failure to provide him with a status letter. Mandatory orders could have been made to put the mistakes right. For my part, I do not think that judicial review was a comparable remedy at all. By having the mistakes put right, Mrs A and Mr Kanidagli would have had their entitlement to benefits restored. But it would have done nothing for the benefits which they lost in the meantime. Mr Wilken's response is that Mrs A at least could have applied for judicial review before she came to the UK. But I question how realistic it would have been for the impoverished spouse of a refugee – assuming that she had appreciated the significance of an inappropriate condition endorsed on her passport – to obtain public funding while still overseas to commence a claim for judicial review for the removal of that condition. In any event, she may well have thought that she could not come to the UK until the question of her entitlement to benefits had been sorted out. In that case, any claim for judicial review would have significantly delayed her arrival in the UK and prolonged her husband's separation from her and their children. (ii) It is said that imposing a duty of care would hamper the effective performance of the system of immigration control. I do not agree. Being required to take care in the administrative implementation of immigration decisions would enhance public confidence in the system, and the administrative implementation of immigration decisions is not an area of human activity in which the fear of being brought to account for one's mistakes is likely to affect performance. (iii) It is said that imposing a duty of care would trigger further claims, which (a) would require funds to be diverted and time to be devoted to enable them to be resisted, and (b) would be a drain on public resources if the claims were successful. I am unimpressed by these assertions. If the claims are successful, it is only right that compensation should be paid. And I doubt whether very many further claims would be triggered. We are, after all, talking about a very limited category of claims, namely claims over mistakes in the administrative implementation of immigration decisions. Even if it were appropriate to take a "floodgates" argument into account, it is unlikely that the floodgates would be significantly opened. (iv) It is said that section 8 of the Human Rights Act 1998 arguably permits a wider range of claims than the common law for which damages may be awarded. The claimants were claiming damages under section 8, a claim which they subsequently abandoned. If they cannot succeed under section 8, they should not be permitted to succeed under the common law. I disagree. Claims for damages under section 8 can only succeed if the unlawful act of the public authority is an act which is incompatible with a Convention right. No breach of a Convention right has been alleged to arise as a result of the consequences flowing from the mistakes which were made in these cases. I have not discerned any other reason why it would not be fair, just or reasonable for a duty of care to be imposed in this case. Indeed, it would be unjust if Mrs A and Mr Kanidagli did not have a remedy enabling them to claim the benefits which they have lost. Conclusion For these reasons, I have concluded that, on the assumed facts, the Secretary of State owed a duty to the claimants to take care in the administrative implementation of the immigration decisions which had been made in their cases. To be precise, he owed a duty of care to Mrs A to ensure that an inappropriate condition on her entry clearance was not endorsed on her passport, and therefore did not include a prohibition on her having recourse to public funds. He owed a duty of care to Mr Kanidagli to ensure that Mr Kanidagli received a status letter which he could use to obtain welfare benefits. In these circumstances, it is unnecessary for me to reach any final conclusion on the far more contentious argument advanced on the claimants' behalf relating to abuse of power, but I am very sceptical about the existence of a free-standing claim in private law that, absent negligence or some other tort, a public authority is liable to pay damages for not exercising a power which it has in a particular way. That is especially so in a case such as this where the abuse of power which is alleged was simply the Secretary of State's refusal to act in a way which mitigated the effect of the mistakes which had been made.. I regret the lapse of time which has occurred since the hearing before me. The principal reason for that was that I twice had to ask counsel for further help on the relevant statutory schemes, namely the scheme for immigration control and the payment of welfare benefits to immigrants, and the scheme governing the backdating of benefits. That implies no criticism whatever of counsel. They had included the relevant schemes in the bundle of authorities. At the hearing, I had not thought it necessary for counsel to take me through them. I subsequently realised that I needed their assistance after all. In order to spare the parties the expense of attending court when this judgment is handed down, I leave it to the parties to see whether an order for the costs of the determination of this issue can be agreed. In case such an order cannot be agreed, I give the parties liberty to apply for the issue of costs to be determined by me. The same applies to the Secretary of State if he wishes to apply for permission to appeal. Any such application for costs or permission to appeal should be filed within 14 days of the handing down of this judgment, and I will consider such applications without a hearing on the basis of any written representations which the parties wish to make.

criminal appellate jurisdiction criminal appeals number. 217 to 233 of 1971. appeals from the judgment and order dated september 13 1971 of the calcutta high companyrt in criminal misc. cases number. 169 177 222 224 229 230 231 237 285 236 287 316 328 329 330 and 331 of 1971. niren de attorney-general d. n. mukherjee and g. s. chaterjee for the appellant in all the appeals . niren de attorney-general r. h. dhebar ram panjwani and p. nayar for the attorney-general for india in all the appeals . somnath chatterjee d. k. sinha rathin das and indira jai singh for the respondents in cr. as. number. 219 223 and 225 to 227 of 1971 . aruk prakash chatterjee rathin das dalip k. sinha and indira jai singh for the respondents in cr. as. number. 228 and 230 to 233 of 1971 . the judgment of the companyrt was delivered by dua j.-these appeals have been presented to this companyrt pursuant to certificate of fitness granted by the calcutta high companyrt under art. 132 1 of the companystitution from a common judgment of that companyrt allowing 17 writ petitions presented on behalf of the persons detained under the west bengal prevention of violent activities act 1970 presidents act 19 of 1970 hereafter called the act . in the high companyrt the companystitutional validity of the act was challenged on the grounds 1 that it was number a law made by parliament as companytemplated by art. 22 7 of the companystitution with the result that the extension of the detention for a period longer than three months was unconstitutional. sections 10 to 13 of the act were described as violative of art. 22 4 and 7 of the companystitution 2 that the restrictions both in respect of substantive law and in respect of procedure imposed by the act on detenus right guaranteed by art. 19 1 d were unreasonable and therefore the act was unconstitutional and 3 that the act was violative of art. 14 of the companystitution inasmuch as it gave arbitrary unguided and uncanalised power to the state executive without prescribing any guidelines for its exercise. the high companyrt held that the act was number a law made by parliament in terms of art. 22 7 of the companystitution. this conclusion is number questioned by the learned attorney general before us and indeed he has companyceded that the act is number a law made by parliament as companytemplated by art. 22 7 . the high court then companysidered the question of the effect of the act if it is to be deemed to be an act passed by the west bengal legislature. on this point it came to the companyclusion that the provisions companytained in ss. 1 1 and 13 of the act relating to the procedure before the advisory board in respect of the person detained for a longer period than three months was ultra vires art. 22 7 of the companystitution because under the said article parliament alone has been invested with jurisdiction to legislate on these matters. the state legislature was accordingly held to be incompetent to make a law prescribing procedure for the advisory board and also to make a law providing for detention for more than three months. on the question of applicability of art. 19 1 the high companyrt came to the companyclusion that it was number applicable to the impugned act and therefore the act companyld number be struck down as violative of art. 19 1 d or under any other clause of art. 19 1 . the challenge on the basis of art. 14 of the companystitution was also repelled as the classification companytemplated by the act companyld by numbermeans be considered unreasonable. in the final result on the ground of invalidity of ss. ii and 13 the writ petition was allowed with respect to the detention of the detenus beyond the period of three months. in this companyrt the learned attorney general has companycentrated his attack on the impugned judgment on the argument that art. 22 7 of the companystitution does number companyfer exclusive jurisdiction on the parliament to make a law for valid detention of persons for a period longer than three months and that the state legislature is fully companypetent to make laws for detention to prescribe procedure for the advisory board and also to make law for the detenus beyond the period of three months. in order to appreciate the legal position it is desirable to reproduce art. 22 of the companystitution protection against arrest and detention in certain cases numberperson who is arrested shall be detained in custody without being informed as soon as may be of the grounds for such arrest number shall he be denied the right to companysult and to be defended by a legal practitioner of his choice. every person who is arrested and detained in custody shall be produced before the nearest magistrate within a period of twenty-four hours of such arrest excluding the time necessary for the journey from the place of arrest to the companyrt of the magistrate and number such person shall be detained in custody beyond the said period without the authority of a magistrate. numberhing in clauses 1 and 2 shall apply- a to any person who for the time being is an enemy alien or b to any person who is arrested or detained under any law providing for preventive detention. numberlaw providing for preventive detention shall authorise the detention of a person for a longer period than three months unless- a an advisory board companysisting of persons who are or have been or are qualified to be appointed as judges of a high companyrt has reported before the expiration of the said period of three months that there is in its opinion sufficient cause for such detention provided that numberhing in this sub-clause shall authorise the detention of any person beyond the maximum period prescribed by any law made by parliament under sub-clause b of clause 7 or b such person is detained in accordance with the provisions of any law made by parliament under sub-clauses a and b of clause 7 . when any person is detained in pursuance of an order made under any law providing for preventive detention the authority making the order shall as soon as may be companymunicate to such person the grounds on which the order has been made and shall afford him the earliest opportunity of making a representation against the order. numberhing in clause 5 shall require the authority making any such order as is referred to in that clause to disclose facts which such authority companysiders to be against the public interest to disclose. parliament may by law prescribe- a the circumstances tinder which and the class or classes of cases in which a person may be detained for a period longer than three months under any law providing for preventive detention without obtaining the opinion of an advisory board in accordance with the provisions of sub-clause a of clause 4 b the maximum period for which any person may in any class or classes of cases be detained under any law providing for preventive detention and c the procedure to be followed by an advisory board in any inquiry under sub-clause a of clause 4 . it is clear that cl. 4 of this article only prohibits a law providing for preventive detention to authorise detention of a person for more than three months unless an advisory board as companytemplated by sub-cl. a of the said clause has before the expiry of three months of detention reported that in its opinion there is sufficient cause for such detention or unless such person is detained in accordance with the provisions of any law made by parliament under sub-cl. a and b of cl. 7 . again even when an advisory board has under sub-cl. a of cl. 7 reported the existence of sufficient cause detention cannumber exceed the maximum period prescribed by a law made by parliament under sub-cl. b of this clause. the expression such detention in sub-cl. a of cl. 4 according to the majority view in pooranlal lakhan pal v. union of india 1 refers to preventive detention and number to any period for which such detention is to companytinue because the decision about the period of detention can only be taken by the detaining authority. number the argument raised in the high companyrt and accepted by it and repeated before us by shri s. n. chatterji on behalf of the respondents is that cl. 7 b of art. 22 makes it obligatory for the parliament to prescribe by law the maximum period for which a person may be detained as also the procedure to be followed by the advisory board in holding the enquiry under cl. 4 a of this article. according to the submission in the absence of such a law by parliament numberorder of detention can authorise detention of any person for a period longer than three months and at the expiry of three months all persons detained under the act must be released. we are unable to accept this companystruction of cl. 7 of art. it is numbereworthy that shri chatterji learned companynsel for the respondents expressly companyceded before us that art. 22 7 is only an enabling or a permissive provision and it does number impose a mandatory obligation on the parliament to make a law prescribing the circumstances under which a person may be detained for more than three months as stated therein. but according to him sub-cl. b and c of cl. 7 do companytain a mandate to the parliament which is obligatory. in our view cl. 7 of this article on its plain reading merely authorises or enables the 1 1958 s.c.r. 460. parliament to make a law prescribing i the circumstances under which a person may be detained for a period longer than three months ii the maximum period for which a person may in any class or classes of cases be detained under any law providing for preventive detention and iii the procedure to be followed by the advisory board in an enquiry under cl. 4 a of this article. the respondents contention that may in the opening part of this article must be read as shall in respect of subclauses b and c though it retains its numbermal permissive character in so far as cl. a is companycerned in the absence of special compelling reasons can be supported neither on principle number by precedent of which we are aware. on the other hand this court has in s. krishnan v. state of madras 1 agreeing with the observations of kania c.j. in gopalan v. state of madras 2 held sub-cl. b of cl. 7 to be permissive. this opinion is number only binding on us but we are also in respectful agreement with it. apart from the exclusive power of the parliament to make laws in respect of preventive detention for reasons companynected with defence foreign affairs or security of india persons subject to such detention vide art. 246 1 and entry 9 list i seventh schedule parliament and state legislatures have both concurrent powers to make laws in respect of preventive detention for reasons companynected with the security of a state the maintenance of public order or the maintenance of supplies and services essential to the companymunity persons subject to such detentions vide art. 246 2 and entry 3 in list iii of seventh schedule . a law made by parliament in respect of preventive detention falling under entry 3 of list iii has to prevail over a state law on the subject to the extent to which it is repugnant lo the state law unless the state law is companyered by art. 254 2 . parliament however is number debarred by cl. 2 as is clear from the proviso. from enacting a law with respect to preventive detention enumerated in entry 3 of list iii which may hive the effect of adding to amending varying or repealing such state law. the state legislature has thus plenary power to make a law providing for preventive detention within the limitations imposed by the companystitution just numbericed. the power of the state legislatures under art. 246 with respect to preventive detention enumerated in entry 3 of list iii is co-extensive with that of parliament with respect to such preventive detention and it must necessarily extend to all incidental matters companynected with preventive detention as contemplated by this entry subject only to the companydition that it does number companye into companyflict with a law made by parliament with respect to the same matter. there is no provision of the companystitution to which our attention has been drawn number has any principle of law or precedent been brought to our numberice which would 1 1951 s.c.r. 621 at 639. 2 1950 s.c.r. 88. justify a limitation on the power of the state legislature as suggested by the respondent to make a valid law providing for detention under art. 22 4 for a period beyond three months on the ground of absence of a law made by parliament permitting detention for such period. had the constitution intended such a result it would certainly have made an express provision to that effect. since art. 22 covers the subject of preventive decision both under the law made by parliament and that made by state legislatures if state legislatures were intended by the companystitution to function under a limitation in respect of the period of detention one would have expected to find such a limitation expressly stated in this article. but as we read cl. 7 of art. 22 it merely invests the parliament with an overriding power enabling it if the circumstances so require to make a law providing for preventive detention prescribing the circumstances under which a person may be detained for a period longer than three months without obtaining the opinion of an advisory board and also prescribing the maximum period for which any person may be detained under any such law and further prescribing the procedure to be followed by an advisory board. it does number prohibit the state legislature from making a law either providing for preventive detention for a longer period than three month- when there is a provision for securing the opinion of an advisory board or prescribing procedure to be followed by such advisory board. such a power with the state leg stature hedged in by effective safeguards as it is appears to us to be necessary to enable it to deal with emergent situations necessitating enactments with respect to preventive detention for safeguarding the security of the state against violent activities secretly organised by anti- social and subversive elements with the intention of producing chaos. security of a state maintenance of public order and of supplies and services essential to the community demand effective safeguards in the larger interest of sustenance of peaceful democratic way of life. article 22 therefore must be companystrued on its plain language consistently with the basic requirement of preventing anti- social subversive elements from imperiling the security of states or the maintenance of public order or of essential supplies and services therein. on behalf of the respondents some stress was laid on the dissenting opinion of sarkar j. as he then was in pooranlal lakhan pals case 1 . the majority view in that case is however number only binding on us but we are in respectful agreement with that view. shri a. p. chatterjee also appearing for the respondents addressed elaborate arguments in support of the submission that after the decision in r. c. companyper v. union of india 2 the view 1 1958 s.c.r. 460 2 19703 s.c.r. 530. taken in gopalans case supra that art. 22 is exhaustive on the subject of preventive detention and art. 19 1 d is wholly out of the picture is numberlonger good law. on this premise he attempted to develop his attack on the reasonableness of the restrictions imposed on the fundamental right of a person detained under the act to move freely throughout the territory of india. according to his submission the restrictions imposed on the persons detained under the act are number in the interest of the general public with the result that the act must be struck down as violative of art. 19 1 d . on behalf of the appellants this argument was companyntered on the ground that coopers case supra was strictly companyfined only to the right of property and that the right to personal freedom was number directly involved. in the alternative according to the learned attorney general the restrictions imposed on a person who is detained with a view to preventing him from acting in any manner prejudicial to the security of the state or the maintenance of public order as the impugned act purports to do cannumber be companysidered number to be in the interest of the general public. in our opinion assuming that art. 19 1 d of the companysti- tution is attracted to the case of preventive detention restrictions imposed by the act on the fundamental rights of a citizen who has been detained under the act to move freely throughout the territory of india with a view to preventing him from acting in any manner prejudicial to the security of the state of west bengal or maintenance of public order are clearly in the interest of the general public. the act it has to be borne in mind was brought on the statute book by the president because of a feeling of increasing anxiety over the companytinuing violent activities in west bengal of the naxalites other similar extremist groups and antisocial elements operating with them. vide reasons for the enactment . the existing laws as reasons for enactment also expressly point out were found to be inadequate for dealing with the situation and it was considered necessary to vest the state administration with powers to detain persons in order to prevent them from indulging in violent activities. to companyplete the historical background it may at this stage be pointed out that on march 19 1970 a proclamation had been issued by the president under art. 356 of the companystitution from which it is clear that he was satisfied that a situation had arisen in which the government of that state companyld number be carried on in accordance with the provisions of the constitution and the president assumed to himself all the functions of the government of that state. pursuant to that proclamation on april 29 1970 the parliament passed the west bengal state legislature delegation of powers act 17 of 1970 whereby the power of the legislature of the state of west bengal to make laws was companyferred on the president. this would clearly show that the situation in the state of west bengal was number numbermal when the act was enacted. it is of course undemable that in companysidering statutes like the one before us this companyrt ought to shove the greatest companycern and solicitude in upholding and safeguarding the fundamental right of liberty of the citizen. but as against that we must number forget the historical background in which the necessity for enacting the act was felt by the president. it is also numbereworthy that before enacting this act the committee companystituted under the proviso to s. 3 2 of act 17 of 1970 was also duly companysulted. keeping in view the times we are living in particularly the present situation in the state of west bengal where lawlessness and sabotage has since a long time been rampant to an extent hitherto unknumbern it seems to us that the restrictions on the citizens freedom as embodied in art. 19 1 d of the constitution placed by the act must be held to be eminently in the interest of the general public. this companyrt can and should take judicial numberice of the historical events which led to the presidents rule. those events in our view fully demonstrate the necessity in the interest of the general public to bring on the statute book the provisions of the act. the general argument challenging the vires of the act is thus wholly without substance. shri a. p. chatterjee next directed his attack to the validity of the various clauses of sub-s. 2 of s. 3 of the act. according to the submission these clauses arbitrarily extend the scope of the expression acting in any manner prejudicial to the security of a state or the maintenance of public order. let us turn to s.3 to see how far the respondents attack is substantiated. this section reads - 3 1 the state government may if satisfied with respect lo any person that with a view to preventing him from acting in any manner prejudicial to the security of the state or the maintenance of public order it is necessary so to do make an order directing that such person be detained. for the purposes of sub-section 1 the expression acting in any manner prejudicial to the security of the state or the maintenance of public order means- a using or instigating any person by words either spoken or written or by signs or by visible representations or otherwise to use any lethal weapon- to promote or propagate any cause or ideology the promotion or propagation of 16-l500 sup cl/72 which affects or is likely to affect adver- sely the security of the state or the main- tenance of public order or to overthrow or to overawe the govern- ment established by law in india. explanation.---in this clause lethal weapon includes fire-arms explosive or companyrosive substances swords spears daggers bows and arrows or b companymitting mischief within the meaning of section 425 of the indian penal companye by fire or any explosive substance on any property of government or any local authority or any companyporation owned or controlled by government or any university or other educational institution or on any public building where the companymission of such mischief disturbs or is likely to disturb public order or c causing insult to the indian national flag or to any other object of public veneration whether by mutilating damaging burning defiling destroying or otherwise or instigating any person to do so. explanation.-in this clause object of public veneration includes any portrait or statute of an eminent indian installed in a public place as a mark of respect to him or to his memory or d companymitting or instigating any person to commit any offence punishable with death or imprisonment for life or imprisonment for a term extending to seven years or more or any offence under the arms act 1959 or the explosive substances act 1908 where the commission of such offence disturbs or is likely to disturb public order or e in the case of a person referred to in clauses a to f of section 110 of the companye of criminal procedure 1898 companymitting any offence punishable with imprisonment where the commission of such offence disturbs or is likely to disturb public order. any of the following officers namely district magistrates additional district magistrates specially empowered in this behalf by the state government. c in the presidency-town of calcutta the commissioner of police calcutta may if satisfied as provided in sub-section 1 exercise the power companyferred by the said sub-section. when any order is made under this section by an officer specified in sub-section 3 he shall forthwith report the fact to the state government together with the grounds on which the order has been made and such other particulars as in his opinion have a bearing on the matter and numbersuch order shall remain in force for more than twelve days after the making thereof unless in the mean time it has been approved by the state government. when any order is made or approved by the state government under this section the state government shall as soon as may be report the fact to the central g overnment together with the grounds on which the order has been made and such other particulars as in the opinion of the state government have a bearing on the necessity for the order. the challenge to cl. a b d and e is prima facie unfounded for there can be numbertwo opinions about the acts covered by these clauses being reasonably likely to be prejudicial to the maintenance of public order. that disturbance of public order in a state may in turn prejudicially affect its security is also undeniable. fairly close and rational nexus between these clauses and the maintenance of public order and security of the state of west bengal is writ large on the face of these clauses. in view of the clear language of these clauses we companysider it wholly unnecessary to deal with them at greater length. in regard to cl. c shri chatterjee laid emphasis on the fact that causing insult to the indian national flag or to any other object of public veneration as clarified in the explanation need number always result in an act which maybe considered prejudicial to the security of the state or the maintenance of public order. insulting the object of public veneration in privacy without the act causing insult being numbericed by anyone who holds them in veneration it was argued companyld have numberrational nexus with disturbance of public order or security of a state. the argument stated in the abstract is attractive. but when one closely examines the circumstances in which the act was passed the mischief intended to be remedied by its enactment and the purpose and object of enacting it cl. c of sub-s. 2 companysidered in the background of sub-s. 1 of s. 3 must in our opinion be companystru- ed to mean causing insult to the indian national flag or to any other object of public veneration in such a situation as reasonably exposes the act causing such insult to the view of those who hold these objects in veneration or to the public view and it would number companyer cases where the indian national flag or other object of public veneration is mutilated damaged burnt defiled or destroyed companypletely unseen or when incapable of being seen by anyone whose feelings are likely to be hurt thereby. the act causing insult referred to in cl. c must be such as would be capable of arousing the feelings of indignation in someone and that can only be the case when insult is caused in the circumstances just explained. so companystrued cl. c would in our view be clearly within the expression acting in any manner prejudicial to the maintenance of public order. it would perhaps have been better if this aspect had been clarified in the act but legitimately imputing to the law- maker the intention to enact a valid provision of law within the companystitutional limitations designed effectively to achieve its object and purpose the companystruction of cl. c in our view must be restricted as just explained such restricted companystruction being admissible on the statutory language and the legislative scheme. on this companystruction the challenge must fail. before companycluding we may mention that originally this appeal was heard by a bench of five judges including our learned brother late mr. justice s.c. roy and before his sudden tragic death he had expressed his agreement with our decision and approved the draft judgment. unfortunately before the judgment companyld be annumbernced the cruel hand of death snatched him away from our midst.

V. Raveendran J., The respondent was employed as a clerk in the Kalindri branch of the appellant Bank. He was issued a charge-sheet dated 30.8.1988. The two charges against him are extracted below On 14.10.1987, you disclosed the balance of SB Account No.1025 of Shri Dharamchand Nathaji lying in in-operative account to an unidentified person posing himself as the said account holder though the person was number having even Pass Book of that account. This disclosure of secrecy led a fraudulent withdrawal of Rs.6,000/- from the said account thereby putting the bank into loss. On 14.10.1987, you have advised Shri I.M. Rawal, the companynter clerk handling Savings Banks ledgers to transfer the balance lying in account number 1025 in the name of Shri Dharam Chand Nathaji from in-operative Savings Bank ledger to that of operative ledgers without first obtaining the permission of the Branch Manager which is a pre-requirement in all such cases. It is further alleged that you have companylected the withdrawal form purported to have been signed by the depositor, handed over the same to Shri I.M. Rawal, the companynter clerk, obtained token and after it was passed for payment by the Branch Manager, obtained payment from paying cashier Shri S.R. Meghwal The real depositor has subsequently companyplained that the signature on withdrawal form was forged and the matter is number under police investigation. The charge-sheet followed a preliminary enquiry by one H. Sharma, an officer of the appellant bank, in which the respondent broadly admitted the facts companystituting the subject matter of the two charges. A joint inquiry was held in respect of the charges against the respondent and two others namely I.M. Rawal and S.R. Meghwal. Several witnesses were examined. The Inquiry Officer submitted a report dated 12.6.1989 holding that both the charges against the respondent were proved. He also held that the charges against I.M. Rawal and S.R. Meghwal were also proved. The disciplinary authority companysidered the inquiry report. He was of the view that on the material placed in the inquiry, the respondent was number guilty of the first charge. He, however, companycurred with Inquiry Officer in regard to the finding of guilt recorded in respect of the second charge. He, therefore, issued a show cause numberice dated 23.6.1990 proposing to impose the punishment of dismissal in regard to the second charge. After companysidering the respondents reply, the disciplinary authority, by order dated 1.8.1990, imposed the punishment of dismissal. The matter rested there for several years. In the meanwhile, on the basis of a companyplaint by the Branch Manager, a charge-sheet was filed before the Chief Judicial Magistrate, Sirohi, in regard to the allegations which were the subject matter of the departmental enquiry. The criminal companyrt acquitted the respondent by judgment dated 7.7.1994, holding that charges were number proved beyond doubt. Thereafter, he filed a writ petition WP No.5761/1994 challenging his dismissal, on the ground that he was acquitted in the criminal case. The said writ petition was disposed of by a brief order dated 26.5.1997 observing that he may avail the remedy of appeal and the appellate authority may companysider the explanation for delay in submitting the appeal. The respondent filed an appeal before the Appellate Authority, with an application for companydonation of delay. The appellate authority, by order dated 7.10.1997, dismissed the application for companydonation of delay and companysequently dismissed the appeal. The respondent challenged the order of the appellate authority in WP No.450/1998. A leaned Single Judge of the Rajasthan High Court dismissed the writ petition on the ground that the appellate authority had number companymitted any error in dismissing the appeal on the ground of delay. The respondent filed a special appeal and the division bench of the High Court allowed the appeal by the impugned judgment dated 4.4.2006. The pendency of the criminal case was accepted as sufficient explanation regarding delay. The division bench held that the number-filing of the appeal by the respondent in time was due to a bona fide impression that he companyld do so after the disposal of the criminal proceedings. With reference to merits, the division bench held that numberwilful or fraudulent companyduct with intention to cause loss to the appellant Bank, number misappropriation by the respondent, was made out. The division bench was of the view that the case was number one where respondent had acted in wilful dereliction of duty and that in an increasing customer-friendly atmosphere in the Bank, the respondent had acted bona fide and allowed the person companysidered by him to be a valued customer to operate on the account number realising that such person was impersonating the account holder. The High Court was of the view that in such circumstances, the question of loss of companyfidence would number arise and the punishment of dismissal was grossly disproportionate to the misconduct. Therefore, it set aside the order of dismissal and directed reinstatement with full backwages and companysequential benefits. The said order is challenged in this appeal by special leave. It is number well settled that the companyrts will number act as an appellate companyrt and reassess the evidence led in the domestic enquiry, number interfere on the ground that another view is possible on the material on record. If the enquiry has been fairly and properly held and the findings are based on evidence, the question of adequacy of the evidence or the reliable nature of the evidence will number be grounds for interfering with the findings in departmental enquiries. Therefore, companyrts will number interfere with findings of fact recorded in departmental enquiries, except where such findings are based on numberevidence or where they are clearly perverse. The test to find out perversity is to see whether a tribunal acting reasonably companyld have arrived at such companyclusion or finding, on the material on record. Courts will however interfere with the findings in disciplinary matters, if principles of natural justice or statutory regulations have been violated or if the order is found to be arbitrary, capricious, mala fide or based on extraneous companysiderations. vide B. C. Chaturvedi vs. Union of India - 1995 6 SCC 749, Union of India vs. G. Gunayuthan - 1997 7 SCC 463, and Bank of India vs. Degala Suryanarayana - 1999 5 SCC 762, High Court of Judicature at Bombay vs. Shahsi Kant S Patil - 2001 1 SCC 416 . When a companyrt is companysidering whether punishment of termination from service imposed upon a bank employee is shockingly excessive or disproportionate to the gravity of the proved misconduct, the loss of companyfidence in the employee will be an important and relevant factor. When an unknown person companyes to the bank and claims to be the account-holder of a long inoperative account, and a bank employee, who does number know such person, instructs his companyleague to transfer the account from dormant to operative category companytrary to instructions regulating dormant accounts without any kind of verification, and accepts the money withdrawal form from such person, gets a token and companylects the amount on behalf of such person for the purpose of handing it over to such person, he in effect enables such unknown person to withdraw the amount companytrary to the banking procedures and ultimately, if it transpires that the person who claimed to be account holder was an imposter, the bank can number be found fault with if it says that it has lost companyfidence in the employee companycerned. A Bank is justified in companytending that number only employees who are dishonest, but those who are guilty of gross negligence, are number fit to companytinue in its service. Several witnesses were examined to prove the charge. One of them was H.S. Sharma who companyducted the preliminary inquiry and to whom the respondent had made a statement broadly admitting the facts which companystituted the subject matter of the second charge. I.M. Rawal, who was the cashier and I.C. Ojha, the officiating Branch Manager were also examined. Based upon their evidence, the Inquiry Officer found the respondent to be guilty of the second charge and that has been accepted by the disciplinary authority. The High Court has interfered with the said finding without expressly holding that the said finding of guilt was erroneous. The High Court has proceeded as if it was sitting in appeal over the departmental inquiry and interfered with the finding on a vague assumption that the respondent must have acted bonafide in an increasing customer friendly atmosphere.

FIRST SECTION CASE OF SEVASTYANOV v. RUSSIA (Application no. 37024/02) JUDGMENT STRASBOURG 22 April 2010 FINAL 04/10/2010 This judgment has become final under Article 44 § 2 of the Convention. It may be subject to editorial revision. In the case of Sevastyanov v. Russia, The European Court of Human Rights (First Section), sitting as a Chamber composed of: Christos Rozakis, President,Anatoly Kovler,Elisabeth Steiner,Dean Spielmann,Sverre Erik Jebens,Giorgio Malinverni,George Nicolaou, judges,and Søren Nielsen, Section Registrar, Having deliberated in private on 25 March 2010, Delivers the following judgment, which was adopted on that date: PROCEDURE 1. The case originated in an application (no. 37024/02) against the Russian Federation lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Russian national, Mr Pavel Igorevich Sevastyanov (“the applicant”), on 10 September 2002. 2. The applicant, who had been granted legal aid, was represented by Mr M. Rachkovskiy, a lawyer practising in Moscow, Russia. The Russian Government (“the Government”) were represented by Ms V. Milinchuk, the then Representative of the Russian Federation at the European Court of Human Rights. 3. On 2 April 2007 the President of the First Section decided to give notice of the application to the Government. It was also decided to examine the merits of the application at the same time as its admissibility (Article 29 § 3). 4. The Government objected to the joint examination of the admissibility and merits of the application. Having considered the Government's objection, the Court dismissed it. THE FACTS I. THE CIRCUMSTANCES OF THE CASE 5. The applicant was born in 1979 and is serving a sentence of imprisonment in the Ivanovo Region. A. Criminal proceedings against the applicant 1. The investigation 6. On 28 October 2000 victims B. and M. were killed in the latter's house. On 31 October 2000 the applicant was questioned in the Oktyabrskiy district prosecutor's office of Ivanovo in relation to the murders. Having been apprised of the privilege against self-incrimination, the applicant stated that he had spent most of the relevant day with his girlfriend Y. and his friend Ov., as well as several other persons (I., K. and V.), except for some time in the afternoon when Ov. and the applicant went to M.'s place but the latter was absent. The applicant added a note to the interview record alleging that he had been threatened with death or violence if he refused to make certain admissions. The record was also signed by a lawyer, Mr O. Immediately thereafter, the applicant signed a suspect arrest record, in which he indicated that he would like to be represented by O. 7. On the same evening, the investigator twice heard Y., who stated at the second interview around midnight that the applicant had told her that he had killed victim M. The investigator also interviewed Ov., who confirmed in substance the applicant's account of the events but added that the applicant had told him that he had killed victims M. and B. with an axe; Ov. had also heard the applicant discuss an alibi with Y. 8. On 1 November 2000 the applicant was brought for further interrogation. He was assisted by counsel and refused to testify. According to the applicant, a police officer or several officers exerted pressure on him and hit him on the head with a folder in order to force him to make self-incriminating statements. On the same day Y. gave a more detailed statement in addition to her second statement made on 31 October 2000. 9. On 2 November 2000 the applicant refused the services of O., allegedly under pressure from unnamed officers. As follows from his written statement, he declined the services of counsel O. due to “contradicting positions on the case” and sought the appointment of a Ms Z. instead. The investigator appointed Z. as counsel and she assisted the applicant during the interview on the same day. The Government referred to the interview record from which it would follow that the applicant had made admissions on that date; that he had felt well and had been willing to give an oral testimony in the presence of counsel Z.; that he had been provided with an opportunity to have a consultation with counsel before the interview; and that he had had no complaints against any police officers. Ov. was also interviewed and provided a more detailed account of the events. 10. On 3 November 2000 the applicant was examined by a medical expert. The applicant had scratches on his left elbow, bruises and scratches on his right arm and legs, several cuts and scratches on his hands, scratches below the ribs, and a scratch on his head. According to the expert, the above injuries had been sustained four to nine days before the date of the examination. 11. On 10 November 2000 the applicant expressed a wish to be represented by O. again. However, on 7 December 2000 the applicant retained the services of another counsel, Mr S., who assisted him in the subsequent pre-trial and trial proceedings. 12. On 20 December 2000 O. (instead of counsel S.) requested the investigator to order an expert report to verify if the applicant had been emotionally disturbed when, according to his version, he had seen victim B. kill victim M. in the latter's house. However, the investigator rephrased the question to the expert as whether the applicant had been emotionally disturbed when the victims had been murdered. 13. Ov. and Y. were interviewed again in 2001. The investigator also interviewed K., who stated that on 28 October 2000 he had been together with the applicant until his departure in the evening; that Ov. told him that the applicant had killed M. and B. 14. On an unspecified date, the applicant was charged with murder, robbery and destruction of property. The case was referred to the Ivanovo Regional Court for trial by a jury. 2. The trial 15. The trial judge considered that it was appropriate to accept in evidence the applicant's interview record of 2 November 2000 since the applicant's allegation of duress was unfounded. The applicant argued that he had seen victim B. kill victim M.; he admitted the arson of the house but pleaded legitimate self-defence in respect of causing injuries to victim B. during a violent fight. 16. It also appears that a number of expert reports were presented to the jury. It transpires from the available material that one of the reports concluded that certain traces of blood at the crime scene and on the clothes of the applicant “could belong” to the applicant and victim B. who had the same blood group. 17. The jury heard a number of witnesses, including witnesses K., V., I., who had seen the applicant in Ov.'s flat on the day of the murders or on the next day. The trial judge allowed the reading out of their pre-trial depositions. 18. The jury also heard Ov. and the applicant was given an opportunity to put questions to him. At the court hearing Ov. alleged that he had previously made statements against the applicant under pressure from the police. The judge examined the allegation of ill-treatment and rejected it as unfounded. The judge thus allowed the reading out of his pre-trial depositions to the jury (see also paragraph 20 below). 19. The trial judge twice summoned Y. However, the subpoenas could not be served on her and were returned to the court because she did not live at the address which she had provided to the domestic authorities during the investigation. There was no information about her whereabouts; her next of kin were not aware of her new place of residence. Having excluded Y.'s statement made on 31 October 2000, the trial judge, however, allowed the reading out of her subsequent statements (see also paragraph 21 below). 20. In her summing-up to the jury on 16 October 2001, the trial judge reiterated the charges against the applicant and the evidence referred to by the parties and declared admissible. The judge explained to the jury that she had not been presented with any evidence indicating that Ov.'s testimony had been obtained under duress or otherwise in breach of law. Considering that the defence counsel had presented a distorted summary of the victims' injuries in his final speech, the judge reiterated the conclusions of the admissible expert reports. She also indicated to the jury that it was not their remit to decide on the putative self-defence issue. 21. After several hours of deliberations, the jury returned a guilty verdict on the charges of murder, robbery and destruction of property. On 17 October 2001 the trial judge held the final hearing concerning civil claims, the sentence and other matters to be determined by the trial judge. Y. appeared before the trial judge on that day and explained that she had not received any court summons, which had been sent to her mother's home address. Her mother was unaware of her new place of residence. Having learnt about the trial the day before, she decided to come to the courthouse (see also paragraph 19 above). The trial judge allowed Y. to give her opinion concerning the applicant's personality in so far as this matter could be relevant to the sentence. On the same day, the applicant was sentenced to eighteen years' imprisonment and the confiscation of his property was ordered. 22. The applicant submitted objections to the trial verbatim record, considering inter alia that Y. had in fact explained to the trial judge that the investigator had wrongly noted her new home address as her work address. The trial judge, however, rejected those objections as untrue. 3. Appeal proceedings 23. The applicant and his counsel submitted appeals to the Supreme Court of Russia. They argued that there had been various defects in the pre-trial investigation, in particular as regards the right to legal assistance; they contested the quality of the evidence, including the expert opinions, and the trial judge's summing-up to the jury. The applicant's counsel S. asked to be notified of the date for the appeal hearing and the applicant asked to be brought to that hearing. 24. On 8 January 2002 the applicant requested the Regional Court to give him access to the case file in order to prepare his defence on appeal. On 1 February 2002 the Regional Court dismissed his request because Russian law did not vest in the accused a right to have access to the file in appeal proceedings. The applicant unsuccessfully renewed his request in February 2002. 25. On 22 February 2002 the judge rejected a request by the applicant to have the trial verbatim record amended. Having examined the trial transcript, on 18 March 2002 the applicant's counsel submitted a statement of appeal. A handwritten inscription by the trial judge contained the instruction that “all participants in the proceedings be made aware of that document”. 26. On 19 April 2002 the Supreme Court granted leave to the applicant to participate in the appeal hearing and ordered that he be brought to Moscow from the Ivanovo Region. As can be seen from a telegram dated 28 May 2002, the applicant's counsel had been informed that the appeal hearing was listed for 4 June 2002 at 10 am. According to the Government, the applicant was also informed accordingly on the same date. 27. The applicant asserted that in April 2002 he had requested the Supreme Court to grant him access to the documents relating to the appeal proceedings, including the statement of appeal lodged by his lawyer and the written observations prepared by the prosecutor. He received no reply to this request. 28. On an unspecified date, the prosecutor lodged his observations in reply to the applicant's appeal. A copy of those observations was not made available to the applicant or his counsel. 29. On 31 May 2002 Moscow remand centre received a letter from the Supreme Court requiring them to make arrangements for the applicant's participation in the appeal hearing on 4 June 2002 at 10 am and for the applicant to be notified of the date of the hearing. 30. On 4 June 2002 the Supreme Court heard the applicant by way of a video link and upheld the trial judgment. During the appeal hearing the applicant was not represented by a lawyer. The prosecutor was present at the hearing. 31. The court refused to examine the applicant's arguments directed against the findings of fact made at first instance by the jury since this aspect of the case could not be challenged on appeal. It noted that the applicant had been informed of the special procedure for appeal against the verdict of a jury (see also paragraph 48 below). The appeal court examined the remaining arguments and dismissed them. Lastly, the court noted that the applicant had been given access to the case file before the trial in July-August 2001 and after the trial in December 2001-February 2002. The applicable legislation did not require photocopying of the file. 4. Subsequent proceedings 32. In 2005 the Regional Court reconsidered the trial and appeal judgments in the light of the amended (more favourable) legislation and lifted the order for the confiscation of the applicant's property. B. Proceedings concerning the alleged ill-treatment 33. The applicant complained to the district prosecutor that on 1 November 2000 an officer had hit him on the head with a folder; that he had been subjected to threats on 2 November 2000 and that he had been compelled to decline O.'s services. The prosecutor heard the investigator in charge of the case against the applicant and the officer who had allegedly beat him. On 6 December 2000 the district prosecutor refused to initiate criminal proceedings, noting the applicant's contradictory statements concerning the alleged threats or beating. The inquiry file was then lost. In the resumed proceedings, the district investigator heard the applicant and the investigator in charge of the case against the applicant. On 27 August 2001 the district investigator issued a new decision not to institute criminal proceedings. He referred to the medical report of 3 November 2000, which had revealed injuries sustained, according to the expert, four to nine days before the date of the examination (see paragraph 10 above). The investigator concluded that those injuries had been sustained before the applicant's arrest. He also noted that the applicant had made no health complaints during his detention in the temporary detention centre from 31 October to 3 November 2000. 34. The applicant was informed of his right to appeal against the above refusals to a prosecutor or to seek judicial review. Instead, the applicant brought court proceedings accusing the town prosecutor of inaction in relation to the alleged threats on 31 October 2000. On 29 March 2002 the Leninskiy District Court of Ivanovo discontinued the proceedings because the town prosecutor had never been asked to deal with the applicant's complaint. The court also held that the prosecutor's office had carried out inquiries but found no evidence of the alleged ill-treatment. Moreover, the District Court referred to the fact that the Regional Court had dealt with this issue at the applicant's trial and also found no evidence of the alleged ill-treatment. On 30 April 2002 the Regional Court upheld the decision of 29 March 2002, considering that only formal decisions were amenable to judicial review. In separate proceedings, the applicant complained about unlawful actions against him on 31 October 2000. On 15 May 2002 the Regional Court took the final decision to discontinue the case because there was no formal decision amenable to review. On 18 April 2003 the applicant again complained to a court about the alleged ill-treatment by the police and the inaction of the regional prosecutor's office. On 19 June 2003 the Regional Court took the final decision to discontinue the case. C. Conditions of detention in the Moscow remand centre 35. From 31 October to 3 November 2000 the applicant was kept in a temporary detention centre in Ivanovo. It appears that from 3 November 2000 to 14 May 2002 he was detained in Ivanovo remand centre no. 1. The applicant was kept in Moscow remand centre no. 77/3 from 14 May to 2 August 2002 in relation to the appeal proceedings in his criminal case. 1. The applicant's account 36. The applicant submitted that on 4 June 2002 he had spent six hours in a small cell in the remand centre with fifteen other persons. The cell had been overheated and had no ventilation. While the temperature outside on 4 June 2002 had exceeded 30ºC, the temperature in the cell had reached over 50ºC. He had not been given water for six hours and had not been allowed to use the toilet. 37. The applicant subsequently submitted that the cell measured 18.6 square metres and that he had been detained with up to twenty other persons. 2. The Government's account 38. According to the Government, on 4 June 2002 the applicant had been placed in an “assembly cell” measuring 18.6 square metres. This cell had no windows, ventilation, sanitary installations or water supply. However, the prison staff allowed the detainees to go to the toilet outside the cell and provided them with drinking water. Air access was ensured by an opening in the cell door. 39. Later on the same day, the applicant had been transferred to cell no. 521 measuring 32.7 square metres for the purpose of participating in the appeal hearing before the Supreme Court by way of a video link. The cell was equipped with a ventilation system, water supply and a sink. Toilet facilities were separated from the main area. Drinking water had been made available to the applicant and the lights had been left on. During the summer period the window panes were removed and detainees were provided with fans. The outside temperature had not exceeded 21.4ºC on that day. The applicant had been provided with bedding and tableware in the remand centre. Detainees were provided with three hot meals a day. 3. The applicant's complaints to national authorities 40. The applicant and certain other detainees complained about the conditions of detention in the Moscow remand centre. 41. According to a letter from the Moscow Prosecutor's Office of 9 March 2004, the conditions of detention in cell no. 521 were acceptable; the outside temperature in Moscow on 4 June 2002 did not exceed +18º C, as indicated by the Moscow Weather Centre. 42. According to letters from the Moscow Prosecutor's Office of 5 and 7 July 2004, the conditions in a cell measuring 18.6 square metres “did not meet the sanitary requirements” at the material time. After an inquiry the supervising prosecutor concluded on 5 July 2004 that up to late 2002 detainees awaiting an appeal hearing had been placed in the above cell with no window, ventilation, sanitary installations or water supply. Since late 2002 detainees awaiting appeal hearings had been placed in “assembly cell” no. 521. Although the applicant had not provided sufficient details, on the basis of information from the prison staff the prosecutor determined that the applicant had also been kept in cell no. 521 on 4 June 2002. The prosecutor also indicated that the document confirming that the applicant had received the letter from the Supreme Court concerning the appeal hearing did not bear his signature. He concluded that the remand centre staff had nonetheless ensured the applicant's right to participate in the appeal hearing. D. Correspondence with the European Court 43. According to the applicant, on 23 January 2003 he handed over a letter to be dispatched by the prison administration to the Registry of the Court. In November 2003 the latter acknowledged receipt of his letter dated 14 September 2003 and informed him that no letter dated 23 January 2003 had been received. 44. On 13 July 2004 the Registry of the Court, by registered mail, requested the applicant to provide by 24 August 2004 certain documents and information concerning his application pending before the Court. According to the acknowledgement-of-receipt card, on 5 August 2004 the letter was received by an unspecified person in the detention facility. According to the Government, on 5 and 15 August 2004 the applicant was called to the office in charge of correspondence in the facility in order to receive the letter, but refused to accept it. 45. On 22 September 2004 the applicant's sister informed the Court by fax that the applicant had only received the letter on 21 September 2004 in an unsealed envelope. 46. Following the applicant's complaint about the issue, on 3 November 2004 the Penitentiary Department of the Ivanovo Region replied that the delay in the delivery of the letter did not constitute a hindrance of the applicant's correspondence with the European Court; although the prison officer had been negligent, there had been no intention to delay the letter. II. RELEVANT DOMESTIC LAW A. Appeal proceedings in criminal cases 47. Under the RSFSR Code of Criminal Procedure, in force at the time, the appeal court was empowered to review a first-instance judgment in full, irrespective of the scope of the statement of appeal lodged by a party to the proceedings (Article 332). This review was carried out on the basis of the file and new materials adduced before or during the appeal hearing (Articles 332 and 337). A prosecutor was required to participate in an appeal hearing and to state his position on the case (Article 335). 48. However, Article 465 of the Code contained special rules for appeal against a verdict of a jury. The grounds of appeal were limited to the exclusion of otherwise admissible evidence at the trial, which was prejudicial to the outcome of the trial or an unjustified refusal to examine of important piece of evidence; the trial court's reliance on inadmissible evidence; violations of procedural rules or wrong application of the law to the facts as established by the jury; imposition of an unfair sentence. B. Re-opening of criminal proceedings 49. Article 413 of the 2001 Code of Criminal Procedure provides that criminal proceedings may be reopened if the European Court of Human Rights has found a violation of the Convention. C. Prisoners' correspondence 50. Article 91 of the 1997 Code of Execution of Sentences has provided since December 2003 that a detainee's correspondence with the European Court of Human Rights cannot be opened and inspected. 51. On 30 July 2001 the Ministry of Justice adopted the Internal Prison Regulations. As amended in March 2004, they provided that the incoming and outgoing correspondence of detainees had to be censured by prison staff, except for a detainee's correspondence with a court, prosecutor, a supervising public authority or the European Court of Human Rights. The Internal Regulations were revoked in 2005. THE LAW I. ALLEGED VIOLATION OF ARTICLE 3 OF THE CONVENTION 52. The applicant complained that the conditions of his detention on 4 June 2002 in the Moscow remand centre had been in breach of Article 3 of the Convention, which reads as follows: “No one shall be subjected to torture or to inhuman or degrading treatment or punishment.” 53. The Government submitted that the applicant had been detained in cell no. 521 in acceptable conditions (see paragraph 39 above). They accepted however that the conditions in another unnumbered cell measuring 18.6 square metres had not been as good (see paragraph 38 above). They also argued that the applicant should have lodged a court action for compensation on account of the conditions of his detention. 54. The applicant maintained his complaint concerning the unnumbered cell. 55. The Court observes at the outset that the applicant's complaint is limited to the conditions of his detention on 4 June 2002, the date of the appeal hearing in his criminal case. Having examined the parties' submissions, the Court does not find it necessary to deal with the exhaustion issue because the complaint is in any event inadmissible. 56. Having regard to the findings made at the time by the national authorities (see paragraph 42 above) and the applicant's own contention, the Court finds it established that he was kept in the unnumbered cell measuring 18.6 square metres. The Government submitted no proof to challenge the applicant's allegation that he had been kept there with at least fifteen other persons. Thus, the Court is inclined to accept the applicant's contention. It is uncontested that this cell had no windows, ventilation, sanitary installations or water supply. Air access was ensured by an opening in the cell door. 57. The Court reiterates, however, that it must be satisfied, on the basis of the materials before it, that the conditions of the applicant's detention constituted treatment which exceeded the minimum threshold for Article 3 of the Convention to apply. Even though the above conditions could potentially raise an issue under Article 3 of the Convention, it is to be observed that the applicant was only kept in such conditions for some hours (see, in a similar context, Seleznev v. Russia, no. 15591/03, § 61, 26 June 2008; see also Fedotov v. Russia, no. 5140/02, §§ 66-70, 25 October 2005; Salmanov v. Russia, no. 3522/04, § 63, 31 July 2008; and Moiseyev v. Russia, no. 62936/00, §§ 140-143, 9 October 2008). 58. Given the above considerations, the Court concludes that the distress and hardship the applicant may have endured on 4 June 2002 did not attain a minimum level of severity under Article 3 of the Convention (compare Andrei Georgiev v. Bulgaria, no. 61507/00, § 61, 26 July 2007). 59. Lastly, the Government indicated that the applicant had also been kept in cell no. 521. However, the applicant raised no grievance in relation to that cell (see paragraph 36 above). In any event, it does not appear that the conditions there were such as to raise an issue under Article 3 of the Convention. 60. It follows that this complaint is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 and 4 of the Convention. II. ALLEGED VIOLATIONS OF ARTICLE 6 OF THE CONVENTION 61. The applicant considered that there had been a violation of Article 6 §§ 1 and 3 of the Convention on account of various procedural defects in the criminal proceedings against him. The relevant provisions read as follows: “1. In the determination of ... any criminal charge against him, everyone is entitled to a fair ... hearing ... 3. Everyone charged with a criminal offence has the following minimum rights: ... (b) to have adequate time and facilities for the preparation of his defence; (c) to defend himself in person or through legal assistance of his own choosing or, if he has not sufficient means to pay for legal assistance, to be given it free when the interests of justice so require; (d) to examine or have examined witnesses against him and to obtain the attendance and examination of witnesses on his behalf under the same conditions as witnesses against him; ...” A. The parties' submissions 1. The applicant 62. As regards the pre-trial and trial proceedings, the applicant complained that the allegedly forced removal and replacement of counsel O. in November 2000 and the admission by the trial court of certain evidence violated Article 6 of the Convention. The applicant had not been afforded an opportunity to suggest an issue for the pre-trial expert examination, and the expert had been biased. The trial judge had been biased, in particular in her summing up to the jury; the applicant had not had sufficient access to the case file; the trial court had failed to make every reasonable effort to summon Y. for questioning by the defence while the authorities had been well aware of her new address; the trial judge had been wrong to admit Y. and Ov.'s pre-trial incriminating statements, which had allegedly been obtained under duress, as evidence. The trial judge had refused to amend the trial transcript, which contained distorted information. 63. As regards the appeal proceedings, the applicant alleged that his ability to participate effectively and to ensure his own defence in them had been undermined due to a number of factors: the lack of access to the case file before the appeal hearing and of an opportunity to familiarise himself with and comment on the materials submitted by his own counsel and the prosecutor to the appeal court; a short notice of the date and time of the hearing and lack of any prior consultation with counsel; the conditions of his detention on 4 June 2002; the low quality of the audio link so that he could not follow the oral pleadings by the prosecutor and the judge rapporteur; and the swift character of the hearing. On the other hand, the prosecutor had been present in the courtroom and had forcefully presented his position to the appeal court. Lastly, the applicant mentioned that during the hearing he had been kept in a metal cage measuring 1.5 x 2 metres. 2. The Government 64. The Government considered that the criminal proceedings had been fair. In particular, regarding the appeal proceedings, they submitted that the applicant and counsel had been informed when the case had been sent to the Supreme Court. The applicant was aware that leave for his participation in the appeal hearing had been granted. His counsel had been informed of the date and time of that hearing. The Government acknowledged that a copy of the prosecutor's written pleadings in reply to the applicant's statement of appeal had not been made available to the defence. They argued, however, that the applicant had taken cognisance of them, since they had been read out at the hearing. Lastly, the Government indicated that the audio link had been “compliant with the applicable technical standards”. B. The Court's assessment 1. Admissibility 65. The Court considers, in the light of the parties' submissions, that this part of the application raises serious issues of fact and law under the Convention, the determination of which requires an examination of the merits. The Court considers therefore that it is not manifestly ill-founded within the meaning of Article 35 § 3 of the Convention. No other ground for declaring it inadmissible has been established. 2. Merits 66. With regard to judicial decisions, the Court reiterates that, in accordance with Article 19 of the Convention, its only task is to ensure the observance of the obligations undertaken by the Parties to the Convention. In particular, the Court is not competent to deal with an application alleging that errors of law or fact have been committed by the domestic courts, except where it considers that such errors might have involved a possible violation of any of the rights and freedoms set out in the Convention (see, among other authorities, Schenk v. Switzerland, 12 July 1988, § 45, Series A no. 140). 67. As regards Article 6 of the Convention, the Court reiterates that the admissibility of evidence is primarily a matter for regulation by national law and as a general rule it is for the national courts to assess the evidence before them. The Court's task under the Convention is not to give a ruling as to whether statements of witnesses were properly admitted as evidence, but rather to ascertain whether the proceedings as a whole, including the way in which evidence was taken, were fair (see Doorson v. the Netherlands, judgment of 26 March 1996, § 67, Reports 1996-II, and Van Mechelen and Others v. the Netherlands, judgment of 23 April 1997, § 50, Reports 1997-III). All the evidence must normally be produced at a public hearing, in the presence of the accused, with a view to adversarial argument. There are exceptions to this principle, but they must not infringe the rights of the defence (see Lüdi v. Switzerland, judgment of 15 June 1992, § 49, Series A no. 238). 68. Bearing in mind the above principles, the Court has first examined the applicant's grievances concerning the preliminary investigation in his criminal case and the trial by a jury (paragraph 62 above). The applicant, who was represented, was afforded an adequate opportunity to present his argument and evidence, as well as to contest the prosecution's arguments and evidence in adversarial proceedings (paragraphs 15 - 22 above). The available material before the Court does not disclose that any alleged violation was such as to impair the overall fairness of the proceedings under Article 6 of the Convention. 69. As regards the appeal proceedings, the manner of application of Article 6 to proceedings before courts of appeal depends on the special features of the proceedings involved; account must be taken of the entirety of the proceedings in the domestic legal order and of the role of the appellate court therein (see Ekbatani v. Sweden, 26 May 1988, § 27, Series A no. 134, and Monnell and Morris v. the United Kingdom, 2 March 1987, § 56, Series A no.115). Indeed, even where an appeal court has full jurisdiction to review the case on questions both of fact and of law, Article 6 does not always require a right to a public hearing and a fortiori a right to be present in person (see Kamasinski v. Austria, 19 December 1989, § 106, Series A no. 168, and Fejde v. Sweden, 29 October 1991, § 31, Series A no. 212-C). Regard must be had in assessing this question to, inter alia, the special features of the proceedings involved and the manner in which the defence's interests were presented and protected before the appellate court, particularly in the light of the issues to be decided by it (see Helmers v. Sweden, 29 October 1991, §§ 31-32, Series A no. 212-A), and their importance for the appellant (see Kremzow v. Austria, 21 September 1993, § 59, Series A no. 268-B; Kamasinski, § 106 in fine; and Ekbatani, §§ 27 and 28, both cited above). 70. The Court also reiterates that Article 6, read as a whole, guarantees the right of an accused to participate effectively in a criminal trial, including, inter alia, not only his right to be present, but also to hear and follow the proceedings (see Stanford v. the United Kingdom, 23 February 1994, § 26, Series A no. 282-A). The principle of equality of arms – one of the elements of the broader concept of a fair trial – requires each party to be given a reasonable opportunity to present his case under conditions that do not place him at a substantial disadvantage vis-à-vis his opponent (see, among other authorities, Nideröst-Huber v. Switzerland, judgment of 18 February 1997, § 23, Reports 1997-I). The concept of a fair trial also means in principle the opportunity for the parties to a trial to have knowledge of and comment on all evidence adduced or observations filed with a view to influencing the court's decision (see Kress v. France [GC], no. 39594/98, § 74, ECHR 2001‑VI, with further references). The above did not, however, confer a right to have disclosed to an applicant, before the hearing, submissions which have not been disclosed to the other party to the proceedings or to the reporting judge or to the judges of the trial bench (see Nideröst-Huber, cited above, ibid.). 71. Where an appellate court has to examine a case as to the facts and the law and make a full assessment of the issue of guilt or innocence, it cannot determine the issue without a direct assessment of the evidence given in person by the accused for the purpose of proving that he did not commit the act allegedly constituting a criminal offence (see Dondarini v. San Marino, no. 50545/99, § 27, 6 July 2004). 72. Turning to the circumstances of the present case, the Court observes at the outset that the Supreme Court granted the applicant's request to be brought to the appeal hearing. For this purpose the applicant was escorted from the Ivanovo Region to Moscow. However, instead of being brought to the hearing the applicant participated in it by video link from a Moscow remand centre (see also paragraph 56 above). The applicant, apparently, first learnt that he would participate in the appeal hearing by video link on the day of the hearing and thus could not be expected to have objected to it in the absence of legal advice. The respondent Government did not suggest, and the Court does not consider, that there was any compelling reason to justify the applicant being brought to Moscow but not to the courtroom of the Supreme Court. 73. The Court further reiterates that where an applicant communicates with the court by way of a video link, the exercise of the right to legal assistance takes on particular significance especially where, as in the present case, there are numerous and serious charges against the applicant and the sentence to which he is liable is severe (see Shulepov v. Russia, no. 15435/03, § 35, 26 June 2008, and Golubev v. Russia (dec.), no. 26260/02, 9 November 2006). The applicant was not represented at the appeal hearing. Furthermore, it is noted that the prosecutor was present in the courtroom and had an opportunity to make oral submissions (see paragraph 48 above). Given the scope of the appeal, it is possible that the prosecution commented on the defence's arguments concerning various defects in the pre-trial investigation, the trial judge's summing-up to the jury and the quality of evidence, including the expert opinions. In such situation, though it is doubtful that the absence of counsel was imputable to the authorities, they should have ensured, for instance by adjourning the hearing and/or appointing another counsel, that the defence rights were secured in the appeal proceedings to an extent compatible with Article 6 of the Convention (see Artico v. Italy, judgment of 13 May 1980, § 36, Series A no. 37, and Balliu v. Albania, no. 74727/01, §§ 35-38, 16 June 2005). This was not so in the present case. 74. Moreover, in the absence of any evidence to the contrary, the Court finds that the applicant was not promptly informed of the date and time of the hearing and could not take cognisance of his counsel's submissions filed with the appeal court. Also, as acknowledged by the Government, the applicant was not provided with a copy of the prosecution's written observations in reply to the defence's statements of appeal. 75. Lastly, in the Court's opinion, it can be accepted that a telegram containing the notification about the hearing was sent to counsel several days in advance and that the prosecution submissions were read out at the hearing. However, the Court considers that in the circumstances mentioned in the preceding paragraphs, the applicant was not afforded a reasonable opportunity to present his case. 76. There has accordingly been a violation of Article 6 § 1 of the Convention. 77. In view of the above, there is no need to examine separately the remaining allegations made by the applicant in relation to the appeal proceedings. III. ALLEGED VIOLATIONS OF ARTICLE 34 OF THE CONVENTION A. Opening and inspection of the letter of 13 July 2004 78. The applicant complained that the opening and inspection by the prison staff of the Court's letter of 13 July 2004 addressed to him and the delay in handing it over to the applicant had been in breach of the State's obligation not to hinder his exercise of the right of individual application under Article 34 of the Convention. 79. Article 34 reads as follows: “The Court may receive applications from any person, non-governmental organisation or group of individuals claiming to be the victim of a violation by one of the High Contracting Parties of the rights set forth in the Convention or the Protocols thereto. The High Contracting Parties undertake not to hinder in any way the effective exercise of this right.” 80. The Government submitted that the applicant had twice refused to have the letter handed to him by the prison staff. The latter had wrongly assumed that, as with other letters, the addressee should have displayed due diligence in receiving correspondence from the European Court. However, there had been no intention to delay that letter. Moreover, thereafter the staff of the prison had been reminded of the special status of correspondence from the European Court and the requirement that it be handed over to detainees immediately. Lastly, the applicant's allegation about the opening and inspection of that letter was unsubstantiated. 81. The applicant contested that he had been required to come to the office in charge of correspondence to receive the letter. The Government had submitted no proof of this assertion. In any event, a refusal on his part would have amounted to a breach of the prison rules. Moreover, the delayed handing over of the letter had been acknowledged by the authorities in their letter of 3 November 2004 (see paragraph 46 above). He added that all letters from the Court, including the letter in question, had been and continued to be opened by the same prison administration. He submitted copies of other letters bearing the stamp of the detention facility, the receipt date and the registration number. 82. The Court notes at the outset that the present complaint is limited to an alleged violation in relation to one letter, that is, the Court's letter of 13 July 2004 addressed to the applicant. As regards its opening and inspection, it is noted that the Russian legislation at the time prohibited the opening and inspection of incoming and outgoing correspondence between a detainee and the Court (see paragraph 50 above). The Court finds that there is insufficient evidence to show that the letter of 13 July 2004 was opened and inspected. 83. Thus, there has been no breach by the respondent State of their obligation under Article 34 of the Convention on that account. 84. At the same time, the Court observes that the national authorities have acknowledged the delay in handing over the letter to the applicant. The applicant submitted that he had received the letter on 21 September 2004, that is, after the expiry of the time-limit set by the Court. The Government did not contest this. 85. It is well known that various proceedings before the Court are subject to time-limits, the non-observance of which is liable to entail legal consequences for the parties. It is noted that by the letter of 13 July 2004 the applicant was given a time-limit by which to submit additional documents and information. An applicant's failure to comply with the Court's instructions would in principle lead the Court to decide on the admissibility of the case on the basis of the file as it then stood, or to conclude that the applicant was no longer interested in pursuing the application and to decide to strike it out of its list of cases under Article 37 § 1 of the Convention (see, among many others, Kupryakov v. Russia (dec.), no. 18792/03, 20 September 2007). While admitting that the responsible prison officer should have handed over the letter to the applicant without delay, the Government submitted that the applicant had contributed to that delay by failing to comply with the order to present himself to the office in charge of correspondence. 86. Bearing in mind the vulnerable position of detainees in so far as their communication with the outside world is concerned, the Court considers that it was incumbent on the respondent State in the present case to ensure that the applicant received the above-mentioned registered letter without undue delay. 87. Thus, the respondent State has not complied with their obligation under Article 34 of the Convention. B. Other allegations under Article 34 of the Convention 88. The applicant also alleged that the authorities' failure to assist him in gathering evidence in support of his complaint before the Court concerning the conditions of detention amounted to a violation of the respondent State's obligation under Article 34 of the Convention. In addition, he alleged that a letter dated 23 January 2003 had not been dispatched by the prison administration (see paragraph 43 above). 89. The Court has examined those complaints as presented by the applicant. However, in the light of all the material in its possession, the Court finds that they do not disclose an appearance of a breach by the respondent State of its obligation under Article 34 of the Convention. IV. OTHER ALLEGED VIOLATIONS OF THE CONVENTION 90. Lastly, the applicant complained under Articles 3 and 13 of the Convention of ill-treatment and threats, to which he had allegedly been subjected on several occasions between 31 October and 2 November 2000. 91. The Court reiterates that allegations of ill-treatment brought to it must be supported by appropriate evidence (see Labita v. Italy [GC], no. 26772/95, § 121, ECHR 2000-IV). To assess this evidence, the Court adopts the standard of proof “beyond reasonable doubt”. Such proof may also follow from the coexistence of sufficiently strong, clear and concordant inferences or of similar unrebutted presumptions of fact (see Ireland v. the United Kingdom, judgment of 18 January 1978, § 161 in fine, Series A no. 25). 92. Having examined the available material, the Court is not satisfied that the applicant has established that he was subjected to any proscribed treatment at the hands of State agents. The applicant did not provide a sufficiently clear and detailed account of the alleged physical ill-treatment on each relevant date. Nor is there any indication that the applicant was subjected to any form of pressure or coercion that exceeded the minimum threshold of severity required under Article 3 of the Convention. The Court further observes that the applicant's allegation was, however, investigated by the national authorities who refused to initiate criminal proceedings against any public officers. The applicant did not put forward any cogent argument contesting the effectiveness of the domestic inquiries. Thus, the applicant's grievances under Article 3 of the Convention should be declared inadmissible. 93. The Court also reiterates that, according to its constant case-law, Article 13 applies only where an individual has an “arguable claim” to be the victim of a violation of a Convention right (see Boyle and Rice v. the United Kingdom, 27 April 1988, § 52, Series A no. 131). In view of the Court's findings above, the Court does not consider that the applicant had an arguable claim under Article 3 of the Convention. 94. It follows that this part of the application is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 and 4 of the Convention. V. APPLICATION OF ARTICLE 41 OF THE CONVENTION 95. Article 41 of the Convention provides: “If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.” A. Damage 96. The applicant claimed 5,000 euros (EUR) in respect of non-pecuniary damage for each violation established by the Court. 97. The Government considered this claim to be excessive. 98. Making an assessment on an equitable basis and having regard to the nature of the violations found, the Court awards the applicant EUR 3,000 in respect of non-pecuniary damage, plus any tax that may be chargeable. 99. As regards the findings under Article 6 of the Convention, the Court also reiterates that when an applicant has been convicted despite an infringement of his rights as guaranteed by Article 6 of the Convention, he should, as far as possible, be put in the position in which he would have been had the requirements of that provision not been disregarded, and that the most appropriate form of redress would, in principle, be the reopening of the relevant proceedings if requested (see Somogyi v. Italy, no. 67972/01, § 86, ECHR 2004-IV, and Shulepov, cited above, § 46). The Court notes in this connection that Article 413 of the Code of Criminal Procedure provides that criminal proceedings may be reopened if the Court has found a violation of the Convention. B. Costs and expenses 100. The applicant also claimed 20,000 Russian roubles for his counsel's fees for representing him before the Regional Court, paid apparently by the applicant's sister. 101. The Government contested the claim. 102. According to the Court's case-law, an applicant is entitled to the reimbursement of costs and expenses only in so far as it has been shown that these have been actually and necessarily incurred and are reasonable as to quantum. It does not appear that the above expenses were related to the violations found or that they were incurred by the applicant or that he was under an enforceable legal or contractual obligation to do so (see Salmanov v. Russia, no. 3522/04, § 98, 31 July 2008). The Court therefore rejects the claim. C. Default interest 103. The Court considers it appropriate that the default interest should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points. FOR THESE REASONS, THE COURT UNANIMOUSLY 1. Declares the complaint concerning the fairness of the criminal proceedings against the applicant admissible and the remainder of the application inadmissible; 2. Holds that there has been a violation of Article 6 § 1 of the Convention in relation to the proceedings before the appeal instance court; 3. Holds that the respondent State has complied with its obligation under Article 34 of the Convention in relation to the confidential nature of the Court's letter of 13 July 2004; 4. Holds that the respondent State has not complied with its obligation under Article 34 of the Convention in relation to the delivery of the Court's letter of 13 July 2004; 5. Holds (a) that the respondent State is to pay the applicant, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, EUR 3,000 (three thousand euros), plus any tax that may be chargeable, in respect of non-pecuniary damage, to be converted into Russian roubles at the rate applicable at the date of settlement; (b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amount at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points; 6. Dismisses the remainder of the applicant's claim for just satisfaction. Done in English, and notified in writing on 22 April 2010, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. Søren NielsenChristos RozakisRegistrarPresident In accordance with Article 45 § 2 of the Convention and Rule 74 § 2 of the Rules of Court, the following joint concurring opinion of Judges Spielmann and Malinverni is annexed to this judgment. C.L.R.S.N. JOINT CONCURRING OPINION OF JUDGES SPIELMANN AND MALINVERNI Paragraph 99 of the judgment states: “As regards the findings under Article 6 of the Convention, the Court ... reiterates that when an applicant has been convicted despite an infringement of his rights as guaranteed by Article 6 of the Convention, he should, as far as possible, be put in the position in which he would have been had the requirements of the provision not been disregarded, and that the most appropriate form of redress would, in principle, be the reopening of the relevant proceedings if requested ...” For reasons we have explained on many occasions, either alone or together with other judges,[1] we would very much have liked this principle, on account of its importance, to have been reflected in the operative part of the judgment. [1] See for example our joint concurring opinions appended to the following judgments: Vladimir Romanov v. Russia (no. 41461/02, 24 July 2008); Ilatovskiy v. Russia (no. 6945/04, 9 July 2009); Fakiridou and Schina v. Greece (no. 6789/06, 14 November 2008); Lesjak v. Croatia (no. 25904/06, 18 February 2010); and Prežec v. Croatia (no. 48185/07, 15 October 2009). See also the concurring opinion of Judge Malinverni in Pavlenko v. Russia, (no. 42371/02, 1 April 2010), the concurring opinion of Judge Malinverni, joined by Judges Casadevall, Cabral Barreto, Zagrebelsky and Popović in the case of Cudak v. Lithuania ([GC], no. 15869/02, 23 March 2010), as well as the concurring opinion of Judges Rozakis, Spielmann, Ziemele and Lazarova Trajkovska in Salduz v. Turkey ([GC], no. 36391/02, ECHR 2008-...).

Wednesday, 24th March 2004 MR JUSTICE MACKAY: This is an appeal by way of case stated from a decision of the justices sitting at the Sussex Northern Magistrates' Court made on 16th December 2003. They convicted the appellant of exceeding the gross permitted weight on a goods vehicle, contrary to Regulation 80(1)(b) of the Road Vehicles (Construction and Use) Regulations 1986 and section 41B of the Road Traffic Act 1988 with Schedule 2 of the Road Traffic Offenders Act 1988. The case was lodged some eight days beyond the ten day time limit allowed. This was due to a letter from the appellant to his solicitors concerning his representation going astray. We grant the necessary extension of time. The facts as proved and found by the magistrates at the close of the prosecution case were these. On 7th November 2002 on the A23 in Sussex vehicle road checks were being carried out. One of the vehicles seen and checked was a Ford lorry driven by the appellant. This vehicle was weighed on a dynamic weighbridge by Mr Paul Chapman, a vehicle inspector. The weight of the first axle was found to be 3,280 kilos - an overload, as he stated, of 13.1 per cent. The authorised weight of the vehicle was 7,500 kilos and the permitted weight for the first axle was 2,900. A copy of the till receipt displaying the weight was given to the appellant, with a copy of the weight certificate. He was cautioned before being interviewed at the site, but did not sign the record of interview and left the site after redistributing the weight evenly across his vehicle. On those facts the appellant made a submission of no case to answer. He argued that the prosecution had failed to prove, firstly, that a plating certificate had been issued in respect of this particular vehicle and, secondly, that the weight transmitted through the front axle exceeded the weight permitted in column 2 of that certificate. In the result the magistrates allowed a prosecution application to recall Mr Chapman, their principal witness, who had examined this lorry by the roadside. He was duly recalled and the appellant himself gave evidence and then the following further facts were found: firstly, that Mr Chapman had determined the permitted maximum weight of the first axle from the ministry plate on the vehicle; that he was unable to remember where the plating certificate was on this particular vehicle but stated that he knew it was in the form of a ministry plate; and that he had made a witness statement on 14th February 2003 and conceded that there was no mention of the plating certificate in that statement or in his contemporaneous notes. The magistrates were of opinion therefore, in response to the submission of no case to answer, that Mr Chapman could be recalled and that thereafter there was a case to answer. They found that the weight of the first axle did exceed the permitted weight. The reason for their decision to allow the prosecution's application to recall Mr Chapman was that they thought they had a discretion, which they believed they had properly exercised, that the conflicting interests of the appellant and the public were weighed up and it was decided that the overall interests of justice were best served by allowing the prosecution to re-open their case. They went on to describe the reasons for their decisions in the rest of the case after the evidence was concluded in this way: they thought the prosecution had adduced sufficient evidence to support their case and for a tribunal properly directed to convict; Mr Chapman's evidence, though inconsistent in parts, was generally credible; and Mr Tuck's evidence was insufficient to discharge the presumption that the weighbridge was calibrated and accurate. The magistrates posed three questions for the opinion of this court in these terms: (1) Should the magistrates, having heard a no case to answer submission, have acceded to the prosecution application to reopen their case given that no evidence had been put before them of a plating certificate? (2) Were the magistrates correct in placing weight on the evidence of Mr Chapman when he was recalled after the case was reopened bearing in mind: (a) there was a 10 month gap between the incident and the trial, (b) he had made no mention of a plating certificate or corresponding number in his contemporaneous note or later statement and (c) his evidence could have been contaminated by his continued presence in court listening to the legal arguments prior to giving further evidence or an addendum statement? (3) If the answer to questions 1) and 2) above are in the affirmative, at the conclusion of the case could the magistrates be satisfied to the criminal standard of proof of the existence of, and contents of, the plating certificate and therefore find that the defendant's vehicle was loaded in such a way as to exceed the prescribed limit for that vehicle?" The relevant legislation The Road Traffic Act section 41B states as follows: "(1) A person who - (a) contravenes or fails to comply with a construction and use requirement as to any description of weight applicable to - (i) a goods vehicle ... is guilty of an offence." The Road Vehicles (Construction and Use) Regulations 1986 regulation 80(1) reads, so far as relevant: "Subject to paragraphs (2), (2A), (2B), (2C) and (4), no person shall use, or cause or permit to be used, on a road a vehicle - ... (b) for which a plating certificate has been issued, if any of the weights shown in column (2) of the plating certificate is exceeded." Turning then to the first question posed by the magistrates, there was undoubtedly a clear lacuna in the prosecution case when it was closed for the first time. The prosecution did not seek to mend it by suggesting that the magistrates could infer the existence of, and the terms of, a plating certificate from the evidence that Mr Chapman had already given, which evidence I remind myself included the assertion that the permitted weight for the first axle was 2,900 kilograms. There is, it is accepted rightly by Mr Hoffman, a clearly established discretion which would allow the prosecution to re-open their case in appropriate circumstances. The issue that has arisen is the extent of that discretion and whether it was correctly exercised by the magistrates in this case. The appellant submits that the prosecution had failed to prove what they must have known from the outset was an essential part of their case, and that was clear from the evidence they had served in advance of the hearing, or, if it was not, at the hearing itself. While the appellant concedes the discretion to allow the prosecution to re-open extends beyond circumstances in which a matter has arisen suddenly or ex improviso, or an omission to prove something which could be called a mere technicality or formality, nevertheless that discretion should be exercised sparingly, particularly in circumstances where, as here, the omission relates to a central feature of the case. The respondent submits that it was just and reasonable to allow them to re-open the case, the discretion was exercised fairly, and balancing the conflicting interests of the appellant on the one hand and the public interest in the other and concluding that the overall interests of justice were best served by allowing the case to be re-opened. No prejudice, they say, was caused to the appellant. The evidence was purely formal and he had as good an opportunity to cross-examine on it when it was called as if that evidence had been given in its correct sequence. The only discernible prejudice is, they say, the loss of an opportunity to escape conviction through a prosecution oversight. The authorities This issue has been addressed on many past occasions by courts, and I do not propose to rehearse those decisions in this judgment. That exercise was in fact carried out very fully by my Lord, Kennedy LJ, in the case of Jolly (which I will refer to below). As it appears to me, the following principles of relevance to this case emerge from those authorities. (1) The discretion to allow the case to be re-opened is not limited to matters arising ex improviso or mere technicalities, but is a more "general discretion" (see Kennedy LJ Jolly v DPP 31st March 2000, unreported, BAILII: [2000] EWHC Admin 316 ). (2) The exercise of this discretion should not be interfered with by a higher court unless its exercise was wrong in principle or perverse (R v Tate [1997] RTR 17 at 22C). (3) The general rule remains that the prosecution must finish its case once and for all (R v Pilcher 60 Cr App R 1 at 5) and the test to be applied is narrower than consideration of whether the additional evidence would be of value to the tribunal (loc cit). The discretion will only be exercised "on the rarest of occasions" (R v Francis 91 Cr App R 271 at 175). (4) The discretion must be exercised carefully having regard to the need to be fair to the defendant (Matthews v Morris [1981] JP 262), and giving consideration to the question of whether any prejudice to the defendant will be caused (Tate at 23C). (5) The courts have in the past differed as to whether the mere loss of a tactical advantage can constitute such prejudice. The defendant, having spotted and drawn attention to a gap in the case by way of submission, as to which he could have remained silent, and taken advantage of that gap at the close of the evidence, was thought in R v Munnery [1992] 94 Cr App R 164 at 172 to be an important consideration. However, later cases take a discernibly different approach. A different view was expressed in Khatibi v DPP [2004] EWHC 83 (Admin) at 25 to 26 and in Leeson [2000] RTR 385 and 391F-G. (6) Criminal procedure while adversarial is not a game (see Leeson (loc cit), Hughes v DPP [2003] EWHC Admin 2470), and the overall interests of justice include giving effect to the requirement that a prosecution should not fail through inefficiency, carelessness or oversight (Leeson). (7) Of particular significance is the consideration of whether there is any risk of prejudice to the defendant (see Jolly and Tate). Returning to the present case, the first question posed is in a sense difficult to isolate entirely from the second. The evidence which the prosecution were in the event allowed to call, by re-opening their case, was no mere formality, such as the production of a certificate that a computer was in working order or that a device was properly calibrated; it did require, as Mr Hoffman stresses in his argument, oral evidence to be given by Mr Chapman about events ten months before as to which he had no contemporary note and as to which his witness statement was silent. In response to it, it is fair to say the defendant, had he been minded to do so, could only have sought to prove a negative. Mr Hoffman seeks to argue that at this stage, that is to say the stage of exercising their discretion, the magistrates should have performed some evaluation of the evidence that it was intended to adduce so as to see whether it was in fact likely to be capable of filling the gap which had been identified. I found this argument impossible to accept. The time for such evaluation can only be after the evidence is heard. The decision to re-open surely cannot include as a relevant factor the likely strength or weight of the evidence that it is being sought to adduce. Conclusions on the first question I would begin, and I would really end, by asking the question: what prejudice did the appellant suffer as a result of the re-opening of the case against him? All I can see in response to this question is the loss of a bonus victory due to a prosecution oversight. The positive defence that had been deployed up to the close of the prosecution case, we are told, was simply to challenge the accuracy or reliability of the reading of 3,280 kilograms. In all other respects the defence posture was a perfectly legitimate one, but amounted to saying no more than "you prove it". The only cross-examination of Mr Chapman on the point that concerns this appeal was a request to see his notebook. When counsel saw it, it became clear that it was silent as to the certificate either being present or its number or its terms, and having established that counsel asked no more questions. But it must surely have been apparent to the defendant's advisers from the start of the case that Mr Chapman had some source of information on which he based his assertion that the specified maximum for this axle was 2,900 kilograms. He could not otherwise have described the measured load as being an overload. He was not cross-examined as to the basis of this evidence, whether it was based on guess work, supposition or hearsay as opposed to direct observation. One can understand perhaps why not. It was no doubt for good reason that Mr Hoffman refrained from extending his cross-examination into such areas as whether there was a plate at all, what it said, where it was and why he had not made a note about it in his book. But the form of prejudice that is identified in this case must surely be present in every case where the prosecution is allowed to fill a gap in its case. It amounts to no more than a loss of a windfall success. The appellant in this case cannot argue that he shaped or adjusted his defence to meet one type of case, only then to face a different one. Other examples of prejudice given in argument by Mr Hoffman I found not convincing. He made no request to adjourn in the light of the magistrates' decision, to call other evidence to meet this new evidence; indeed, it is difficult to see how he could sensibly have done so. As to the second question, the weight to be given to Mr Chapman's evidence, the issues thrown up by the question as drawn are predominantly issues relating to matters of fact and as such ill-suited to an appeal of this nature. The only exception is the third sub-issue: whether his evidence, when given, was tainted by his having sat in court to hear the submission, and thus having had the benefit of a clear identification of the evidence that he needed to give to fill in the gap in the case. Would it have been better if he had sat outside the court, whereupon an additional witness statement could have been taken from him in circumstances in which the taker could have scrupulously avoided leading him to the evidence which was needed to answer the submission? It is to be noted that the defence made no application (as is often, though not always, made) to the effect that the witness should sit outside court while the application proceeded. My conclusion is that this feature of the case was not a valid reason for declining to allow the case to be re-opened. The justices then had to decide, for the usual reasons and for this reason as well, what weight they should properly attach to the evidence of Mr Chapman once he was recalled. The conclusion that they reached and which they have explained, cannot, despite Mr Hoffman's arguments to the contrary, be categorised as one they were not entitled to reach. They do not say in terms that they made express allowance for the fact that Mr Chapman had heard the submission, but they did note that, though inconsistent in parts, his evidence was generally credible. I have no doubt that the matters in question 2(a) to (c) were fully argued before them as being reasons why the prosecution case should be dismissed as not meeting the relevant standard of proofs. That having been done, it was entirely open to them to decide what weight to place on the evidence, and according to that weight to find the case proved. That, in my submission, deals with both the second and third questions. For my part, therefore, I would answer all three questions in the affirmative and would dismiss this appeal. LORD JUSTICE KENNEDY: I agree. MR DEAL: My Lords, the respondent seeks their costs in this matter. A summary statement of costs has been served. LORD JUSTICE KENNEDY: Yes. MR DEAL: I do not know if your Lordships have a copy. LORD JUSTICE KENNEDY: Yes, we had that yesterday. What do you want to say about it, Mr Hoffman? MR HOFFMAN: My Lords, Mr Tuck is certified under the Legal Services Commission. He is in effect legally aided. LORD JUSTICE KENNEDY: So it has to be a detailed assessment in any event. MR HOFFMAN: My Lord, yes. LORD JUSTICE KENNEDY: Very well, the matter will go for detailed assessment. MR DEAL: Thank you very much. LORD JUSTICE KENNEDY: Thank you both very much.

The case has a chequered litigative history but we pick up the thread from 1973 when the present appellants before us initiated a case for mutation of their names which was rejected by the Anchal Adhikari, Bhabhua. Appeal filed against the aforesaid orders of the Anchal Adhikari was dismissed by the Deputy Commissioner, Land Reforms on 7-5-1976. Thereafter, the appellants filed appeal before the Collector, Rohtak who dismissed the appeal on 22-6-1977. Against that order a revision was filed before the Commissioner, who by his order dated 4-2-1980, allowed the revision and directed that an enquiry be made to ascertain if the land in question was in actual physical possession of the appellants. This order was challenged in the High Court, which by its judgment and order dated 11-9-1985 allowed the writ petition and held that the Commissioner had numberjurisdiction to hear and decide the revision filed by the appellants. It is against this order that the present appeal has been filed. Relying upon Section 8 of the Bihar Land Reforms Act, 1950 and Rule 8 framed there under, the High Court held that the Commissioner had numberjurisdiction to entertain a revision against the order of the Collector. For that purpose, the High Court relied upon an earlier decision of its own in Baldeo Prasad Sah v. Commr. of Bhagalpur Division 1960 BLJR 19. This decision has since been Followed by that High Court in another case, namely, Sk.

WARNING The President of the panel hearing this appeal directs that the following should be attached to the file: An order restricting publication in this proceeding under ss. 486.4(1), (2), (2.1), (2.2), (3) or (4) or 486.6(1) or (2) of the Criminal Code shall continue.  These sections of the Criminal Code provide: 486.4(1)       Subject to subsection (2), the presiding judge or justice may make an order directing that any information that could identify the victim or a witness shall not be published in any document or broadcast or transmitted in any way, in proceedings in respect of (a)     any of the following offences; (i)      an offence under section 151, 152, 153, 153.1, 155, 159, 160, 162, 163.1, 170, 171, 171.1, 172, 172.1, 172.2, 173, 210, 211, 213, 271, 272, 273, 279.01, 279.011, 279.02, 279.03, 280, 281, 286.1, 286.2, 286.3, 346 or 347, or (ii)      any offence under this Act, as it read at any time before the day on which this subparagraph comes into force, if the conduct alleged involves a violation of the complainant’s sexual integrity and that conduct would be an offence referred to in subparagraph (i) if it occurred on or after that day; or (iii)     REPEALED: S.C. 2014, c. 25, s. 22(2), effective December 6, 2014 (Act, s. 49). (b)     two or more offences being dealt with in the same proceeding, at least one of which is an offence referred to in paragraph (a). (2)     In proceedings in respect of the offences referred to in paragraph (1)(a) or (b), the presiding judge or justice shall (a)     at the first reasonable opportunity, inform any witness under the age of eighteen years and the victim of the right to make an application for the order; and (b)     on application made by the victim, the prosecutor or any such witness, make the order. (2.1) Subject to subsection (2.2), in proceedings in respect of an offence other than an offence referred to in subsection (1), if the victim is under the age of 18 years, the presiding judge or justice may make an order directing that any information that could identify the victim shall not be published in any document or broadcast or transmitted in any way. (2.2) In proceedings in respect of an offence other than an offence referred to in subsection (1), if the victim is under the age of 18 years, the presiding judge or justice shall (a) as soon as feasible, inform the victim of their right to make an application for the order; and (b) on application of the victim or the prosecutor, make the order. (3)     In proceedings in respect of an offence under section 163.1, a judge or justice shall make an order directing that any information that could identify a witness who is under the age of eighteen years, or any person who is the subject of a representation, written material or a recording that constitutes child pornography within the meaning of that section, shall not be published in any document or broadcast or transmitted in any way. (4)     An order made under this section does not apply in respect of the disclosure of information in the course of the administration of justice when it is not the purpose of the disclosure to make the information known in the community. 2005, c. 32, s. 15; 2005, c. 43, s. 8(3)(b); 2010, c. 3, s. 5; 2012, c. 1, s. 29; 2014, c. 25, ss. 22,48; 2015, c. 13, s. 18.. 486.6(1)       Every person who fails to comply with an order made under subsection 486.4(1), (2) or (3) or 486.5(1) or (2) is guilty of an offence punishable on summary conviction. (2)     For greater certainty, an order referred to in subsection (1) applies to prohibit, in relation to proceedings taken against any person who fails to comply with the order, the publication in any document or the broadcasting or transmission in any way of information that could identify a victim, witness or justice system participant whose identity is protected by the order. 2005, c. 32, s. 15. COURT OF APPEAL FOR ONTARIO CITATION: R. v. W.W.A., 2017 ONCA 928 DATE: 20171130 DOCKET: C55461 Feldman, Tulloch and Benotto JJ.A. BETWEEN Her Majesty the Queen Respondent and W.W.A. Applicant/Appellant Joseph S. Wilkinson, for the appellant Michelle Campbell, for the respondent Heard and released orally: November 23, 2017 On appeal from the conviction entered on September 8, 2011 and the sentence imposed on June 11, 2012 by Justice Catherine Kehoe of the Ontario Court of Justice. REASONS FOR DECISION [1] The appellant was convicted of sexual assault of his 14 year old niece. It was agreed that he visually examined her vagina. He denied touching her. The trial judge accepted the evidence of the complainant and concluded that he touched her for a sexual purpose. He appeals on the basis of ineffective assistance of counsel. [2] The first issue to be determined is that of prejudice. As stated by the Supreme Court of Canada in R. v. B. (G.D.) , 2000 SCC 22, at para. 29: “In those cases where it is apparent that no prejudice has occurred, it will usually be undesirable for appellate courts to consider the performance component of the analysis.” [3] The appellant submits that trial counsel was ineffective because he: (a) did not explore the issue of the mother’s violent alcoholism resulting in a difficult relationship with the complainant, to explain why she would turn to her uncle for help; and (b) did not cross-examine the complainant’s sister to establish that because of her animus toward the appellant, she encouraged the complainant to go to the police and to embellish her story. [4] In our view, these issues do not satisfy the prejudice requirement. The child’s difficult relationship with her mother would not have informed the critical issue in the case – was there touching? The sister’s evidence was problematic for the appellant as it risked opening the door to allegations of similar acts. [5] As the appellant has not satisfied the prejudice requirement of the test for ineffective assistance, consequently, we do not need to consider the performance component of counsel’s assistance. [6] We see no error in principle with respect to the trial judge’s determination of sentence. It is acknowledged that a five month sentence is within the appropriate range. [7] The appeal is therefore dismissed. Leave to appeal the sentence is granted,, but the sentence appeal is dismissed. “K. Feldman J.A.” “M. Tulloch J.A.” “M.L. Benotto J.A.’

LORD JUSTICE SCOTT BAKER: This is an extradition appeal under Part 1 of the Extradition Act 2003. It concerns a European arrest warrant. The Appellant, Robert Thompson, is a 42-your-old British man sought by the French Judicial Authority ("the Respondent") for conduct said to have occurred in 2001. It is said that in France, in late 2001, a British gang was involved in smuggling tobacco through France into England. The tobacco was bought using fake credit cards. The gang made use of stolen cards, which were then cloned. It is said that the Appellant was part of that gang. The case was originally argued before the District Judge in November 2005. It was contended that the Appellant's extradition was barred by reason of the passage of time. The conduct was by then 4 years old and the French had unsuccessfully sought his extradition from the Netherlands in the meantime, where he had spent 8 months in custody. This argument was rejected by the District Judge, who found that the Appellant had fled from the Netherlands. There was also an argument in relation to the appropriateness of the charges, which was successful in part. Judgment was delayed until 15th May 2008, because the Appellant did not attend the original hearing date and could not be found. The present appeal was originally due to be heard in July. The grounds being advanced by the Appellant were that the arrest warrant was defective in a number of respects. None of those points had been taken before the District Judge, but the contention was that the case law had developed since the hearing in November 2005 and these points were open to the Appellant on appeal. The time point was no longer being pursued. On 24th July the following information was received from the public prosecutor in Boulogne in unauthenticated e-mail form: "a) Mr THOMPSON was sentenced in absentia to 4 years imprisonment on 23rd November 2006. B) The judgment was made in absentia under the terms of section 489 and subsequent sections of the French code on criminal prosecutions. An appeal may be lodged within 10 days of the date that the subject is notified of the arrest... or made aware of the conviction. If an appeal is lodged, he will be given a new trial date, a new decision will be passed and the first declared nul and void. C) Mr THOMPSON was convicted of: - the offence of using counterfeit bank cards and complicity in counterfeiting and using false bank cards. The maximum sentence for this offence is 7 years imprisonment as under the terms of French law, an accomplice incurs the same sentence which is likely to be imposed upon the chief perpetrator. (section 121-6 of the Penal Code). - the offence of handling stolen vehicles, for which the maximum sentence is 5 years imprisonment." Up until then, everyone had been under the impression that the Appellant was wanted as an accused person. That appeared to be the basis on which he was sought in the European arrest warrant, and it was on that basis that the District Judge considered the case. The state of the law when the appeal came before the Divisional Court in July was that the fact that the Appellant, so it appeared, had been convicted did not avail him because of the fact that he had a right of appeal against the conviction in France. Put simply, the French proceedings had not been concluded and so it remained appropriate to be seeking his return as an accused person rather than as a convicted person. But the point was under appeal to the House of Lords in Caldarelli v Court of Naples [2008] UKHL 51 and speeches were due to be handed down on 30th July. Accordingly, at the respondent's request, the Divisional Court adjourned the Appellant's appeal. In the event, the House's decision in Caldarelli does nothing to assist either side. It is said that the warrant is defective in three respects, which are summarised as follows: 1. Lack of section 2 statement. It does not state whether the person is sought for the purpose of being prosecuted for the offence or with a view to his extradition to serve a sentence, as required by sections 2(3) and 2(5) of the Act. Nor is it apparent from the warrant as a whole what stage the proceedings in his case have reached and whether he is sought for prosecution or as part of the investigation for questioning. 2. Lack of particulars of sentence. It does not specify particulars of sentence in respect of each offence which may be imposed under French law, as required by section 2(4)(d). 3. Lack of particulars of the handling offence. In respect of the allegation of handling stolen cars, it does not specify the particulars of the circumstances of the offence, as required by section 2(4)(c). It is submitted that these defects are fatal to the warrant. The relevant provisions of the Extradition Act 2003 are: "2. Part one warrant and certificate... (2) A Part 1 warrant is an arrest warrant which is issued by a judicial authority of a category 1 territory and which contains—— (a) the statement referred to in subsection (3) and the information referred to in subsection (4), or (b) the statement referred to in subsection (5) and the information referred to in subsection (6). (3) The statement is one that—— (a) the person in respect of whom the Part 1 warrant is issued is accused in the category 1 territory of the commission of an offence specified in the warrant, and (b) the Part 1 warrant is issued with a view to his arrest and extradition to the category 1 territory for the purpose of being prosecuted for the offence. (4) The information is—— (a) particulars of the person's identity; (b) particulars of any other warrant issued in the category 1 territory for the person's arrest in respect of the offence; (c) particulars of the circumstances in which the person is alleged to have committed the offence, including the conduct alleged to constitute the offence, the time and place at which he is alleged to have committed the offence and any provision of the law of the category 1 territory under which the conduct is alleged to constitute an offence; (d) particulars of the sentence which may be imposed under the law of the category 1 territory in respect of the offence if the person is convicted of it. 5. The statement is one that—— (a) the person in respect of whom the Part 1 warrant is issued is alleged to be unlawfully at large after conviction of an offence specified in the warrant by a court in the category 1 territory, and (b) the... warrant is issued with a view to his... extradition [to serve sentence]." So it can be seen that there are two alternative routes: either he is sought because he is accused or because he has been convicted. The respondent contends that the warrant in the present case fell into the former category. Accordingly, if this is correct, the warrant had to contain the statement required by section 2(3) and the information required in section 2(4). Section 2(4) requires particulars of the person's identity. There is no problem about that. It also requires particulars of any other warrant. Again there is no difficulty about that. There are, however, issues about the third requirement, which are particulars of the circumstances of the offence and particulars of the sentence which may be imposed. The first question is whether the warrant is an accusation warrant or a conviction warrant. It is necessary to establish this in order to see whether the provisions of subsections (3) and (4) or (5) and (6) of section 2 are applicable. Unfortunately, the warrant, in its opening words, does not make the position clear. Immediately under the words "European arrest warrant" in bold type, it says: "The present warrant was issued by a judicial competent authority. I request the arrest and delivery of the hereabove mentioned person to the judicial authorities for legal proceedings or execution of a sentence or as a custody provision." The cause of the problem appears to have been the use of standard wording without eliminating one of the two alternatives so as to indicate whether it was an accusation warrant or a conviction warrant. There is another problem with these opening words. Section 2(3)(b) requires the warrant to contain a statement that the warrant is issued with a view to the person's arrest and extradition for the purpose of being prosecuted (my emphasis) for the offence. The words on the warrant refer to the object as being "legal proceedings" rather than "the purpose of being prosecuted". The authorities make clear that the court should look at the whole of the warrant when an issue of lawfulness arises. That is common ground. In my view, it is clear from looking at the whole warrant that it is an accusation warrant rather than a conviction warrant. Mr Yeo for the Appellant submits that section (b) will often provide clarification, where the standard form "introduction" has left the position ambiguous, but, he says, not in this case, because there is reference to a judgment reference number which implies concluded proceedings. Closer examination, however, reveals that the number is no more than the prosecution's department number (see page 13). There are clear indications that it is not a conviction warrant. The maximum sentence that may be given is referred to, rather than any sentence actually passed. There is reference to the preliminary investigation being still in progress with regard to the Appellant. I have no doubt, from looking at the whole of the warrant, that this was an accusation warrant rather than a conviction warrant. Mr Yeo has a much stronger argument, that as an accusation warrant it is invalid because it does not state that the warrant is issued with a view to his arrest and extradition for the purpose of being prosecuted (my emphasis). There is all the difference in the world between being wanted for questioning and being wanted for the purpose of being prosecuted. See, for example, Lord Scott in Office of the King's Prosecutor, Brussels v Armas [2005] UKHL 67 at paragraph 54, where he said: "These features of the Framework Decision explain, I think, the inclusion in the 2003 Act of the requirement that if an arrest warrant is issued for the purpose of prosecuting the person named in the warrant, the arrest warrant must so state (see section 2(3)(b)). Extradition for the purpose of interrogation with a view to obtaining evidence for a prosecution, whether of the extradited individual or of anyone else, is not a legitimate purpose of an arrest warrant. But the judicial authority in the requested State cannot inquire into the purpose of the extradition. It is therefore necessary for there to be an unequivocal statement of that purpose in the arrest warrant itself. Hence the requirement in section 2(3)(b). It is to be noted that the opening words of the form of arrest warrant set out in the Annex to the Framework Decision refer to a request that 'the person mentioned below be arrested and surrendered for the purposes of conducting a criminal prosecution or executing a custodial sentence or detention order.' It is presumably intended that the inapplicable alternative be deleted. The person is question is surely entitled to know which of the alternatives apply to him." The English translation of the warrant refers not to the purpose of being prosecuted, as required by section 2(3)(b), but instead uses the much broader words "for legal proceedings". We were referred to the original French version of the warrant, which uses the expression "poursuites pénales". We were also referred by Miss Rebecca Hill, who has appeared for the respondent, to the judgment of Maurice Kay LJ in McCormack v the Tribunal de Grande Instance, Quimper, France [2008] EWHC 1453 (Admin). That was a case in which the court had had the benefit of expert evidence from Professor Jacqueline Hodgson of Warwick University. There has been no such evidence in the present case. Maurice Kay LJ drew attention, in that case, to the evidence that to be able to issue the warrant the examining magistrate also had to be satisfied (pursuant to Article 122 of the French Code of Criminal Procedure), on the information known to her that there existed serious or corroborating materials making it likely that Mr McCormack may have participated as author or accomplice in the commission of the offence, and that that is the same test that will determine whether a person should be placed under examination. The evidence went on that as a matter of French law, in cases concerning serious offences such as those there under consideration, the requisitoire introductif by which the examining magistrate is designated, commenced poursuites pénales in respect of that person. Maurice Kay LJ said: "15. The English language version of Article 1 of the Framework Decision refers to the EAW as relating to the arrest and surrender of the requested person "for the purpose of conducting a criminal prosecution", and this wording is reflected in Section 2(3)(b) of the 2003 Act. However, the French language version of the Framework Decision refers to arrest and surrender 'pour l'exercice de poursuites pénales', and that is the wording used in paragraph 695-11 of the French Code of Criminal Procedure. It is common ground between Professor Hodgeson and the Public Prosecutor that, although the appellant is not presently mise en examen, poursuites pénales have in fact commenced. 16. In Tribunale di Firenze (Italy) v Maria Pupino Case C-105/03, 16 June 2005, the Grand Chamber of the ECJ said at paragraph 61: 'The national court is required to take into consideration all the rules of national law and to interpret them, so far as possible, in the light of the wording and purpose of the Framework Decision.' In my judgment, this court would be failing in that duty if we were to take an insular view of the present case, or to see the stage of mise en examen as a prerequisite. To do so would subvert the purpose of the Framework Decision, as to which see Dabas, per Lord Bingham of Cornhill at paragraph 4." Miss Hill submits that the reference to poursuites pénales in the French version of the warrant is sufficient to clarify any uncertainty arising from the English translation of being wanted "for legal proceedings". The English translation leaves it unclear what stage the French proceedings have reached. Some help is to be found at the top of page 4 of the warrant, under the heading "Procedure": "the preliminary investigation initiated by the Examining Magistrate is still in progress regarding Robert THOMPSON, but in the meanwhile other persons involved were placed under formal examination and appeared before [the] court or were sentenced in spite of being absent." The clear implication is that the Appellant had not been placed under formal examination and I would find it difficult to conclude on the scant material before the court that the point had been reached where he was wanted for the purpose of being prosecuted. Section 2(3)(b) requires the warrant to contain a statement to that effect, and in my view this warrant does not. I am not persuaded, absent any evidence, that the mere appearance of the words "poursuites pénales" in the French warrant is sufficient to cure the deficiency. Moses LJ had touched on the issue of complying with section 2(3)(b) 2 years before Maurice Kay LJ in Vey v The Office of the Public Prosecutor of the County Court of Montluçon, France [2006] EWHC 760 (Admin). The appeal in that case was decided on the grounds that section 2(4) had not been complied with and the court did not need to, and indeed did not reach, a concluded view on Article 2(3). The court had received conflicting evidence from experts as to the stage which the proceedings against the Appellant had reached. He said: "41... The appellant's expert, M. Serres, Avocat à la Cour de Paris, contends that she is not mise en examen. She is therefore not accused and her extradition is not sought for the purposes of taking proceedings against her. The Public Prosecutor disputes the contention that the appellant is not mise en examen. The answers to the questions make it clear that she is. But he also contends that it is unnecessary to resolve this issue. The logically prior question is whether proceedings have commenced once an opening brief (réquisitoire introductif) has been referred to the juge d'instruction. Since there is no dispute that the opening brief has been referred to a juge d'instruction, the stage of the proceedings has been reached which satisfies Section 2(3)(b). 42. This issue is clearly of importance. It has implications far beyond this case. It is, therefore, dangerous to reach any final conclusion when it is unnecessary for the purposes of this decision." He then went on to express his provisional views. The European arrest warrant procedure is designed to provide a summary and speedy process for securing the extradition of accused and convicted persons between Member States. Where the warrant contains the required information, it is unnecessary and indeed inappropriate to go behind the warrant. The last thing the court wants, save in most exceptional circumstances, is for the proceedings to become bogged down by contested expert evidence. If the warrant provides that the person is required for the purpose of being prosecuted for the offence, or in this case offences, that is sufficient to comply with section 2(3)(b). Whilst I appreciate that warrants are often directed to more than one Member State, and it may not be easy to provide a form of words that meets the requirements of each recipient state's national legislation, it should surely be possible, on receipt of a warrant in the United Kingdom, for it to be carefully checked to ensure that it complies with the requirements of the Extradition Act 2003. Then any defect can be remedied before time is wasted on what are likely to be costly and abortive proceedings. The second point relates to the lack of particulars of sentence. It could be said that this is a very technical point, because we have been told in unauthenticated form, as I mentioned earlier in this judgment, that the Appellant was in fact sentenced to 4 years' imprisonment in absentia on 23rd November 2006; that the maximum sentence for the counterfeiting offence is 7 years' imprisonment, and that for handling stolen vehicles 5 years. It appears he was not convicted of the smuggling offence. However, no application was made to adduce extraneous evidence to clarify an ambiguity within the warrant and therefore we have to deal with the point on the information within the warrant itself. In section C of the warrant, under the heading "information regarding the term of imprisonment to be served" is recorded "maximum duration of the sentence or custo[dy] to be served that may be given for the offence(s) committed: 7 YEARS imprisonment". The reference to "Sentence or custody provision given" and "remaining period time to be served" are both left blank. It is not clear whether 7 years is the maximum for each offence or for all three. The offences in respect of which the Appellant is sought are described as "aiding and abetting in the forgery of credit cards, using forged credit cards (for payment and withdrawal)", "possessing, transporting, importing goods without the carrier's bill, qualified as smuggling" and "receiving of stolen cars". In every case the relevant provisions of the penal code, or customs regulations, are referred to, but there is no mention of any maximum penalty that breach of these provisions might attract. The reason why the sentence for each offence has to be specified is so that it can be seen whether it carries a sufficiently long sentence to qualify as an extradition offence and in relation to specialty. The words of Lord Hope in Dabas at paragraph 50 are important. He said: "I wish to stress, however, that the judge must first be satisfied that the warrant with which he is dealing is a Part 1 warrant within the meaning of section 2(2). A warrant which does not contain the statements referred to in that subsection cannot be eked out by extraneous information. The requirements of section 2(2) are mandatory. If they are not met, the warrant is not a Part 1 warrant and the remaining provisions of that Part of the Act will not apply to it." So too are the observations of Richards LJ in Haynes v Court of Magistrates, Malta [2007] EWHC 2651 (Admin), where this same problem arose. Richards LJ referred to a possible exception to the principle that the particulars of sentence must be contained in the warrant itself identified by Toulson LJ in the case of Kuprevicius v Vice Minister of Justice Ministry of Justice Lithuania [2006] EWHC 1518 (Admin), where he thought, without deciding the point, that it might be possible to look at other material to resolve an ambiguity. The respondent has not sought to do that in this case. In my view, the warrant is also defective for non-compliance with section 2(4). Mr Yeo's third point is that the warrant fails to particularise the circumstances of the receiving offence. The narrative of the warrant describes how vehicles stolen in Great Britain were cloned, ie fitted with number plates that belonged to similar vehicles, and taken to France. The trader, who was presented with, but refused to accept, forged credit cards from the Appellant, noted the registration number of his car, which was one of the fleet used by the smugglers. That seems to me to be sufficient particulars to meet the requirement of section 2(2)(c). Accordingly, I would reject the argument of Mr Yeo that the warrant is defective in this regard. However, having concluded the warrant is defective on the other two grounds, I would allow the appeal. MR JUSTICE AIKENS: I agree with the judgment of my Lord. I only wish to add some comments on the second aspect of the first issue which my Lord has identified, viz the issue of whether this warrant has complied with the requirements of sections 2(3)(a) and (b) of the Extradition Act 2003 ("the Act"). It is clear, taking the wording of the warrant, as a whole, that this is what Lord Hope in the Armas case at paragraph 27 called an "accusation case" warrant as opposed to a "conviction case" warrant. But, as Lord Hope emphasised at paragraphs 27 and 28 of his speech in the Armas case, if the warrant does not comply with the requirements of section 2 of the 2003 Act, then it is not a warrant within the meaning of that section and the terms of Part 1 of the Act will not apply to it. Accordingly, there will be no jurisdiction to send the person sought to the requesting judicial authority: see Boudhiba v Central Examining Court No 5 of the National Court of Justice Madrid Spain [2006] EWHC 167 (Admin), at paragraph 15 per Smith LJ. The terms of section 2(2)(a) and section 2(3)(a) and (b), which apply to arrest warrants in "accusation" cases, are clear. A Part 1 warrant in an "accusation" case is an arrest warrant which will contain the statement that (section 2(3)(a)): "the person in respect of whom the Part 1 warrant is issued is accused in the category 1 territory of the commission of the offence specified in the warrant..." And (section 2(3)(b)): "the Part 1 warrant is issued with a view to his arrest and extradition to the category 1 territory for the purpose of being prosecuted for the offence." Given the statement in recital (5) of the Council Framework Decision of 13th June 2002 that the principal object of that decision is to abolish "extradition" between Member States and to replace it with a system of "surrender" between judicial authorities, the reference to "extradition" in section 2(3)(b) may seem a little odd, but that is the wording of the United Kingdom statute. My Lord has already quoted from the speech of Lord Scott of Foscote, at paragraph 54 of the speeches of their Lordships in the Armas case. I need not repeat it. It is an important passage. In two recent cases in the Divisional Court concerning European arrest warrants, problems have arisen over the issue of whether the European arrest warrant in question stated unequivocally that it was issued by the requesting judicial authority for the purpose of prosecuting the person named in the warrant for the offence identified in the warrant. Those cases are, chronologically, Vey v The Office of the Public Prosecutor in County Court of Montluçon, France [2006] EWHC 760 (Admin) and McCormack v the Tribunal de Grande Instance, Quimper, France [2008] EWHC 1453 (Admin). In each case the dichotomy considered was whether the person whose extradition being sought was an accused as opposed to someone who was merely wanted for questioning. (For the distinction, see the speech of Lord Steyn in re Ismail [1999] AC 320 at page 327). In both the Divisional Court cases I have referred to, this court considered that the question of whether the arrest warrant stated unequivocally that the person whose extradition was sought was for the purpose of being prosecuted turned upon the stage the criminal proceedings had reached in the French criminal court concerned. In each case expert evidence as to French criminal procedure was before the court. In the Vey case the experts did not agree on whether, given the stage of the procedure reached, it warranted the conclusion that the person whose extradition was sought was an accused as opposed to somebody who was merely wanted for questioning. In deciding whether the requirements of section 2(3)(b) of the Act are fulfilled, the court in each case did so on the basis of the wording of the warrant, such extraneous material that it was prepared to admit (such as the further information from the requesting authority sought under Article 15 of the Framework Decision) and expert evidence on French Criminal procedure. In this case we have no extraneous material or expert evidence. The heading of the European arrest warrant in the English version in this case states that the arrest and delivery of Mr Thompson is requested "to the judicial authorities for legal proceedings". That does not follow the English language wording of the pro-forma European arrest warrant that is annexed to the Framework Decision. That refers to a person being arrested and surrendered "for the purposes of conducting a criminal prosecution". That language would obviously satisfy the statutory test under section 2(3)(b), as explained by Lord Scott in the Armas case. Miss Hill points to the French version of the warrant in the present case, which uses the case phrase "soit arrêtée et remise aux autorités judiciaries aux fins de l'exercice de poursuites pénales". She points to the fact that this accords with the French language version of the pro-forma warrant annexed to the Framework Decision. So, she submits, that should be sufficient to satisfy the statutory test in this case. The problem, however, is that there is nothing in the remainder of the warrant, including the section in box E on procedure, which leads to the unequivocal conclusion that the purpose of the arrest and extradition of Mr Thompson is for conducting a criminal prosecution against him. Indeed, both the English and French versions of the statement concerning procedure in box E suggest that the position is undecided as regards Mr Thompson. The English courts are duty bound to interpret national law, particularly Part 1 of the Act, "as far as possible in the light of the wording and purpose of the framework decision in order to attain the result which it pursues and thus comply with article 34(2)(b) EU": see criminal proceedings against Pupino (Case C-105/03) reported at [2006] QB 83, which was quoted in the speech of Lord Bingham of Cornhill in the Dabas case at paragraph 5. Nevertheless, we cannot get away from the plain wording of the statutory requirements. Like my Lord, on this point I am not satisfied that in this case those requirements are fulfilled. This court and, a fortiori, District Judges who have to deal with applications for European arrest warrants on an almost daily basis, must not be put in the position where the court may have to consider detailed evidence about criminal procedures in other European countries for the purpose of the deciding whether or not the statutory requirements in section 2(3)(b) of the Act are fulfilled. If the objectives of speed and simplicity in the procedure of cross-border arrest and surrender within the EU are to be achieved, the solution, in my view, is clear. When a requesting authority issues a European arrest warrant with a request to the United Kingdom, the precise English-language wording in the head of the pro forma warrant annexed to the Framework Decision should be used. Furthermore, care should be taken to ensure that there is nothing in the body of warrant that detracts from that unequivocal statement. The liaison magistrate in the requesting state and the liaison authority in the United Kingdom can ensure that this is done. In that way, the objective of paragraph 5 of the recitals to the Framework Decision and Part 1 of the Act, viz the introduction of a new simplified system of arrest and surrender between judicial authorities, can be fulfilled. MISS LYLE: My Lord, if the legal aid costs could be assessed in the usual way. LORD JUSTICE SCOTT BAKER: Yes, certainly. Are you asking for any further consequential orders? It is simply a quashing order, is it? MISS LYLE: It is.

GRAND CHAMBER CASE OF GOROU v. GREECE (No. 2) (Application no. 12686/03) JUDGMENT STRASBOURG 20 March 2009 This judgment is final but may be subject to editorial revision. In the case of Gorou v. Greece (no. 2), The European Court of Human Rights, sitting as a Grand Chamber composed of: Nicolas Bratza, President,Christos Rozakis,Josep Casadevall,Volodymyr Butkevych,Vladimiro Zagrebelsky,Alvina Gyulumyan,Khanlar Hajiyev,Ljiljana Mijović,Renate Jaeger,David Thór Björgvinsson,Ineta Ziemele,Mark Villiger,Isabelle Berro-Lefèvre,Giorgio Malinverni,András Sajó,Zdravka Kalaydjieva,Işıl Karakaş, judges,and Vincent Berger, Jurisconsult, Having deliberated in private on 11 June 2008 and on 4 February 2009, Delivers the following judgment, which was adopted on the last-mentioned date: PROCEDURE 1. The case originated in an application (no. 12686/03) against the Hellenic Republic lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Greek national, Mrs Anthi Gorou (“the applicant”), on 23 January 2003. 2. The applicant was represented by Mr I. Mylonas, a lawyer practising in Athens. The Greek Government (“the Government”) were represented by their Agent's delegates, Mr K. Georgiadis, Adviser at the State Legal Council, and Mr I. Bakopoulos, Legal Assistant at the State Legal Council. 3. The applicant's complaint concerned, in particular, under Article 6 § 1 of the Convention, the fairness and length of proceedings that she had initiated by filing a criminal complaint. 4. The application was allocated to the Court's First Section (Rule 52 § 1 of the Rules of Court). By a decision of 14 February 2006 a Chamber of that Section, consisting of Judges Loukis Loucaides, Christos Rozakis, Françoise Tulkens, Peer Lorenzen, Nina Vajić, Dean Spielmann and Sverre Erik Jebens, and of Søren Nielsen, Section Registrar, declared the application partly admissible. 5. On 14 June 2007 a Chamber of that same Section, consisting of Judges Loukis Loucaides, Christos Rozakis, Nina Vajić, Anatoly Kovler, Elisabeth Steiner, Dean Spielmann and Sverre Erik Jebens, and of Søren Nielsen, Section Registrar, found unanimously that there had been a violation of Article 6 § 1 of the Convention on account of the excessive length of the proceedings, and, by four votes to three, that there had not been a violation of that provision in respect of the fairness of those proceedings. 6. On 1 September 2007 the applicant requested, in accordance with Article 43 of the Convention and Rule 73, that the case be referred to the Grand Chamber. On 12 November 2007 a panel of the Grand Chamber accepted that request. 7. The composition of the Grand Chamber was determined according to the provisions of Article 27 §§ 2 and 3 of the Convention and Rule 24. 8. The applicant and the Government each filed observations on the admissibility and merits of the case. 9. A hearing took place in public in the Human Rights Building, Strasbourg, on 11 June 2008 (Rule 59 § 3). There appeared before the Court: (a) for the Government Mr K. Georgiadis, Adviser at the State Legal Council,Agent's delegate, Mr I. Bakopoulos, Legal Assistant at the State Legal Council,counsel. (b) for the applicant Mr I. Mylonas, Lawyer,counsel. The Court heard addresses by Mr Mylonas and Mr Georgiadis. THE FACTS I. THE CIRCUMSTANCES OF THE CASE 10. The applicant is a civil servant in the Ministry of National Education. At the relevant time she was on secondment to the Bureau for the primary education of Greek children abroad, in the city of Stuttgart. On 2 June 1998 she filed a criminal complaint for perjury and defamation against S.M., with an application to join the proceedings as a civil party, but without claiming compensation. S.M., a civil servant in the same Ministry, was the applicant's immediate superior. She alleged in particular that, in connection with an administrative investigation opened against her, S.M. had stated that she did not observe working hours and did not get on well with her colleagues. 11. On 26 September 2001, when the case was heard before the Athens Criminal Court, the applicant reiterated her civil-party application, claiming 1,000 drachmas (about 3 euros) and adduced her arguments. On the same day, the Athens Criminal Court acquitted S.M. of the charges against him, finding that the applicant's allegations were unsubstantiated. In particular, after examining all the evidence, the court considered that the offending remarks had been truthful and that it had not been the defendant's intention to defame or insult the applicant (judgment no. 74941/2001). 12. On 5 August 2002 this judgment was finalised and entered in the register of the Criminal Court. 13. On 24 September 2002 the applicant requested the public prosecutor at the Court of Cassation to lodge an appeal on points of law against the Athens Criminal Court's judgment no. 74941/2001, under Article 506 § 2 of the Code of Criminal Procedure. She alleged, in particular, that the judgment did not contain sufficient reasoning. 14. On 27 September 2002 the public prosecutor at the Court of Cassation returned the applicant's letter with the following handwritten comment on the actual request: “There are no legal or well-founded grounds of appeal to the Court of Cassation”. II. RELEVANT DOMESTIC LAW 15. The Code of Criminal Procedure contains the following relevant provisions: Article 138 “(1) The present Code specifies the instances in which a judge gives a decision or makes an order. Orders shall also be made by the public prosecutor where he has a statutory obligation to take measures during a judicial investigation in a case or when hearings have been adjourned by the court ...” Article 139 “Judgments, orders of the chamber of judges, and orders of the investigating judge or of the public prosecutor shall give specific and precise reasons ... ... Even where it is not required by a specific provision, all judgments and orders shall include reasoning, whether they are final or interlocutory and whether or not they depend on the discretion of the judge hearing the case.” Article 463 “Remedies may be used solely by persons who are expressly afforded such right by law ...” Article 505 “(1) ... an appeal on points of law may be lodged (a) by the defendant; (b) by a third party whose civil liability has been engaged in the conviction judgment and who has acknowledged such liability; (c) by a civil party named in the conviction judgment, but only in respect of that part of the judgment in which he or she is awarded damages or is recognised as being entitled to compensation, or in which his or her claims have been dismissed as being devoid of legal basis; (d) by the public prosecutor. The Principal Public Prosecutor at the Court of Cassation shall be entitled to appeal on points of law against any decision within the time-limit provided for in Article 479 § 2 ...” Article 506 “The quashing of an acquittal on points of law may be sought: (a) by the defendant, if he or she has been acquitted for expressing remorse; (b) by the principal public prosecutor ... if the acquittal has been the consequence of a misinterpretation of a substantive criminal-law provision within the meaning of Article 510 of the Code of Criminal Procedure; (c) by the person who laid the charge or the complainant, if he or she has been ordered to pay damages and costs.” Article 513 “(1) ... The Public Prosecutor at the Court of Cassation shall summon the appellant in cassation and other parties to the proceedings, by a summons served on them in accordance with Articles 155 to 161 and within the time-limit provided for in Article 166, before the Court of Cassation or its plenary assembly ... (2) Where the appeal on points of law has been lodged by a public prosecutor, he shall not be summoned but shall be represented by the public prosecutor at the Court of Cassation. ...” THE LAW I. ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE CONVENTION WITH RESPECT TO THE FAIRNESS OF THE PROCEEDINGS 16. The applicant complained that the decision in which the public prosecutor at the Court of Cassation had dismissed her request for an appeal on points of law had lacked reasoning. She relied on Article 6 § 1 of the Convention, the relevant parts of which read: “In the determination of his civil rights and obligations ..., everyone is entitled to a fair ... hearing within a reasonable time by [a] ... tribunal ...” A. The Chamber judgment 17. In its judgment of 14 June 2007 the Chamber found that the public prosecutor at the Court of Cassation had upheld the Criminal Court's decision after a full examination of the case, espousing the reasoning of that court. It held that, having regard to the circumstances of the case and in particular the straightforward nature of the dispute and the clear findings of the Criminal Court, there had been no violation of Article 6 § 1 of the Convention. B. The parties' submissions 1. Applicability ratione materiae of Article 6 § 1 18. The Government submitted, as they had done before the Chamber, that Article 6 § 1 was not applicable in the present case for two reasons. First, they argued that the applicant's behaviour throughout the criminal proceedings showed that her purpose in joining the proceedings as a civil party was primarily to obtain the defendant's conviction. The Government noted in this connection that, before the Athens Criminal Court, the applicant had merely claimed the symbolic amount of 1,000 drachmas (about three euros), without prejudice to the satisfaction of all her civil rights before the civil courts. The Government added that, in acquitting the defendant, the Athens Criminal Court had refused to decide on the applicant's civil claims. Accordingly, the sole purpose of her request to the public prosecutor at the Court of Cassation was to support the criminal charge and to have the Criminal Court's acquittal reversed, not to assert any civil right before a criminal court. For the Government, those facts left no doubt that the applicant had decided to join the proceedings as a civil party primarily in order to obtain the defendant's conviction and not for the protection or reparation of her civil rights. Referring to the case of Perez v. France ([GC], no. 47287/99, §§ 70-71, ECHR 2004‑I), they observed that the Convention did not guarantee the right to “private revenge”. Secondly, the Government argued that Article 6 § 1 was not applicable in the present case as the civil party's request to the public prosecutor at the Court of Cassation could not, in their opinion, be characterised as a remedy. In particular, they asserted that Article 506 of the Code of Criminal Procedure did not grant a civil party the right to appeal on points of law. On this point the Government also referred to Article 463 of the Code of Criminal Procedure: “Remedies may be used solely by persons who are expressly afforded such right by law”. For the Government, the public prosecutor was by no means obliged to justify his decision not to accept the request, since there was no right to appeal on points of law under domestic law and, moreover, no such right could be relied upon against statutory provisions on the basis of any particular judicial practice. The lodging of an appeal on points of law fell exclusively within the public prosecutor's discretion. 19. The applicant submitted, first, that in joining the proceedings as a civil party she had claimed a certain sum. However symbolic that sum might have been, Article 6 § 1 was applicable in the present case because her application to join the proceedings as a civil party also had an economic aspect, in accordance with the principle set out in Perez (cited above). In addition, the applicant observed that, according to a longstanding and established domestic practice, the civil party was entitled to request the public prosecutor to appeal on points of law and could always expect a reply. Judicial practice thus confirmed the possibility for the civil party to appeal on points of law indirectly, that is to say through the intermediary of the public prosecutor at the Court of Cassation. The applicant added that the argument that her request to the public prosecutor did not concern a “civil right” was contrived, since that act was part of a whole set of proceedings in which she had participated, among other reasons, to obtain compensation. She pointed out that, under Article 513 of the Code of Criminal Procedure, if the public prosecutor granted the civil party's request to lodge an appeal on points of law, the civil party was also summoned to appear before the Court of Cassation and to take part in the proceedings thus reopened. Lastly, she observed that the case-law of the Court itself, as developed in other Greek cases, recognised as a “remedy” the request to the public prosecutor at the Court of Cassation and, accordingly, the applicability of Article 6 § 1 of the Convention in such cases. 2. Merits 20. The applicant submitted that, when the domestic legal order provided a litigant with a remedy, the State had an obligation to ensure that he or she enjoyed the fundamental guarantees of Article 6. She alleged that, according to the Court's case-law concerning Greek cases of the same kind, the public prosecutor was obliged to give reasons for his decisions, such obligation implying that the injured party could expect his or her principal claims to be dealt with attentively. In the present case the applicant asserted that she had filed a request containing detailed arguments with the public prosecutor at the Court of Cassation, but that he had completely disregarded those arguments and rejected the request without giving any reasons whatsoever. Pointing out that the Convention enshrined rights that were not theoretical or illusory but practical and effective, she alleged that the total absence of reasoning in the decision of the public prosecutor at the Court of Cassation had made it impossible to verify that the decision was not improper or arbitrary. 21. The Government observed, first, that Article 139 of the Code of Criminal Procedure required reasoning only in orders made by public prosecutors. The rejection by the public prosecutor at the Court of Cassation of the applicant's request for an appeal on points of law was not, however, an order. Article 138 of that Code provided that public prosecutors made orders in the cases provided for by law at the pre-trial stage or during the court's recess. Accordingly, the Government contended that the refusal by the public prosecutor at the Court of Cassation to lodge an appeal on points of law in response to a request from the civil party did not need to contain reasoning, since it was not a judicial decision but an official note in which he expressed his preference not to use the remedy in question, this being left to his discretion. The Government added that, in any event, the public prosecutor's refusal in this case had been sufficiently reasoned. It being a simple libel and perjury case, it had been sufficient, in their opinion, for the public prosecutor to confirm the Criminal Court's decision merely by writing an observation on the applicant's letter. C. The Court's assessment 1. The Government's preliminary objections 22. It should be pointed out, first, that the Grand Chamber may examine issues relating to the admissibility of the application in so far as they concern complaints that were declared admissible by the Chamber (see Üner v. the Netherlands [GC], no. 46410/99, § 41, ECHR 2006‑X, and K. and T. v. Finland [GC], no. 25702/94, § 141, ECHR 2001‑VII). 23. In the present case, the Grand Chamber notes that the Court, in its decision on admissibility of 14 February 2006, declared admissible the complaints under Article 6 § 1 of the Convention concerning the length of the proceedings and the reasoning of the reply from the public prosecutor at the Court of Cassation. Moreover, the Government raised the same objections before the Chamber. In these circumstances the Grand Chamber finds it necessary to deal with those objections. (a) Civil nature of the proceedings 24. The Court reiterates that the Convention does not confer any right, as such, to have third parties prosecuted or sentenced for a criminal offence. To fall within the scope of the Convention such right must be indissociable from the victim's exercise of a right to bring civil proceedings in domestic law, even if only to secure symbolic reparation or to protect a civil right such as the right to a “good reputation” (see Perez, cited above, § 70). 25. The import of this case-law is that Article 6 § 1 of the Convention applies to proceedings involving civil-party complaints from the moment the complainant is joined as a civil party, unless he or she has waived the right to reparation in an unequivocal manner (see Perez, cited above, § 66). 26. In the present case the applicant applied for civil-party status, claiming a sum equivalent to about three euros, in criminal proceedings concerning charges of perjury and defamation. Accordingly, Article 6 § 1 is applicable, above all because the impugned proceedings involved the right to a “good reputation” (see Perez, cited above, §§ 70-71, and Schwarkmann v. France, no. 52621/99, § 41, 8 February 2005). Moreover, the proceedings had an economic aspect, on account of the sum – however symbolic – of about three euros which the applicant claimed in joining them as a civil party. Having regard to the foregoing, this preliminary objection of the Government must be dismissed. (b) Characterisation of the request to the public prosecutor 27. The Court observes that the Government contested the applicability of Article 6 § 1, arguing that the applicant's request to the public prosecutor at the Court of Cassation could not be characterised as a “remedy”. The Court notes, however, that to be applicable Article 6 § 1 does not necessarily require the existence of a remedy that is formally recognised by law. That provision, under its “civil” head, is applicable when there is a dispute (“contestation”) over a “right” which can be said, at least on arguable grounds, to be recognised under domestic law (see Vilho Eskelinen and Others v. Finland [GC], no. 63235/00, § 40, ECHR 2007‑....). Such a dispute implies the existence of a disagreement (see Le Compte, Van Leuven and De Meyere v. Belgium, 23 June 1981, § 45, Series A no. 43) which must be genuine and serious; it may relate not only to the existence of a right but also to its scope and the manner of its exercise. Moreover, the outcome of the proceedings must be directly decisive for the “civil right in question” (see, among other authorities, Frydlender v. France [GC], no. 30979/96, § 27, ECHR 2000‑VII, and Sporrong and Lönnroth v. Sweden, 23 September 1982, § 81, Series A no. 52). 28. In the present case, the Court has already acknowledged the civil nature of the proceedings in issue. It will accordingly examine the question whether the “dispute” element was still present when the applicant submitted her request to the public prosecutor at the Court of Cassation. 29. In this connection, the Court reiterates that the spirit of the Convention requires that this word should not be construed too technically and that it should be given a substantive rather than a formal meaning (see Le Compte, Van Leuven and De Meyere, cited above, § 45). Moreover, in assessing whether there is a dispute over a civil right, one must look beyond the appearances and the language used and concentrate on the realities of the situation (see, mutatis mutandis, Van Droogenbroeck v. Belgium, 24 June 1982, § 38, Series A no. 50) according to the circumstances of each case (see, mutatis mutandis, Roche v. the United Kingdom [GC], no. 32555/96, § 121, ECHR 2005‑X). 30. On this point, the Court notes the particularity of the present case: the applicant's view is that the possibility of appealing on points of law through the intermediary of the public prosecutor at the Court of Cassation derives not from legislation but from an established judicial practice. This practice consists in recognition of the possibility for a civil party to request the public prosecutor at the Court of Cassation to appeal on points of law. Moreover, the public prosecutor is accustomed to replying, albeit in a summary manner, to such requests. The Government have not disputed the existence of such a practice. 31. The Court considers that, on account of that particularity and of a certain ambiguity as to the legal nature of the applicant's request, it is more appropriate to examine the real impact of her request by placing it in the context of the impugned proceedings as a whole. The Court will thus look at how the applicant's request fitted into the proceedings that began with her civil-party application with a view to obtaining compensation. In other words, it will seek to ascertain whether the initiative in question was an integral part of the civil-party application procedure and whether it was thus directly related to the initial “dispute”. For that purpose the Court must examine the role of the judicial practice in question, having regard in particular to domestic law. 32. In this connection, the Court reiterates that it has always attached a certain importance to judicial practice in the context of Article 6 § 1. Thus, in its case-law on equality of arms, it has often taken judicial practice into account in examining the compatibility of domestic law with Article 6 § 1. It did so in particular in its Reinhardt and Slimane-Kaïd v. France judgment (31 March 1998, § 106, Reports of Judgments and Decisions 1998‑II), where it took the view that the practice of sending notes to the court in deliberations could remedy the parties' inability to respond to the advocate-general's submissions, provided the latter informed the parties' lawyers of the tenor of his submissions before the day of the hearing. 33. The Court took the same position in the cases of Meftah and Others v. France ([GC], nos. 32911/96, 35237/97 and 34595/97, ECHR 2002‑VII) and Voisine v. France (no. 27362/95, 8 February 2000). In addition, in the case of Wynen v. Belgium (no. 32576/96, ECHR 2002‑VIII), it further referred to the practice before the Belgian Court of Cassation whereby the parties and their counsel could request the registry of that court to inform them in writing of the date of the hearing or to provide them with that information by telephone. The Court found that it was not unreasonable to require appellants to the Court of Cassation to avail themselves of these additional notification arrangements. 34. Having regard to the foregoing, the Court considers that it would be more faithful to the reality of the domestic legal order to take into consideration the practice in question and to accept that the applicant's request to the public prosecutor was a logical part of her challenge to the judgment in which her claim for compensation as a civil party had been rejected. In other words, her request to the public prosecutor at the Court of Cassation was made in the same context and pursued the same aim as her previous application to be joined to the proceedings as a civil party. In addition, the Court observes that if the public prosecutor at the Court of Cassation had lodged an appeal on points of law, the applicant's request would have been inextricably linked to the subsequent proceedings. It can be seen from Article 513 § 1 of the Code of Criminal Procedure that if the public prosecutor had acceded to her request by lodging his own appeal on points of law, the applicant would have been summoned to appear before the Court of Cassation as a “party to the proceedings”. 35. In the Court's view, it would be artificial, in these circumstances, to deny that the applicant's request to the public prosecutor arose from a real “dispute”, since the request formed an integral part of the whole of the proceedings that the applicant had joined as a civil party with a view to obtaining compensation. 36. Consequently, the applicant's request to the public prosecutor at the Court of Cassation related to a “dispute over a civil right” for the purposes of Article 6 § 1. The Government's preliminary objection should therefore be dismissed. 2. The merits 37. The Court reiterates that Article 6 § 1 of the Convention obliges courts to give reasons for their decisions, but cannot be understood as requiring a detailed answer to every argument. The extent to which this duty applies may vary according to the nature of the decision. It is moreover necessary to take into account, inter alia, the diversity of the submissions that a litigant may bring before the courts and the differences existing in the Contracting States with regard to statutory provisions, customary rules, legal opinion and the presentation and drafting of judgments. That is why the question whether a court has failed to fulfil the obligation to state reasons, deriving from Article 6 § 1, can only be determined in the light of the circumstances of the case (see, among many other authorities, Ruiz Torija v. Spain, 9 December 1994, § 29, Series A no. 303‑A, and Van de Hurk v. the Netherlands, 19 April 1994, § 61, Series A no. 288). 38. In the present case the Court notes that, when an acquittal has been decided, under domestic law the civil party is not, in principle, entitled to appeal directly on points of law or to seek redress from the public prosecutor at the Court of Cassation. The Court has nevertheless acknowledged that the existence of an established judicial practice cannot be disregarded in this case and that, in view of the specific features of the applicant's request to the public prosecutor at the Court of Cassation, Article 6 § 1 of the Convention is applicable. That same practice should be taken into account in assessing the extent of the reasoning to be given by the public prosecutor in his reply. 39. The Court has already observed that the public prosecutor is accustomed to responding, albeit in a summary manner, to requests from the civil party to appeal on points of law. In practice, the civil party draws the public prosecutor's attention to certain specific circumstances of the case, while the prosecutor remains free to take his decision after weighing up the arguments submitted. 40. Moreover, it should be noted that, under Article 506 of the Code of Criminal Procedure, a “positive” decision by a public prosecutor is not addressed to the civil party but gives rise to the prosecutor's own appeal on points of law. Similarly, a “negative” decision means that the public prosecutor declines to lodge an appeal on points of law himself. The Court further notes that, contrary to the applicant's assertions, no particular obligation to give reasons arises from the relevant domestic law, because the response of the public prosecutor at the Court of Cassation to the applicant's request was not issued in the form of an “order” within the meaning of Articles 138 and 139 of the Code of Criminal Procedure (see paragraph 15 above). 41. Lastly, the Court observes that, as regards the preliminary procedure for the examination and admission of appeals on points of law by an organ operating within the Court of Cassation, it has previously acknowledged that an appellate court is not required to give more detailed reasoning when it simply applies a specific legal provision to dismiss an appeal on points of law as having no prospects of success, without further explanation (see Salé v. France, no. 39765/04, § 17, 21 March 2006, and Burg and Others v. France (dec.), no. 34763/02, ECHR 2003-II). The Court considers that the same principle may apply in the case of a public prosecutor at the Court of Cassation who is requested by the civil party to lodge an appeal on points of law in his own name. 42. To sum up, the handwritten note placed on the applicant's request simply gives information about the discretionary decision taken by the public prosecutor. Seen from that perspective, and having regard to the existing judicial practice, the public prosecutor does not have a duty to justify his response but only to give a response to the civil party. To demand more detailed reasoning would place on the public prosecutor at the Court of Cassation an additional burden that is not imposed by the nature of the civil party's request for him to appeal on points of law against an acquittal. The Court therefore considers that, by indicating that “[t]here [were] no legal or well-founded grounds of appeal to the Court of Cassation”, the public prosecutor gave sufficient reasons for his decision to reject the request. Having regard to the foregoing, there has been no violation of Article 6 § 1 of the Convention. II. THE ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE CONVENTION IN RESPECT OF THE LENGTH OF THE PROCEEDINGS 43. The applicant alleged that the length of the impugned proceedings had entailed a breach of the “reasonable time” requirement. She relied on Article 6 § 1 of the Convention, which reads as follows: “In the determination of his civil rights and obligations ... everyone is entitled to a... hearing within a reasonable time by [a] ... tribunal ...” 44. The Chamber found in the present case that the length of the proceedings had been excessive and that there had been a violation of Article 6 § 1. 45. The Court notes that the applicant's request for referral to the Grand Chamber concerned only that part of the Chamber judgment that related to the complaint concerning the fairness of the impugned proceedings. However, given that the case referred to the Grand Chamber necessarily embraces all aspects of the application previously examined by the Chamber in its judgment (see Sisojeva and Others v. Latvia [GC], no. 60654/00, § 61, ECHR 2007‑...), it is also appropriate to examine the complaint about the length of the proceedings. 46. For the reasons set out by the Chamber, the Court considers that there has been a violation of Article 6 § 1 of the Convention in respect of the length of the proceedings as a whole. III. APPLICATION OF ARTICLE 41 OF THE CONVENTION 47. Article 41 of the Convention provides: “If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.” A. Chamber judgment 48. In its judgment, the Chamber considered that the applicant had clearly sustained non-pecuniary damage because the length of the impugned proceedings had exceeded a “reasonable time”, and that it was therefore appropriate to award her compensation. Ruling on an equitable basis, it awarded 4,000 euros (EUR) to the applicant under this head, plus any tax that might be chargeable. It also awarded the applicant EUR 2,300 for costs and expenses, plus any tax that might be chargeable. B. The parties' submissions 49. In respect of the non-pecuniary damage the applicant alleged she had sustained on account of the length and unfairness of the proceedings, she claimed EUR 7,500 and EUR 10,000 respectively. She also claimed EUR 7,000 for the costs and expenses incurred in the proceedings before the Court. She produced two invoices for a total amount of EUR 2,300 corresponding to the fees she had already paid for her representation before the Court. 50. The Government did not comment on this matter. C. The Court's assessment 1. Non-pecuniary damage 51. The Grand Chamber points out that its finding of a violation of the Convention resulted exclusively from a breach of the applicant's right to a hearing within a “reasonable time”. In those circumstances, it does not see any causal link between the violation found and any non-pecuniary damage the applicant may have suffered as a result of the alleged unfairness of the proceedings in question. The claims under that head should therefore be dismissed. It considers, however, that the applicant clearly sustained non-pecuniary damage in respect of her right to a hearing within a reasonable time. Ruling on an equitable basis, it awards her, like the Chamber, EUR 4,000 for non-pecuniary damage, plus any tax that may be chargeable on that sum. 2. Costs and expenses 52. The Court reiterates that costs and expenses will not be awarded under Article 41 unless it is established that they were actually and necessarily incurred and are also reasonable as to quantum (see Iatridis v. Greece (just satisfaction) [GC], no. 31107/96, § 54, ECHR 2000‑XI). Ruling on an equitable basis, and in consideration of the fact that the applicant did not submit any specific claim for the costs and expenses she had incurred in the proceedings before it, the Grand Chamber, like the Chamber, awards her EUR 2,300 in respect of costs and expenses, plus any tax that may be chargeable to the applicant on that sum. 3. Default interest 53. The Court considers it appropriate that the default interest should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points. FOR THESE REASONS, THE COURT 1. Dismisses unanimously the Government's preliminary objection that Article 6 § 1 is inapplicable because the proceedings in issue were not of a civil nature; 2. Dismisses by eleven votes to six the Government's preliminary objection that Article 6 § 1 is inapplicable on account of the characterisation of the applicant's request to the public prosecutor at the Court of Cassation; 3. Holds by thirteen votes to four that there has been no violation of Article 6 § 1 of the Convention in respect of the fairness of the proceedings; 4. Holds unanimously that there has been a violation of Article 6 § 1 of the Convention in respect of the length of the proceedings; 5. Holds unanimously (a) that the respondent State is to pay the applicant, within three months: (i) EUR 4,000 (four thousand euros), plus any tax that may be chargeable, in respect of the non-pecuniary damage caused by the length of the proceedings; (ii) EUR 2,300 (two thousand three hundred euros), plus any tax that may be chargeable to the applicant, in respect of costs and expenses; (b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points; 6. Dismisses unanimously the remainder of the applicant's claim for just satisfaction. Done in English and in French, and delivered at a public hearing in the Human Rights Building, Strasbourg, on 20 March 2009. Vincent BergerNicolas BratzaJurisconsultPresident In accordance with Article 45 § 2 of the Convention and Rule 74 § 2 of the Rules of Court, the following opinions are annexed to this judgment: (a) separate opinion of Judges Zagrebelsky, Hajiyev, Jaeger, Björgvinsson, Villiger and Berro-Lefèvre; (b) partly dissenting opinion of Judge Casadevall; (c) partly dissenting opinion of Judge Malinverni joined by Judge Sajó; (d) partly dissenting opinion of Judge Kalaydjieva. N.B.V.B. SEPARATE OPINION OF JUDGES ZAGREBELSKY, HAJIYEV, JAEGER, BJÖRGVINSSON, VILLIGER AND BERRO-LEFÈVRE (Translation) We voted with the majority in favour of finding that there had not been a violation of Article 6 as regards the complaint about a lack of reasoning in the reply of the public prosecutor at the Court of Cassation to the applicant's request for an appeal on points of law. We are of the view, however, that there was no “dispute” over a civil right, as required for the purposes of Article 6 § 1, and that this Article should not therefore have been found applicable in the circumstances. We wish to clarify our views on that particular question. It is clear from the relevant legislation that the quashing of a judgment can be sought by a civil party only in a limited number of situations, which evidently do not include that of the present case. In particular, under Article 505 § 1 of the Code of Criminal Procedure, a civil party is entitled to appeal on points of law against a conviction only in respect of that part of the judgment in which he or she is awarded damages or is recognised as being entitled to compensation, or in which his or her claims have been dismissed as being without legal basis. Under Article 506 of that Code, the quashing of an acquittal may be sought by the complainant only if he or she has been ordered to pay costs. To be sure, the relevant legislation is supplemented by judicial practice: the public prosecutor takes into account requests from civil parties and is accustomed to replying in a summary manner to their letters asking him to appeal on points of law. We are nevertheless of the view that the majority should not have found Article 6 applicable simply on the basis of this practice, however established it may be, that runs counter to the provisions of legislation. If indeed such a practice, whereby the public prosecutor at the Court of Cassation responds to the civil party's request in the event of an acquittal, were to be regarded as creating a remedy available to the civil party, that would be incompatible with the clear and precise applicable law recognising the civil party's right to appeal on points of law only in the situation provided for in Article 506 of the Code of Criminal Procedure, which is not relevant to the present case. Consequently, the applicant's request to the public prosecutor cannot be regarded as a “remedy” but rather as a means of inviting or urging him to lodge his own appeal on points of law. It is not appropriate for an international court to infer, from the limited practice of answering letters, the much broader effects of a legal action, especially where the law enumerates an exclusive list of situations in which such legal action is available. For the foregoing reasons we consider that the complaint concerning the lack of reasoning in the public prosecutor's reply to the applicant was incompatible ratione materiae with the provisions of the Convention. PARTLY DISSENTING OPINION OF JUDGE CASADEVALL (Translation) 1. I voted with the majority in finding a violation of Article 6 § 1 on account of the length of the proceedings. However, I do not share their view as regards the fairness of the proceedings in connection with the public prosecutor's unreasoned rejection of the applicant's request that he appeal on points of law (by means of a mere handwritten note stating “There are no legal or well-founded grounds of appeal to the Court of Cassation”). The reasons for my disagreement are as follows. 2. The Court has observed on a number of occasions that “[w]hen the domestic legal order provides an individual with a remedy, such as a criminal complaint with an application to join the proceedings as a civil party, the State has a duty to ensure that the person using it enjoys the fundamental guarantees of Article 6” (see Anagnostopoulos v. Greece, no. 54589/00, § 32, 3 April 2003). In the present case, the right to appeal on points of law derived not from legislation but from an established and undisputed judicial practice (see paragraph 30 of the judgment). Furthermore, the applicant's request to the public prosecutor at the Court of Cassation “was made in the same context and pursued the same aim as her previous application to be joined to the proceedings as a civil party” (see paragraph 34 of the judgment). 3. Accordingly, since the Court found that the applicant's request concerned the “determination of ... civil rights” and that the said Article was therefore applicable, I find it difficult to accept, on the basis of the same considerations and the same logic, that the public prosecutor's reasoning – in rejecting that request – was in fact sufficient. 4. Starting from the principle that Article 6 § 1 of the Convention obliges courts to give reasons for their decisions (see, among other authorities, Van de Hurk v. the Netherlands, 19 April 1994, § 61, Series A no. 288), the Court has previously developed unambiguous case-law about the practice whereby Greek public prosecutors reject requests from individuals for appeals on points of law by means of terse, and therefore completely unreasoned, handwritten notes. Without claiming to be exhaustive, I would cite three recent cases – Alija v. Greece, no. 73717/01, 7 April 2005, Gorou v. Greece (no. 4), no. 9747/04, 11 January 2007 and Markoulaki v. Greece (no. 1), no. 44858/04, 26 July 2007 – which raise exactly the same question as in the present case and where the Court found that there had been a violation of Article 6 § 1 in respect of the fairness of the proceedings. 5. The judgment in the case referred to the Grand Chamber, which concerned the same applicant, Mrs Gorou, as the second of the three judgments cited above, but this time finding that there had been no violation, is dated 14 June 2007 and was thus delivered between the last two of those judgments, after Gorou (no. 4) and before Markoulaki (no. 1). Incomprehensibly, the Chamber thus changed tack in June (perhaps accidentally?), only to revert to its previous course in July. 6. In addressing the question whether the public prosecutor at the Court of Cassation had to give reasons in replying to requests for an appeal on points of law, the Court's three above-mentioned judgments answered in the affirmative and found that there had been a violation of Article 6 § 1, explaining that this obligation derived from Article 139 of the Greek Code of Criminal Procedure and that “the reply to the applicant's request was not left to the public prosecutor's discretion” (see Alija, cited above, § 22, and Gorou (no. 4), cited above, § 22) or that “the public prosecutors in question were supposed to have given reasons in their replies to the applicant's requests, even though the use of the remedies in question fell within their discretion” (see Markoulaki (no. 1), cited above, § 23). 7. Now the Grand Chamber has answered this question in the negative and has not found a violation, in accordance – it states – with Articles 138 and 139 of the Code of Criminal Procedure (the same Articles of the same Code), after observing that “the response of the public prosecutor at the Court of Cassation to the applicant's request was not issued in the form of an 'order'” (see paragraph 40 of the judgment). 8. The Grand Chamber decided to endorse the Chamber's departure from case-law. In the absence of explanation, I fail to understand what reason, serious question or legal interest there is to justify this step backwards by the Court. It is clear that the Court, in its previous judgments, could have adopted a different approach to the issue – perhaps a less demanding or less formalistic one – but once it has decided to extend individuals' rights in a particular aspect of the right to a fair hearing, it should not – unless there has been a manifest mistake – reverse its decision. Acquired rights in the cause of human rights are at least as precious as acquired rights in other branches of the law and therefore the principle of non-regression must prevail. 9. In this connection I am reminded of the “standstill” technique. Also known as the “ratchet mechanism”, preventing a cogwheel from turning back once it has moved forward, the principle has been developed, particularly in legal opinion, in connection mainly with acquired social rights. It is the principle whereby the legislature is supposed not to pass laws that would have the effect of lowering a level of social protection already achieved. PARTLY DISSENTING OPINION OF JUDGE MALINVERNIJOINED BY JUDGE SAJÓ (Translation) 1. I voted with the majority in favour of finding Article 6 applicable in the present case. However, I am not able to follow the majority in their finding that there was no violation of that Article. 2. Indeed, I have never understood why the Chamber, departing from the Court's previous case-law (see Anagnostopoulos v. Greece, no. 54589/00, 3 April 2003[1]; Alija v. Greece, no. 73717/01, 7 April 2005; Gorou v. Greece (no. 4), no. 9747/04, 11 January 2007; and Markoulaki v. Greece (no. 1), no. 44858/04, 26 July 2007[2]), held in its judgment of 14 June 2007 that there had not been a violation of Article 6. 3. That departure from case-law was all the more difficult to justify as the Court's earlier judgments had not been challenged by the respondent Government, at least not formally, for example by means of a request for referral to the Grand Chamber. It is also surprising in the sense that, as a rule, the Court departs from case-law in order to afford better protection to individuals. Here the opposite is true. Not only is the Court now of the opinion that there is no violation of Article 6 in this type of case, but a minority of judges (see the joint dissenting opinion) have even gone so far as to deny the applicability of the provision. The present judgment thus constitutes a step backwards in the protection of fundamental rights that I find both difficult to understand and regrettable. 4. In my opinion, the public prosecutor's refusal was insufficiently reasoned. The applicant had in fact requested him to appeal on points of law against the judgment of the Athens Criminal Court on the ground that it had not given sufficient reasons for its findings. The question that the applicant sought to submit to the adjudication of the Court of Cassation was thus an eminently legal one: namely, whether that judgment contained sufficient reasoning. 5. In Greece, appeals to the Court of Cassation are subject to the discretion of the public prosecutor at that court, by whom they are filtered. In the present case, the dismissal of the applicant's request was notified in a terse handwritten comment on her actual letter: “There are no legal or well-founded grounds of appeal to the Court of Cassation”. These few words fall below the requisite standard of reasoning under Article 6 in a number of respects. 6. First, although it is true that, under Greek law, appeals to the Court of Cassation are subject to the public prosecutor's discretion, it should nevertheless be pointed out that any authority which has such power is not thereby absolved from the duty of giving reasons for its decisions, as otherwise it could quite easily slide into arbitrariness. 7. In this perspective the public prosecutor's handwritten note is doubly deficient. In commenting that there were “no legal grounds of appeal to the Court of Cassation” the public prosecutor should at least have indicated the legal provisions to which he was referring. This is the least that could have been expected. And in stating that there were “no well-founded grounds of appeal to the Court of Cassation” he should have given, even if only in summary form, the reasons why the applicant's request was not well-founded. 8. Furthermore, according to the Court's established case-law on Article 6, judgments of courts and tribunals should adequately state the reasons on which they are based (see Van de Hurk v. the Netherlands, 19 April 1994, § 61, Series A no. 288, and García Ruiz v. Spain [GC], no. 30544/96, § 26, ECHR 1999‑I). Admittedly, the extent of the reasoning may vary according to the nature of the decision and must be determined in the light of the circumstances of the case (see Ruiz Torija v. Spain, 9 December 1994, § 29, Series A no. 303‑A; Hiro Balani v. Spain, 9 December 1994, § 27, Series A no. 303-B; and Higgins and Others v. France, 19 February 1998, § 42, Reports of Judgments and Decisions 1998‑I). 9. It is true that, when giving reasons for decisions, a public prosecutor is probably not bound by the same obligations as a judge. Nevertheless, in the present case the applicant was unable to ascertain the reasons for which she met with a refusal, even though her letter of request extended to six pages. This situation, in my opinion, is totally unsatisfactory. 10. I would observe lastly that, in terms of the form, the writing of a few words on the applicant's actual request showed a lack of respect towards her. A decision of such importance for the applicant should not only have been more detailed but, as to the form, should have been set out in a separate, typed document. The form of the public prosecutor's decision sits uneasily, in my opinion, with the seriousness that should be a hallmark of all judicial acts, and could even be regarded as capable of undermining the confidence that the public must have in the proper administration of justice. PARTLY DISSENTING OPINIONOF JUDGE KALAYDJIEVA The Court's conclusion that Article 6 is applicable implies an expectation that the proceedings in question should be of a judicial nature and should afford the guarantees required by this provision at least to a certain minimum level. I voted with the majority in finding that Article 6 is applicable to the determination of the applicant's civil rights within criminal proceedings, but I was among the minority in finding that the absence of sufficient reasoning constituted a violation of that provision. I share the concerns of Judge Casadevall about the effect of the majority's conclusion that there was no violation of Article 6 on the development of the Court's findings in similar cases. I also concur with the view of Judge Malinverni that the absence of requisite content and form from a decision which puts an end to judicial proceedings may be seen as arbitrary and may shake public confidence in justice. In the present case the respondent Government argued that the applicant's request to a prosecutor may not be seen, in principle, as a remedy in respect of her complaints. I agree with this view. Indeed, the fact that the determination of the applicant's civil right to compensation is left to the discretion of a body which is not bound by procedural rules or requirements and which, furthermore, has no appellate jurisdiction, but acts as an intermediary between the applicant and the court, does not appear to be consonant with the institutional and procedural guarantees that are inherent in the judicial determination of a civil right. Having voted that Article 6 was applicable in these circumstances, I fail to see how proceedings of a non-remedial nature could meet the higher standards required by Article 6 as a matter of principle. I regard the length of these proceedings and the absence of minimum reasoning for their outcome as logical aspects of their non-judicial nature. [1] In its Anagnostopoulos judgment (§ 32) the Court found as follows: “When the domestic legal order provides an individual with a remedy, such as a criminal complaint with an application to join the proceedings as a civil party, the State has a duty to ensure that the person using it enjoys the fundamental guarantees of Article 6”. [2] Rather curiously, the Markoulaki judgment was delivered a few weeks after the Gorou (no. 2 ) Chamber judgment.

LORD JUSTICE PILL: This is an application by Mr J A Layode for permission to appeal against a decision of the Employment Appeal Tribunal which dismissed an appeal from the decision of the registrar who had refused to extend time. The applicant had brought a claim against his employers alleging unfair dismissal and race discrimination arising from his employment with them as a painter and decorator/handyman. By decision on 3rd November 1999 the Employment Tribunal unanimously decided that the applicant was not the subject of discrimination on the grounds of his race and that the applicant was unfairly dismissed but because of his conduct there was a one hundred percent contribution to his dismissal and therefore there was no order for compensation. The extended reasons were sent to the parties on 16th November and in accordance with the rules time began to run on that date. The applicant had 42 days within which to appeal. What he did was to write to the Employment Tribunal by letter which carries the date 28th of December 1999 but plainly was written a month earlier. He states in that letter: "I am writing immediately (that is immediately on his return from holidays to which he refers) to ask the Tribunal to change or revoke the wrong ruling." That was an application to the Employment Tribunal to review its own decision. That application was considered by the Employment Tribunal and the application for review was refused. That decision was given on 13th December and sent to the parties on 21st December, which was still within the 42-day limit for appeal. With the decision is a formal notice which states, amongst other things: "It should be noted that the application for review has not extended the time limit for appeal from the original tribunal decision." Mr Layode accepts that he received that decision and notice. He says that he went to the Citizens Advice Bureau in Paddington and in his words in a document to the Court he states: "The fact that the Paddington Citizens Advice Bureau missadvised me, as to when the 42 days limit started from. All of us thought the counting started from the date of the chairman's letter to me. I was shocked and surprised when I was written that the counting from the day of hearing. I was misled (unintentionally) by the Paddington CAD. Therefore, this appeal is very important, to at last put what went wrong right." It is clear that Mr Layode has strong views about the original decision and the treatment to which he says he was subjected. I do not doubt the strength of his feelings which he has expressed in more than one document to the Court and has indicated orally today. There are further letters from him following his receipt of the documents, to which I have referred, from the Employment Tribunal. The applicant wrote to the registrar of the Employment Tribunal on 31st January. That is outside the time limit. He states in that letter: "As soon as the Citizens Advice Bureau can find me a solicitor, he will take over legally. In view of the difficulty I am encountering, I beg that the time limit be extended, so that the case can be handled as required by law." He wrote again on 3rd February requesting "up to four weeks extension, in view of the difficulty in getting a solicitor to represent me". On 12th February he again wrote stating that he applied for an extension of four weeks to enable him to find a lawyer and repeating his main reason for appealing is in relation to the merits of the issue and the way in which the hearing before the Employment Tribunal was conducted. On 1st February the applicant lodged his notice of appeal with the Employment Appeal Tribunal which was 35 days out of time. Following the application to which I have referred in the letter dated 3rd February, the matter was placed before the registrar who by order of 17th March declined to extend time. That decision was upheld by His Honour Judge Peter Clark in the Employment Appeal Tribunal. Judge Clark sets out in his judgment both the grounds upon which the application is made and the relevant law. He came to the conclusion that an extension of time should not be granted. One of the points raised was that the chairman of the Employment Tribunal had misled the applicant as to the time for appealing. I agree with Judge Clark that that submission, which has not been repeated orally, must be rejected. The reference in the decision refusing the application to review was that it would more appropriately form the basis for an appeal to the Employment Appeal Tribunal. It does not in my view mislead the applicant as to the time limit. I agree with the judgment of Judge Peter Clark. I note that upon receipt of the refusal to review, the applicant was still within time and could have entered an appeal within the appropriate 42 days. He refers to the consultation with the Paddington Citizens Advice Bureau. Having regard to the fact that the rules are clear and that the notice in relation to time was sent to Mr Layode, I do not regard that as a sufficient ground for extending time. In the public interest time limits are enforced in this jurisdiction and in my judgment no reason has been shown why the extension of 35 days, which is sought, should be granted in this case. Accordingly this application for permission to appeal must be refused. (Application for permission to appeal refused)

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 319 and 320 of 1961. Appeals by special leave from the order dated October 23, 1959 of the Foreign Exchange Appellate Board, New Delhi, in Appeal No. 51 of 1959. V. Viswanatha Sastri, K. L. Misra, Advocate General for the State of Uttar Pradesh, B. P. Khaitan, S. K. Kapur and P. Maheshwari, for the appellant in C. A. No. 319 of 1961 and the respondent In C. A. No. 320 of 1961 . C. Setalvad, Attorney General of India, C. N. Joshi and D. Menon, for the respondents In C. A. No. 319 of 61 and the appellant in C. A. No. 320 of 1961 . 1962 April 19. The Judgment of the Court was delivered by VENKATARAMA AIYAR, J.-The appellant in Civil Appeal No. 319 of 1961, Shri S. P. Jain in the Chairman of the Board of Directors of a Company called Sahu Jain Ltd., which holds the managing agency of two companypanies, the Rohtas Industries Ltd. or more shortly the Rohtas, and the New Central Jute Mills Ltd. The Rohtas carry on business in the manufacture and sale of paper, and own a paper Mill at Dalmianagar in the State of Bihar. Shri Jain is the Chairman of the Board of Directors of that Company also. The New Centre Jute Mills Ltd. carry on business in the manufacture and sale of Jute, and own Mill at Calcutta. They also do business in the manufacture and sale of chemicals and fertilizers at Varanasi. On June 30, 1958, Shri S. P. Jain left India on a tour to the companytinent of Europe and on his return to this companyntry he was searched at the Palam Airport on October 1, 1958, and the following document was found in his leather attache case Deutsche Bank Aktiengesellschaft. Page 2 to our letter of 25th Sept., 1958 to .Mr. S. P. Jain, Hotel Briedenbacher Hof. Dusseldorf. The DM-account with limited companyvertibility No. 50180 of Mr. P. Jain has been credited in 1958, upto number,. with the following amounts from German sources 20th March 1958 DM 210,118,65 from M s. J. M. Voith G. m H. Maschinenfabrik, Heidenbeim marked DM 210.081,31 less DM. 262,65 banking charges the said charge was made by the remitters bank which is number a branch of ours 11th July 1958 DM, 205.000 from Messrs. Escher Wyss G. m. H. marked as, per letter of 7th July 1958 in translation. 9th August 1958 DM 201.424,81 from Messrs. J.M. Voith G. m. b. H. Maschinemfabrik, Heiden heim marked DM. 201.676,59 less banking charges. 15th August 1959 DM 472.886, 03 from Messrs. Friedr. Udhe G. m. b. H. Dertmund, marked-in translationderived expenses DM. 465.633,63 interest payment DM. 7.2.52,40. 24th. September 1958 DM, 350.000, from Messrs. Pintsch- Bamag A.G., Butzbach marked-in translation ,payment of excess price. 25th September 1953 DM. 250.000 from Messrs. Pintech-Bamag C., Butsbech marked-in translation in respect of excess price. Now s. 4 1 of the Foreign Exchange Regulations Act VII of 1947 herienafter referred to as ,the Act providesthat Except with the previous general or special permission of the Reserve Bank, numberperson resident in India other than authorised dealer shall outside India buy or borrow from, or sell or lend to, or exchange with, any person number being an authorised dealer, any foreign exchange. The expression foreign exchange as defined in s.2 d means foreign currency and includes all deposits, credits and balances payable in any foreign currency and any drafts, travellers cheques, letters of credit and bills of exchange expressed or drawn in Indian currency but payable in any foreign currency. As Shri Jain had admittedly number obtained the permission general or special of the Reserve Bank, for opening the account aforesaid, the Director of Enforcement started proceedings against him under s. 4 1 of the Act. The explanation of Shri Jain was that the amounts in question had been deposited into the Bank by four German firms in settlement of claims which two Indian Companies the Rohtas and the New Central Jute Millis Ltd. had against them for delayed and defective supplies of machinery and equipment under previous companytracts, that the deposits in question had been made subject to the companydition that they should be utilised only for making initial payments towards price of new machineries to be purchased from the German firms and that in companysequence there was numberloan by the appellant within s.4 1 of the Act. The Director rejected this explanation and held that s.4 1 had been companytravened and imposed a fine of Rs. 55 lakhs on Shri Jain under s. 23 i a of the Act. Against this order there was an appeal to the Foreign Exchange Appellate Board who, examining the question in the light of fresh materials which were made available to them accepted the version of Shri Jain, and held that the deposits had been made by the German firms under the circumstances and on the companydition stated by him. They however held that even so the deposits in question would inn law be loans by Shri Jain to the Bank, and. that in companysequence, s.4 1 of the Act had been infringed, as numberpermission had been obtained as required by it. In this view they companyfirmed theorder of the Director but reduced the fine to Rs.5 lakhs. Against this order both Shri S. P. Jainand the Union of India have preferred the above appeals with the leave of this Court under Art.136 of the Constitution. In this judgment Shri S. P. Jain will be referred to as the appellant and the Union of India as respondents. On the companytentions urged before us the questions that arise for our decision in these appeals are What. are the terms and companyditions on which the deposits in question were made 2 whether on those terms and companyditions there has been a violation of s.4 1 of the Act by the appellant and 3 whether the imposition of penalty under s. 23 i a of the Act is bad on the ground that the section is in companytravention of Art. 14 and in companysequence void. It will be companyvenient to dispose of the last companytention first, as it goes to the very root of the jurisdiction of the Director of Enforcement to proceed under the impugned section. Section 23 1 of the Act is as follows 23 1 If any person companytravences the provisions of section 4, section 5, section 9, or sub-section 2 of section 12 or of any rule, direction or order made thereunder, he shall- a be liable to such penalty number exceeding three times the value of the foreign exchange in respect of which the companytravention has taken place, or five thousand rupees, whichever in more, as may be adjudged by the Director of Enforcement in the manner hereinafter provided, or b upon companyviction by, a Court, be punishable with imprisonment for a term which may extend to two years, or with fine, or with both. Then there is s. 23-D which, omitting what is number material, ruins as follows - D 1 For the purpose of adjudging under clause a of sub-section i of section 23 whether any person has companymitted a companytravention, the Director of Enforcement shall hold an inquiry in the prescribed manner after giving that person a reasonable opportunity of being heard and if, on such inquiry, he is satisfied that the person has companymitted the companytravention, he may impose such penalty as he thinks fit in accordance with the provisions of the said section 23 Provided that if, at any stage of the inquiry, the Director of Enforcement is of opinion that having regard to the circumstances of the case, the penalty which he is empowered to impose would.not be adequate, he shall, instead of imposing any penalty himself, make a companyplaint in writing to the Court. It will be seen that when there is a companytravention of s.4 1 , action with respect to it is to be taken in the first instance by the Director of Enforcement. He may either adjudge the matter himself in accordance with s. 23 1 a , or he may send it on to a Court if he companysiders that a more servere penalty than he can impose is called for. Now the companytention of the appellant is that when ,the case is transferred to a Court, it will be tried in accordance with the procedure prescribed by the Criminal Procedure Code, but that when the Director himself tries it, he will follow the procedure prescribed therefor under the Rules framed under the Act, and that when the law provides for the same offence being tried under two procedures, which are substantially different, and it is left to the discretion of an executive officer whether the trial should take place under the one or the other of them, there is clear discrimination, and Art. 14 is companytravened. Therefore s. 23 1 a must, it is argued, be struck down as unconstitutional and the imposition of fine on the appellant under that section set aside as illegal. It is number disputed by the appellant that the subject-matter of the legislation, viz., Foreign Exchange, has features and problems peculiarly its own, and that it forms a class in itself. A law which prescribes a special procedure for investigation of breaches of foreign exchange regulation will therefore be number hit by Art. 14 as it is based on a classification which has a just and reasonable relation to the object of the legislation. The vires of s. 23 1 a is accordingly number open to attack on the ground I that it is governed by a procedure different from that prescribed by the Code of Criminal Procedure. That indeed is number companytroverted by the appellant. That being so, does it make any difference in the legal position that s. 23-D provides for transfer by the Director of Enforcement of cases which he can try, to the Court ? We have number here, as in State of West Bengal v. Anwar Ali 1 a law, which companyfers on an officer an absolute discretion to send a case for trial either to a Court or to a Magistrate, empowered to try cases under a special procedure Section 23-D companyfers authority on the very officer who has power to try and dispose of a case to send it on for trial to a Court, and that too only when he companysider that a more severe 1 1952 S. C. R. 284. punishment than what he is authorised to impose, should be awarded. In a Judicial system, in which there is a hierarchy of Courts or Tribunals, presided over by magistrates or officers belonging to different classes, and there is a devolution of powers among them graded according to their class, a provision such as s. 23-D is necessary for proper administration of justice. While on the one hand a serious offence should number go without being adequately punished by reason of companynizance thereof having been taken by an inferior authority, the accused should on the other hand have in such cases the benefit of a trial by a superior companyrt. That is the principle underlying s. 349 of the Criminal Procedure Code, under which magistrates of the second and third class, are empowered to send the cases for trial to the District Magistrate or Sub-Divisional Magistrate, when they companysider that a more severe punishment than they can inflict is called for. In our view the power companyferred on the Director of Enforcement under s. 23-D to transfer cases to a Court is number unguided or arbitrary, and does number offend Art. 14 and s. 23 1 a cannot be assailed as unconstitutional. Passing on to the question as to the terms on which the deposits standing to the credit of the appellant in the Deutsche Bank were made, though before the Director, and the Appellate Board, the truth of the settlements between the German firms, and the appellant was itself questioned by the respondents, before us it is number disputed that there were such settlements or that the deposits were made pursuant thereto. The whole of the companytroversy before us is limited to the question whether the deposits were unconditional and absolute or whether they were made subject to the companydition, that the appellant companyld operate on them only for payment of the price of new machineries to be purchased from those German firms. Before entering on a discussion of the materials bearing on this point, we may deal shortly with a question which was agitated before the Director of Enforcement and the Appellate Board. That is whether the provisions of the Evidence Act are applicable to the proceedings under the Act. Rule 3 5 of the Rules framed under the Act provides that in taking evidence, the Director shall number be bound to observe the provisions of the Indian Evidence Act, 1872 1 of 1872 . Section 24-A of the Act provides that the companyrt shall presume the genuineness and the truth of the companytents of certain documents tendered in evidence by the prosecution unless the companytrary is proved. The Director of Enforcement held that by reason of the above provisions the Evidence Act had numberapplication to proceedings under the Act. The Appellate Board came to a different companyclusion. It held that s. 24-A had application only to proceeding in Court and that Rules 3 5 had number the effect of rendering admissible evidence which was irrelevant or inadmissible under the Evidence Act. In our opinion this is the companyrect view to take of the scope of s. 24- A and Rule 3 5 and that was companyceded before us by the learned Attorney General appearing for the respondents. For a satisfactory determination of the question as to the terms on which the deposits in account No. 50180 were made, it is necessary to narrate briefly the history and nature of the disputes, which form the subject-matter of the settlements. They have their origin in four companytracts entered into with four German firms, two of them by the Rohtas and the other two by the New Central Jute Mills Ltd. Taking the first of them, some time prior to 1953 the Rohtas had placed an order with a German firm called Messrs. Voith Company for the supply of three paper Machines. The shipment of these machines was delayed beyond the time stipulated and moreover when they were supplied their production was found to be far below what had been guaranteed under the agreement. The Rohtas claimed companypensation from M s. Voith Company on both these accounts and after some companyrespondence between them a representative of the German firm Mr. Zimmermann came over to India to make an enquiry on the spot, and as a result of the discussion which he had with the Rohtas he recommended on February 21, 1957 that a sum of pound 17,900/- might be paid by the German firm as companypensation for delay in shipment. He however declined to admit the claim made by the Rohtas on account of the deficiency in the output of the machines. In accordance with this recommendation Messrs. Voith Co. remitted on March 15, 1958, German Marks equivalent to the sum of pound 17,900/- to the Deutsche Bank to be credited in the name of the appellant and it was so credited on March 20, 1958. The appellant was in due companyrse informed of the deposit, but on May 14, 1958, he wrote to M s. Voith Co. that he was number prepared to accept the amount in full satisfaction as numbercompensation was paid for deficiency in output. Thus the dispute was still unsettled, when the appellant left for Germany. Coming next to the second companytract, some time in 1951 the Rohtas had purchased from M s. Escher Wyss another firm in West Germany a Yankee Paper-making Machine. As soon as it was installed it was discovered that some of its parts were defective and that its output was also below what was guaranteed. On December 17, 1953, the appellant brought these defects to the numberice of the German firm and asked them to substitute good and suitable parts in the place of the unusable old ones. On this a protracted companyrespondence followed but as the machines companyld number be worked without replacement of the defective parts, the Rohtas companyld number wait until a settlement was reached and so purchased, the requisite parts from another German firm called ODorries and made a demand on M s. Escher Wyss Company for companypensation. A representative of the firm Mr. Staudenmaier came over to India some time in 1956 to investigate the matter, and after making a local inspection he submitted proposals for remodelling the machines. On June 17, 1957, the Rohtas wrote to the German firm that they were number agreeable to these proposals and requested them to have the claims settled as put forward by us in our previous letters. Thus the claim under this companytract was also pending settlement at the material period. The facts relating to the third and fourth companytracts companycerned in these disputes are that the New Central Jute Mills Ltd. had decided to instal at Varanasi a Gas and Synthesis Ammonia Plant for the manufacture of Chemicals and Fertilisers and placed orders for the machineries and parts with two German firms M s. Friedrich Udhe and M s. Pintsch Bamag. The case of the appellant is that many of the equipments which were supplied by the two firms were number in accordance with the specifications, that the pipe lines were Dot properly fabricated and were untailored and that there was also shortage in the supplies made by M s. Pintsch Bamag. The New Central Jute Mills Co. claimed companypensation for the defective supplies as aforesaid from the German firms, and negotiations for settlement of these claims were also pending at the relevant dates. Another factor forming the background for the settlements must number be mentioned. At about this time the appellant bad companye to a decision to instal a new Paper Plant at Dalmianagar and a new Ammonium Chloride Plant at Varanasi. To carry out those projects it was necessary to secure the requisite foreign exchange and for that the permission of the Government of India had to be obtained. Accordingly the appellant wrote on May 26, 1958, to the Ministry of Commerce Industries and again on June 5, 1958, to the Ministers for Industries and for Finance settling out his proposals for expensations and desiring to know the amounts of foreign exchange which companyld be made available for these projects. In his reply to the appellant dated June 9, 1958, the Minister for Industries stated As you know under the present acute foreign exchange position, numberearlier payments before production are permitted Also export earnings from the products of a particular plant lay only be allowed to be used for payments for that very plant and number for the payment of Import and other capital goods and equipment. for the Continent was that he had outstanding claims against four German firms and negotiations for their settlement were pending, and that he had on hand schemes for expansion of industries at Dalmianagar and Varanasi which companyld be put through only if the requisite machinery companyld be imported but that the Government of India would number permit imports which involved payments of price at the time of delivery of goods. The appellant left India for Europe on June 30, 1958. In the following months he companytacted the respresentative of the four German firms mentioned above and all the disputes were settled. According to the appellant, the terms of the settlement which were same in all the four companytracts were as follows The amount payable to the Indian Companies as companypensation was fixed. It was to be deposited by the German firms to the credit of the appellant in the Deutsche Bank. The Indian Companies were to obtain import licences from the Government of India and place orders with the respective firms for the supply of new machineries. The amounts in credit in the Deutsche Bank were to be supplied pro tanto for the payment of the price of these machines to the respective firms. The appellant was number to operate on this account except for the purpose of making payments to the German in the manner aforesaid. It is number necessary to refer to the evidence bearing on the settlements, because, as already stated, while the respondents admit that there were settlements with the German firms and deposits were made pursuant thereto, they do number admit that the deposits were made subject to companyditions, as stated by the appellant. It will be remembered that on March 20, 1958, M s. Voith Company had deposited with Deutsche Bank DM. 210.081,31 Marks being the equivalent of pound 17,900/- as companypensation for delayed shipment, which was the only portion of the claim admitted by them, in full settlement of all the claims of the Rohtas. Now pursuant to the settlement reached with the appellant, they deposited on August 1, 1958, a further sum of DM. 201,67,659 Marks in the name of the appellant in the Deutsche Bank. The terms of the settlement appear, in two letters written by M s. Voith Company on August 1, 1958, one to the Rohtas and the other to the Deutsche Bank. In the letter addressed to the Rohtas M s. Voith and Company say Mr. Jain informed us of your plans for the future such as the establishment of a new companyplete pulp and paper making unit in Assam, and in particular, of your immediate desire to increase the production of your Board Machine P.M. I in Dalmia a ar For this re-construction project we have already submitted an offerRegarding the remodelling of your M. I., we understand that you have already obtained an industrial licence and that you expect to get an import licence for the equipment offered by us. An advance payment of 20 of the ex-works price is, however, for this companyparatively small order a pre-condition for our credit insurance. In view of Mr. Jains assurance that we will enjoy preference for the supply of our machinery in the event that an import licence for the new paper mill will eventually be obtained, and in order to make the early placing of your order for the reconstruction of P.M. I possible, we have finally agreed to meet your claims for the paper machines already supplied to the extent of a total sum of DM. 412,058 including the amount already placed with the Deutsche Bank, Dusseldorf, in March representing 20 of the price quoted in our offer of January 15th, 1958. We are, therefore, remitting the balance to the Deutsche Bank as per letters addressed to them translation of which we attach hereto. This settlement of your claims is, companysidered on the definite understanding that the total amount can only be utilised by you to make to us the initial payment of 20 on and when the import licence for the reconstruction of P.M.I. is received. The Bank is, therefore, instructed to hold both remittances made by us at your disposal for this purpose only. On the same day M s. Voith Company advised the Deutsche Bank that they had remitted a further sum of DM.? 201,676.59 to it in addition to the previous remittance of DM. 210,381.31 and then go on to say ,the two amounts are paid in final settlement, of the claims of Messrs. Rohtas Industries Limited against us in companynection with the supply of 3 paper machines. We repeat that the said amounts may be utilised by Mr. S. P. Jain, Chairman of Messrs. Rohtas Industries Limited, only for the purpose of asking initial payments to us against further purchase of machinery, which payments will be made on final approval of our tender after receipt of the Indian import licence. For others sake please companyfirm receipt of these instructions to us. It should be mentioned that under the Export Regulations in force in Germany numbergoods manufactured therein companyld be exported unless 20 price quoted were paid for before the goods left the companyntry. The effect of the arrangement companye to between M s Voith Company and the appellant was that the firm would be free to export goods to the Rohtas on payment to it of 20 of the price out of the funds standing to the credit of the appellant in the Deutsche Bank, and it may be gathered that the total amount of companypensation had relation to the 20 per cent of the price of the new machinery to be purchased. The settlement made in respect of the three other companytracts was also on the same lines. M s. Escher Wyss Company settled the claim of the Rohtas on July 7 1958, and wrote to the appellant as follows We are pleased that a solution has been arrived in the companyrse of the talks we had with you to settle your long outstanding claim. We have declared to pay the agreed amount of DM. 205.000, as finally settled immediately for your satisfaction to Deutsche Bank to be held by them for your utilising in purchase of machinery by Messrs. Rohtas Industries Ltd., Dalmianagar from us after you have finally decided on the several plans discussed here and obtained import licences from your Government. We have pointed out to you that we attach great value to entertaining good and friendly relations and to do further business with you. We shall thank you also to let us have a companyfirmation that all claims against our firm in companynection with our delivery of Yankee Paper Machine are number definitely settled. On the same day M s. Escher Wyss Company transferred a sum of DM. 205.000 to the Deutsche Bank companymunicating to. them a companyy of the letter addressed to the appellant companytaining the terms of the deposit with them. The amount was duly credited to the account of the appellant on July 11, 1958. On August 11, 1958, a settlement was reached between the appellant and M s. Friedrich Udhe Company, who, then addressed the following letters to the Deutsche Bank We are releasing a sum of DM. 472,866,03 as derived expenses DM. 465.633,63 and interests payment DN. 7.252.40 to meet claims of Mr. S. P. Jain, President, New Central Jute Mills, Calcutta. We request you to hold this amount in the name of Mr. S. P., Jain but it shall number be payable to him and is to be utilised only for payment to us against purchase of expansion machinery by Sahu Chemicals-Proprietor New Central Jute Mills-after they secure licence and DM transfer guarantee from their Government. The amount was actually credited in the Deutsche Bank in the name of the appellant on August 15, 1958, Confirming this arrangement M s. Friedrich Udhe wrote to the appellant on August 18, 1958, as follows As a very special case, to promote our pleasant business relations, we have, only in view of your assurance for expansion order, released a sum of DM. 472,886,03 calculated as aforesaid, against our engineering fees and expenses on your existing supply, which must be utilised, however, only towards your meeting payments to us against order and shipments which are essential for our credit insurance. We have made over this amount to Deutsche Bank C. with instructions to hold the same for payment aforesaid after your Government grants you licence and DM transfer guarantee is established as may be acceptable to companypetent German authorities. On September 21, 1958, there was a settlement of the dispute with M s. Pintsch-Bamag under which the latter agreed to pay 600.000 Marks in full satisfaction of the claim on the same terms as in the other companytracts. On the same day M s Pintsch Bamag wrote the following letter to the Deutsche Bank. We hereby numberify you that we are placing DM. 600.000 with you in payment of excess price claimed by Mr. S. P. Jain, President of New Central Jute Mills Co. Ltd., we further advise that the amount is to be held by you in the name of Mr. S. P. Jain, but it would number be available to him except for making payment to us against extension machinery to be ordered with us by Sahu Chemicals Proprietors New Contrat Jute Mills Co., on their obtaining licence from their Government and approval of payment companyditions., On September 24, 1958, M s. Pintsch Bamag wrote to the appellant. that they had deposited the amount settled in the Deutsche Bank and added we must however point out expressly that but for the assurance of extension order to us, it would number have been possible for us to meet your claims. This amount will be available therefore only for making payment to us against extension machinery and the bank has been specifically advised to hold the same for you only in accordance therewith. The evidence above referred to clearly establishes that the deposits in account No. 50180, were made subject to the companyditions stated by the appellant, and there is intrinsic evidence in the entries themselves in this account which support this companytention. Thus the entry relating to the receipt of deposit from Messrs. Friedrich Udhe speaks of derived expenses and interest and those relating to the receipt from Messrs. Pintsch Bamag read as payment of excess price and in respect of excess price. These entries have reference to the nature of the claime on account of which the deposit are made, and would be wholly out of place in the case of ordinary deposits. On the other hand, they would be quite explicable if made under special directions from the depositors. But the matter does number rest there. While the appeal was pending before the Appellate Board both the parties agreed that further information should be elicited from the Bank as to several matters companycerning the deposits, and on August 21, 1959, a questionnaire agreed to by companynsel on either sides was sent by the appellant to the Bank for its reply. Therein the Bank was asked to furnish particulars regarding the heading of account No. 50180 the certified companyy of the relevant entries therein, the certified companyy of page-1 of the letter dated September 25, 1958 from the Bank to Mr. Jain, and the companymunications which passed between the Bank and Mr. Jain in respect of the six items of deposit appearing in the account. Among the questions sent to the Bank were the following - Please state whether the amounts referred to were deposited with you and were held by you on the companyditions mentioned in the letters, companyies whereof are enclosed herewith. What is meant by the expression ,DM account with limited companyvertibility ? What does it signify in relation to the deposits taken by you under the companyditions mentioned in those letters ? Was the acceptance of these companyditional credits by the Bank companyfirmed to the persons who deposited these amounts- ? To this the Bank sent a reply dated September 1, 1959, to the Chairman of the Board, but addressed to the appellant. Therein it give particulars of the six items of deposit as companytained in the letter dated September 25, 1958. Then there are the following statement which are material The deposited amounts are being held by us subject to the companyditions given in the enclosed certified companyies of the relevant letters from the German parties companycerned As is evident from the stipulations mentioned above, you are number entitled to withdraw the amounts specified or parts thereof, without fulfilling the terms and companyditions stipulated in the said letters. The acceptance of these companyditions, has, of companyrse, been companyfirmed to the firms companycerned and we are, therefore, bound to observe the companyditions vis-a-vis those firms, too, before we possibly companyld carry out any instructions from your part to dispose of the funds. It need number be emphasized that these companyditions applied during all the time the amounts have been maintained in this ,account where, indeed, they companytinue to be kept on the same basis. As the letter of the Bank did number companytain replies to all the questions raised in the letter of August 2 1, 1959, the Appellate Board directed that it should be asked to send a further reply with respect to all the questions. On September 17, 1959 the appellant accordingly wrote another letter to, the Bank asking for a reply specifically to all the questions, to which the Bank again replied on September 23, 1959. Therein they stated that the heading of the account was Mr. Shanti Prasad Jain, Account No. 50180 that the account companysisted in its entirety of six items of credit totalling DM. 1.689 429,50 and that there were numberfurther credits or debits in the account. The reply then proceeds on to state. The restrictions prevailing against the disposal of the amounts as imposed upon us by the firms who deposited the money are-as is customary in such cases-not expressed or referred to in the heading of the account. Such restrictions are marked to the account companycerned by means of internal instructions. That is what has been done in this case too. We give below the exact companyy of page 1 of our letter dated 25th September, 1958 except for the portion wherein we companymunicated to you some particulars of a strictly companyfidential nature companycerning the affairs of a third party, some client of ours. This information we cannot disclose to any other party, as you evidently went us to do we, however, state that this omitted part page-1 does number in any way relate either to the account of the six items of deposit or to you. The companyies of the companymunications addressed by the German firms to the Bank were enclosed. It is number disputed for the respondents that if the statements companytained in the replies given by the Bank are to be accepted at their face value then the case of the appellant must be held to be established beyond all reasonable doubt. But they companytend that there are circumstances which give rise to a suspicion that the above statements might have been inspired by the appellant. They argue that the letter of the Bank dated September 25, 1958, shows that what we have on record is only the second page of the account of the appellant in the Bank and that shows that this is only a companytinuation of a previous account which has number been produced. It is also pointed out that in the letter which the Bank sent to the Appellate Board on September 23, 1959, it was stated that the annual statement of the account ending December 31, 1958, had been sent to the appellant but that again has number been produced. All this, it is said, throws a cloud of suspicion on the truth of the arrangement as set up by the appellant, We are number impressed by this companytention. There is numberbasis the evidence for the supposition that the account as produced is number the whole of the dealing of the appellant with the Bank. The Bank has categorically stated that the six items of credit were all the transactions standing in the name of the appellant and there is numberreason to discredit it. Nor is there any force in the companytention that the annual statement ending December 31, 1958, had number been produced by the appellant, because the total amount standing to the credit of the appellant on that date as stated in the letter of the Bank, is precisely what is shown in the account at page-2. It is, therefore, clear that there were numberdealings between the Bank and the appellant, other than those we are companycerned with. Nor is there any position the companyplaint that it is only the second page of the account that has been produced and the first page suppressed. The Bank has made it clear that the first page only companytains some companyfidential companymunications relating to a customer, and that there are numberentries relating to the deposits of the appellant in that page. It is argued for the respondents that it is unusual for a Bank to take deposits on the terms stated by the appellant, and that furnishes companyent reason for rejecting the settlements pleaded by him as an afterthought. It should be mentioned that while the matter was pending before the Appellate Board, the respondents obtained the opinions of German Banks and a German Lawyer as to whether deposits on the terms mentioned by the appellant were usual and what the incidence of such deposits was. Among the opinions received was one from Sal Oppanheim Koein in which it is stated A Germanbanking practice in export trade with India-as described in your above letter-is number known to This is strongly relied on for the respondents, but then it is further stated in that opinion We think it possible however, that in individual cases, agreements of this kind companyld be arranged between the two companytracting partners If the companytracting parties reach such an agreement, and if the customer instructs his bankers accordingly, the bankers, will, as a matter of usual business companyduct inform the third party beneficiary accordingly of the instructions and all relevant modalities which they have received If it has been ascertained that the Indian beneficiary has number fulfilled or cannot fulfil the stipulations agreed upon, be forfeits his claims to companyditional. payment and the bank can then, on principle, refund the customer of the secured amount. As in the aforementioned case, proceedings here depend on the terms stipulated in individual cases, between the customer and his bankers. We have then the opinion of the Dresdner Bank on the practice of the German Banks. There. in after observing that they would as a matter of principle avoid handling transactions of the sort referred to lost they should get involved in dispute between the depositor and the payee, the Bank proceeds on to state that we will handle such business only if the depositor and the payee are known to us as well reputed businessmen and that, when a Blocked Account is opened at the depositors request in the name of the payee, the responsibility of the Bank with reference to the amount vis-a-vis the depositor to release the deposited money to the payee is only upon receipt of a special authorization to this effect from the depositor and that on the other hand Bank, may refund this amount to the depositor only after expiration of ,he term stipulated by the depositor or, with the payees companysent, before expiration of the stipulated term. This is relied on behalf of the appellant. Another Bank, Messrs. Schacht Company stated in their opinion that a German Bank when handling deposits would follow exclusively the instructions given by the depositor and that when payments have to be made out of the deposits on the fulfilment of certain companyditions the Bank would effect the payment only after fulfilment of these companyditions given by the depositor and that companyditional deposits would as a rule be limited in time so that after expiration of this limit amounts which have number been paid out for reasons of number-utilization or number-fulfilment of the companyditions will be at the depositors free disposal. One Mr. J. Bergermann a lawyer of Bonn states in his opinion that it is companymon practice to accept deposits under companyditions and that in case of such deposits the payee ,could number enforce payments if the companyditions are number fulfilled. There was some argument before us as to who will be entitled to the amounts in deposit in case the companyditions agreed to between the parties are number fulfilled. One view is that the amounts would then revert back to the depositors. The German lawyer companyld number say on this question more than this that ifthe companyditions are number fulfilled the legal situation isdoubtfull. The companyrect position possibly is that if the companyditions become impossible of performance, the companytract becomes void on the ground of frustration, and the parties are thrown back on their rights prior to the settlement. It is however unnecessary to enter into a discussion of this question, as all that we number companycerned with is to see whether deposits of the kind set up by the appellant are so unusual, as to cast a suspicion on their truth. The evidence on record shows that such deposits are well known, though number very companymon in German banking practice, and there are therefore numbersufficient grounds for discrediting the statements of the Bank, as to the terms on which the deposits were made. But the respondents argue that stripped of all its embellishments, the substance of the agreements between the appellant and the German firms, was that the latter were to pay companypensation to the Indian Companies, number in cash, but in kind, by delivery of goods manufactured by them against new orders, that that object companyld have been easily achieved by the Indian Companies and German firms entering into a simple companytract to that effect, without companyplicating the matter by associating the Deutsche Bank in the transaction, and that there is therefore ground for suspecting that the present version of the terms of the arrangement is an after thought so companyceived as to fit in with deposits which must have been made previously in the numbermal companyrse. We are unable to accept this argument. The Doutsche Bank occupies, it should be marked, a position analogous to the State Bank in this companyntry, and it is a Bank of great international repute, and status. Its statements as regards the companyditions which the deposits were made are number to be lightly brushed aside, and numbergrounds have been shown as to why they should number be accepted. On the other hand, there is on record unimpeachable evidence which fully supports them. On March 15, 1958, when M s. Voith Company remitted to the Bank the sum equivalent to pound 17,900/- to the credit of the appellant, they gave the following instructions to the Bank The said amount should be held in the name of Mr. S. P. Jain, Chairman of Messrs. Rohtas Industries Ltd., who will arrive in Germany in the companyrse of the next month. As soon as we have arrived on a final understanding With Mr. P. Jain would be authorised to utilise the above amount for payment only of the purchase of further machinery by Messrs. Rohtas Industries Limited from us. Please be advised that the amount may number be used otherwise by Mr. S. P. Jain or Messrs. Rohtas Industries Limited. Thus the deposit was companyditional, and it was to be repaid to the depositors in payment of the price of goods, to be thereafter ordered by, and supplied to the Rohtas. The importance of this lies in this that it is the first of the six credits in account No. 50180, which is number under scrutiny, and it was long prior to the settlement reached between the parties, which was on August 1, 1958. This companypletely shatters the theory that the statement of the Bank might have been inspired as suggested for the respondents. The fact would appear to be that when Mr. Zimmermann came over to India in February 1957 for settling the claim of the Rohtas for companypensation, he must have been apprised of the intention of the appellant to expand the industries, and as practical businessmen, he, and the appellant must have evolve the scheme of companyditional deposits, to be applied in payment of future goods to be ordered by the Indian Companies. Such a scheme would be of advantage to M s. Voith Company because that would insure them new business, and they companyld make up for it in fixing the price. The Indian Companies would under this arrangement be in a position to overcome the difficulties of getting foreign exchange, and it would be easy to get import license from the Government of India. And as for depositing the amounts in the Bank, that would number merely lend assurance to the Indian Companies, but also enable the parties to companyply with the German regulations, as to payment of 20 per cent of the price of manufactured goods, before they axe exported. This precisely is the sort of arrangement which businessmen might be expected to companyclude in the situation in which the parties were placed. It should be numbered that when the proposal of M s. Voith Company and the deposits made by them were companymunicated to the appellant, he raised numberobjection in his reply dated May 14, 1958, to the companyditions under which the deposit was made. He declined to accept it only because numbercompensation was awarded for deficiency in output, and it is this claim which was also settled on August 1, 1958, when a second deposit was made by M s. Voith Company. The scheme evolved by the appellant and M s. Voith Company set the pattern for settlement with the other three firms, and that is how all the four companytracts came to be settled on the same terms. On the evidence above referred to., we are satisfied that the deposits in account No. 50180 were made by the German firms on the companyditions stated by the appellant. We have reached this companyclusion on a companysideration of the evidence on record, without reference to any abstract doctrine as to burden of proof. But it is only right to observe, that the proceedings under the Act are quasicriminal in character and it is the duty of the respondents as prosecutor to make out beyond all reasonable doubt that there has been a violation of the law. Vide the decision in re. H. P. C. Productions Ltd. 1 cited for the appellant. The learned Attorney General did number companytest this position. That brings us on to the next question which is whether on our finding as to the nature of the deposits the appellant has companytravened s. 4 1 of the Act. The appellate Board has held that he has, for the reason that under the law the true relationship between a Banker and a customer is that of a debtor and creditor and that it makes numberdifference in that relationship that the deposites were companyditional. The respondents maintain that this 1 1962 2 W. L. R. 51. is the companyrect view to take of the relationship between the appellant and the Deutsche Bank with reference to account No. 50180 and that he must be held to have lent out the monies deposited in that account to the Bank. The companytention of the appellant on the other hand is threefold. Firstly, it is said, that on the terms of the deposits, he has numberpresent right to the amounts standing to his credit in the account, that he would become entitled to them only on the happening of certain companytingencies, and that until then there was numberdebt due to him and that therefore there companyld be numberlending in respect, of that debt. Secondly, it is companytended, that when the German firms transferred the amounts mentioned in account No. 50180 to the Deutsche Bank that was number by way of deposit with it as a bank but by way of entrustment for safe custody to be paid over to the person who might become entitled to them in terms of the agreement and that the monies deposited Under those agreements. were number monies lent to the Bank. And thirdly, it is argued, that on the terms on which the deposits were made in the Bank, the position of the Banker was number that of a debtor but that of a trustee, the appellant being the beneficiary entitled to the amounts on fulfilment of the companyditions of which the Bank had been apprised. We must number examine these companytentions. Now the law is well settled that when moneys are deposited in a Bank, the relationship that is companystituted between the banker and the customer is one of debtor and creditor and number trustee and beneficiary. The banker is entitled to use the monies without being called upon to account for such user, his only liability being to return the amount in accordance with the terms agreed between him and the customer. And it makes numberdifference in the jural relationship whether the deposits were made by the customer himself, or by some other persons, provided the customer accepted them. There might be special arrangement under which a Banker might be companystituted a trustee, but apart from such an arrangement, his position qua Banker is that of a debtor, and number trustee. The law was stated in those terms in the old and well-known decision of the House of Lords in Foley Hill 1 , and that has never been questioned. If the point under companysideration fell to be decided solely on the basis of account No. 50180 in the Deutsche Bank, there companyld be numberanswer to the companytention of the respondents that the appellant was a creditor in respect of the amounts deposited in that account he must be held to have advanced them as loan to the Bank. It needs hardly to be stated that it makes numberdifference in the legal position that the amounts shown in the account were number deposited by the appellant but by the German firms as he bad accepted them. But it is companytended for the appellant that the acceptance of the deposits by him was under special agreements entered into with the German firms, which gave him numberpresent right to the amounts, that though the account stands in his name he has numberright to operate on it, that before he can do so he must obtain licence from the Government of India to import the goods, then place an order with the respective German firms for supply of new machineries and parts and then only draw on the account and that even then it can only be for the payment of the price payable to those firms for the supply of new goods. The right of the appellant to the amounts in deposit is, it is argued, companytingent on the happening of these events and that until then there was numberdebt due to him and s 4 1 had numberapplication. 1 1848 11 H.L.C. 28-9 E.R. 1002. In our opinion this companytention is well founded. A companytingent debt is strictly speaking number a debt at all. In its ordinary as well as its legal sense, a debt is a sum of money payable under an existing obligation. It may be payable forthwith, solvendum in presenti, then it is a debt due or it may be payable at a future date, solvendum futuro then it is a debt accuring. But in either case it is a debt. But a companytingent debt has numberpresent existence, because it is payable only when the companytingency happens, and exhypothesi that may or may number happen. The question whether a companytingent debt is a debt as understood in law has often companye up for companysideration before English Court in companynection with garnishee proceedings taken by judgment creditors to attach it as a debt. The, decision has invariably been that they are number debts ,accruing and companyld number be attached. In Webh v. Stenton 1 , the point for decision was whether an amount payable by a trustee to the beneficiary in futuro companyld attached by a judgment creditor as a debt owing or accruing and it was answered in the negative. Discussing the distinction between an existing debt and a companytingent debt, Lord Lindley observed I should say, apart from any authority, that a debt legal or equitable can be attached whether it be a debt owing or accruing but it must be debt, and a debt is a sum of money which is number payable or will become payable in the future by reason of a present obligation, debitum in presenti, solvendum in futuro. An accruing debt, therefore, is a debt number yet actually payable but a debt which is represented by an existing obligation The result seems to me to be this you may attach all debts, whether equitable or legal but only debts can be attached and moneys which may or may number become payable from a trustee to his cestui que trust are number debts. The meaning of accruing debt observed Lord Black burn in Tapp v. Jones 1 , ,is debitum in presenti solvandum in futuro, but it goes numberfurther, and it does number companyprise anything which may be a debt, however, probableor however soon it may be a debt. The law is thus well settled that a companytingent debt is numberdebt until the companytingency happens, and as the right of the appellant to the amounts in deposit in his name in the Deutsche Bank arises only on the happening of the companytingencies already mentioned, it follows that there is numberdebt due to him in presenti and there companyld be numberloan thereof within s. 4 1 of the Act. We should add that our companyclusion that there is numberpresent debt owing to the appellant is based on the fact that the companytingency on which his title to the amounts in deposit will arise, such as the grant of import licence by the Government is one the fulfilment of which is wholly beyond his companytrol. Different companysideration might arise when the companytingency is one which can be fulfilled by the very person, who is to take under it. It is further companytended on behalf of the appellant that the payments made by the German firm in account No. 50180 cannot be regarded as deposits made by or on behalf of a customer in the numbermal companyrse of banking business and that in company. sequence the principle of law that when banker receives monies from a customer he becomes his debtor in respect of those moneys has numberapplication. There is companysiderable force in this argument. It is well know that Bank engage, in addition to their numbermal work as Bankers, in several 1 1875 L.R.100 B.591, activities, which are number associated with, and do number involve any elements of banking. In Halsburys Laws of England, Third Edition, Vol. 2, Not g it is stated Numerous other functions are undertaken at the present day by banks, such as the payment of domiciled bills, custody of Valuables, discounting bills, executor and trustee business or acting in relation to stock exchange transactions, and banks have functions under certain financial legislation, e. g. by delegation under the Exchange Control Act, 1947, or as authorised dealers under that Act and subordinate legislation. These functions are number strictly banking business. In Pagets Law of Banking, Sixth Edition, p. 43, it is stated that superimposed on this general relationship of banker to customer there may be special relationships arising from particular circumstances and requirements and that the express terms of those relationships overrides the implied terms arising from the general relationship. It was argued for the respondents, that this statement of the law companyld have, as suggested by the word superimposed, reference only to special companytracts entered into with customers, and that involves the admission that the appellant is a customer. Normally numberdoubt Banks would undertake these works for their customers, but there is numberhing to prevent them from doing so for others as well. In Corpus Juris Secundum, Vol. 9, it is stated The intention of the parties companytrols the character of the relation between Bank and depositor, which may be that of bailee and bailor, but is ordinarily that of debtor and creditor Page 546 . And it is pointed out when money is delivered to a Bank for application to a particular specific purpose it is number a general deposit creating the relationship of debtor and creditor, but a ,specific deposit creating the relationship of bailee and bailor or trustee and beneficiary. Vide p. 570, Therefore the fact that money has been put in a Bank does number necessarily import that it is a deposit in the ordinary companyrse of banking. We have to examine the substance of it to see whether it is in fact so or number. It is unnecessary for the purpose of this case to elaborately examine what banking business, properly so called, companysists in. It is summed up as follows in Halsburys Laws of England. Third- Edition Vol. 2 p. 150 Para 277 ,the receipt of money on current or deposit account and the payment of cheques drawn by and the companylection of cheques paid in by a customer. Applying these tests, can it be said that account No. 50180 is truly a banking account? Did the appellant open the account in the Bank with a view to deposit his moneys from time to time, and to operate on it by drawing cheques? The question admits of only one answer, and that is in the negative. The account was opened in the Bank with a view to effectuate the arrangement between the German firms, and the appellant, which was that the amounts were to be repaid to the depositors a price of new machineries to be supplied by them and the appellant was number to operate on it except for that purpose. The Bank was informed of this arrangement and took the deposits with numberice of the rights of the parties thereunder. Under the circumstances the Bank has really only custody of the money as if it were a stakeholder, with a liability to hand it over to the persons who would become entitled to it under the arrangement. On these facts it cannot be said that there is a deposit in a companymercial sense of the word. It would be more companyrect to say that the Bank holds the money under a special arrangement which companystitutes it number a debtor, but a sort of a stakeholder. It was also argued on behalf of the appellant that when Deutsche Bank received the amounts from the German firms on the terms mentioned by them, the relationship that was companystituted between it and the appellant was one of trustee and beneficiary and number that of debtor and creditor and that therefore s. 4 1 was out of the way. We are unable to agree with this companytention. Under the terms of the arrangement between the German firms and the appellant the deposits were to stand in the name of the appellant and so they never vested in the Bank. It is true that the- Bank would have the right to use the funds but that is number because they belong to it but because it must be taken to be the understanding of the parties, when they entrusted the moneys to it pending there repayment to the German firms in terms of the agreement, that the Bank was to have the right to use them until a demand is made for their return. Relience was placed for the appellant on the decision of the Privy Council in Official Assignee v. Bhat 1 , where it was held that a trust fund which was authorised to be invested in business companyld be traced, on the principle laid down in re. Halletts Estate 2 , into the assets of the business. But in that case it was admitted that the deposit was a Trust and the point for decision was only whether the undoubted rights of the beneficiary to follow that amount was lost by the authority given to the trustee to use it in his business. But here the question is whether the Bank is a trustee and the fact that they are entitled to use the funds does number clothe them with the character of a trustee. If that were number so every banker must be a trustee which clearly is number the law. Then again who are the beneficiaries under the trust, the German firms or the appellant? The fact is that the arrangement under which the monies were deposited in the Bank is sui generis and its position in truth is that of a bailee, number a debtor or trustee. It is unnecessary to pursue the discussion further 1 1933 L.R. 60. I.A. 203. 2 1890 13 Ch. D. 696. in view of our decision that the relationship between the Bank and the appellant is number that of debtor and creditor. It remains to deal with the companytention urged on behalf of the appellant that even if it be held that the appellant had made the deposits in question in the Deutsche Bank as a customer, there had been numbercontravention of is. 4 1 of the Act as the prohibition enacted therein is only against lending of foreign exchange by a person who is resident in India and that at the time of the deposits in question the appellant was number in India but in Germany. There is numbersubstance in this companytention. The intention of the Legislature was plainly to prohibit all transactions in foreign exchange by persons who are residents of India whether such transactions take place during their actual residence in India or during their sojourn in foreign parts. To hold that the prohibition under the Act does number extent to acts done outside India by residents of India must inevitably lead to large-scale evasion of the Act resulting in its object being defeated. A companystruction which leads to such a result must be avoided. The expression resident in India is clearly used in the sense resident of India. It may be mentioned that the words used in s. 1 I of the companyresponding British Statute Exchange Control Act. 1947 are numberperson resident in, the United Kingdom, other than an authorised dealer, shall, outside the United Kingdom, buy or borrow any gold or foreign currency from, or sell or lend any gold or foreign currency to, any person other than an authorised dealer It will be-seen that the language in the Indian Statute is in identical terms. In re. H. P. C. Production Ltd. 1 cited on behalf of the appellant the question was whether certain transactions entered into by a resident of England but outside England were hit by s. 1 and the basis of the decision is that they would be if the other companyditions were satisfied. We have numberhesitation in holding that if the appellant did in fact land monies to the Deutsche Bank while he was in Germany he would, have companytravened s. 4 1 of the Act. In view of our companyclusion that the appellant has only a companytingent right to the amounts standing in credit in account No. 50180 and that the deposits were made in the Bank number in the companyrse of numbermal banking business but under a special arrangement, it must be held that there was numberlending of those amounts by the appellant to the Bank within s. 4 1 of the Act and the order of the Appellate Board Imposing a fine of Rs.

CITATION: McDonald v. Kwan, 2011 ONCA 789 DATE: 20111215 DOCKET: C53239 COURT OF APPEAL FOR ONTARIO Rosenberg, Cronk and Watt JJ.A. BETWEEN James McDonald, Dorothy June McDonald and Judith McDonald Andrew Plaintiffs (Respondents) and Hoi Ko Kwan and Po Ping Lana Lai Defendants (Appellant) John M. Burnes, for the appellant Jeffrey Wm. Strype, for the respondents Heard: December 7, 2011 On appeal from the judgment of Justice Eva Frank of the Superior Court of Justice, dated January 4, 2011, reasons reported at 2010 ONSC 5861. ENDORSEMENT [1] The appellant appeals from the trial judge’s assessment of damages for future loss of income in a personal injury negligence action.  At the conclusion of oral argument, we dismissed the appeal for reasons to follow.  These are those reasons. [2] Although the appellant raised various grounds of appeal in his factum concerning the damages awarded at trial for future loss of income, during oral argument his challenge of this award was narrowed to two main issues. [3] The appellant argued that the trial judge erred: (1) by failing to order disclosure of the settlement amounts received by the respondent on the compromise of litigation arising from two later motor vehicle accidents involving the respondent and; (2) by failing to deduct those settlement amounts from the gross damages awarded in this case for future income loss. [4] Next, the appellant maintained that the trial judge erred by failing to hold that the statutory trust and assignment pertaining to the respondent’s receipt of future collateral benefits, which accrues to the appellant’s benefit by reason of ss. 267.8(9) and (10) of the Insurance Act , R.S.O. 1990, c. I.8 (the “Act”), extends to future pension benefits paid to the respondent by his former employer or under the Canada Pension Plan. [5] We reject these arguments. [6] At trial, the parties agreed on the method by which the trial judge was to quantify the damages recoverable by the respondent from the appellant.  Based on Hicks v. Cooper , [1973] O.J. No. 772 (C.A.), that method contemplated that the trial judge would globally assess the damages caused by all three motor vehicle accidents and then subtract the damages caused by the second and third accidents from the global assessment.  The parties also agreed that damages attributable to the second and third accidents would be quantified on the basis of a percentage of the total damages. [7] This overall approach to the assessment of damages ensured that the respondent would not realize any double recovery for the injuries at issue.  Rather, he would recover only what was owed to him as a result of the appellant’s own negligence. [8] Three additional aspects of the damages award for income loss are noteworthy. [9] First, the trial judge held that the accident involving the appellant was the sole cause of the respondent’s past and future loss of income.  On her unchallenged factual findings, on a global assessment of the respondent’s losses, no loss of income could be attributed to either of the two subsequent accidents as the respondent was already permanently disabled from employment when the subsequent accidents occurred. [10] Second, the appellant is entitled to deduct 100% of the past collateral benefit payments received by the respondent from the income loss damages, without regard to any possible deductibility of those payments from the damages or settlement proceeds otherwise payable in the actions relating to the second and third accidents.  In other words, regardless of the deduction claims of the defendants in the other two actions, the appellant is to enjoy a full deduction for all past collateral benefit payments.  This is a significant benefit to the appellant. [11] Third, as we have said, by operation of ss. 267.8(9) and (10) of the Act, the appellant is also entitled to payment of all future collateral benefits payable to the respondent, including Canada Pension Plan payments and long-term disability benefits. [12] In our view, in all these circumstances, it is not open to the appellant to also seek to deduct, on the ground of double recovery, the settlement proceeds payable to the respondent in the actions relating to the second and third accidents from the damages awarded to the respondent at this trial for future income loss.  As the trial judge put it, the approach to the assessment of damages employed in this case ensured that the appellant was “called upon to pay no more than what is owed to the [respondent] as a result of this [appellant’s] negligence”. [13] This is also a full answer to the appellant’s complaint regarding non-disclosure of the details of the settlements pertaining to the second and third accidents.  Whatever may be said about the merits of the appellant’s disclosure requests before or at trial, the method ultimately used for the assessment of damages and the trial judge’s causation findings concerning the respondent’s income loss render such disclosure unnecessary and irrelevant. [14] Nor do we accept the appellant’s complaint concerning the trial judge’s ruling in respect of the respondent’s future pension benefits.  As we understood his argument, the appellant submits that he is entitled to an assignment of the pension benefits that may be payable to the respondent in the future by his former employer or under the Canada Pension Plan until the respondent reaches his 65th birthday, providing that the respondent elects to receive those pension benefits prior to turning 65 years of age. [1] [15] The trust provisions of s. 267.8 of the Act make no mention of pension benefits.  The trial judge rejected this claim as speculative.  She was right to do so.  There is no suggestion that the respondent intends to pursue the early receipt of his pension benefits.  Should he elect to do so in the future by opting for early retirement, the appellant acknowledges that it will be open to him to seek to recover some of the payments at issue by resorting to arbitration under the arbitration provisions of the assignment agreements to be entered into by the parties in relation to s. 267.8 of the Act. [16] Accordingly, for the reasons given, the appeal was dismissed.  The respondent is entitled to his costs of the appeal, fixed in the amount of $20,000, inclusive of disbursements and all applicable taxes. “M. Rosenberg J.A.” “E.A. Cronk J.A.” “David Watt J.A.” [1] This argument assumes that, as a matter of law, the respondent’s Canada Pension Plan benefits may be the subject of an assignment agreement in light of the statutory trust provisions of s. 267.8 of the Act.  It is unnecessary to address this issue for the purpose of this appeal and we decline to do so.

C. Lahoti, J. On 12.4.1972 Dena Bank hereinafter the Bank for short , who is appellant before us, filed a suit for recovery of a sum of Rs.19,27,142.29 paise with future interest and companyts against a partnership firm namely, M s Bhikhabhai Prabhudas Parekh Co. and its partners. The suit was based inter alia on a mortgage by deposit of title deeds made by the partnership firm and its partners on 24.4.1969. The suit sought for enforcement of the mortgage security. During the pendency of the suit some of the defendants expired and their legal representatives were brought on record. Three tenants in the mortgage property were also joined as parties to the suit so as to eliminate the possibility of their causing any hindrance in the enforcement of the charge created by the equitable mortgage of the property in favour of the Bank. During the pendency of the suit the State of Karnataka tried to attach and sell the mortgaged properties for recovery of sales tax arrears due and payable by the partnership firm, the first defendant. The arrears of sales tax related to the assessment years 1957-58, 1966-67 to 1969-70 under the State Act and to the assessment years 1958-59 to 1964-65 and 1967-68 to 1969-70 under the Central Act. It appears that there was a companyrt receiver appointed who tried to resist the States attempt to attach and sale the mortgaged property by preferring objections but he was unsuccessful. It appears as is stated by the Trial Court in para 4 of its judgment the State of Karnataka itself purchased the property in auction held on 30.4.1976. Upon a prayer made by the Bank the State of Karnataka was impleaded as a defendant in the suit. The Trial Court found all the material plaint averments proved and the Bank entitled to a decree. The charge created on suit properties by mortgage was also held proved. The trial companyrt also held that the State companyld number have attached and sold the said properties belonging to partners for recovery of sales tax dues against the firm. However, the suit was directed to be dismissed as in the opinion of the Trial Court, Shri R.K. Mehta the Chief Manager and Power of Attorney holder of the Bank was number proved to be a person duly authorised to sign and verify the plaint and institute the suit. The Bank preferred an appeal before the High Court. The High Court has held Shri R.K. Mehta to be a person duly authorised to sign, verify and present the plaint. During the companyrse of hearing of the appeal, on 27.1.1992 a companypromise was entered into between the Bank and the borrowers firm and the partners . The settlement as arrived at between the Bank and the borrowers provided for a mode of payment of the decretal amount as agreed upon between the parties. Clauses 7 and 8 of the Deed of Compromise provide as under- That the defendant-respondent Nos.1-4, 6, 8-12, 14 15 are at liberty to sell the plaint schedule property either in portion or in one lot within a period of 2 years from the date of the decree. The plaintiff-appellant shall companyoperate with the defendants-respondents in such sale or sales and the price sale proceeds shall be credited by the defendants-respondents to the account of the plaintiff-appellant Bank and the plaintiff-appellant shall thereafter give their companysent and numberobjection to such sale or sales. The plaintiff-appellant shall be entitled to refund of the Court fee paid on the appeal memo and an appropriate direction may be issued by the Honble Court. As the State of Karnataka was number a party to the companypromise, the appeal had to be decided as companytested insofar as the rights of the State are companycerned. On behalf of the Bank, as also on behalf of the borrowers who supported the Bank in this regard, two pleas were raised. Firstly, it was submitted that the right of the State to realise its arrears of tax companyld number take precedence over the right of the Bank to enforce its security, it being a secured creditor. Secondly, it was submitted that the property mortgaged in favour of the Bank was the property belonging to the partners while the arrears of sales-tax related to the partnership firm which was assessed as a legal entity the arrears of tax companyld be recovered from the assets of the partnership firm and number by proceeding against the property of the individual partners. Both the companytentions were repelled by the High Court. While recording the companypromise and passing a decree in terms thereof by its judgment dated 3.8.1992 the High Court has excluded clauses 7 and 8 aforesaid being illegal and number enforceable against the State. Accordingly the suit filed by the Bank has been decreed by the High Court superseding the judgment and decree of the Trial Court. The operative part of the decree passed by the High Court reads as under- We have already held that the sales tax arrears due to the State from the first respondentpartnership, shall have preference over the plaintiffs claim. Therefore, we accept the companypromise except Clauses 7 and 8 and other terms which affect the preferential claim of the State to recover Sales Tax arrears by sale of the suit properties, and decree the suit of the plaintiff in terms of the companypromise subject to exemption as stated above, and subject to the companydition that the sales tax arrears including the penalty, if any, due under the Sales Tax Act from the 1st respondent and its partners shall have preference over the plaintiffs claim, and the plaintiff shall have to first pay the amount recovered during the companyrse of execution to the State towards the sales tax arrears and the other amount due under the Sales Tax Act from the 1st respondent and its partners and thereafter the plaintiff is entitled to adjust the remaining amount towards the amount due under the decree. On the basis of the submission made by Sri K.R.D. Karanth and the learned Advocate General, we further direct that though the State has a preferential claim, the right to recover the amount is assigned to the plaintiff on companydition that the amount recovered shall first be paid towards the arrears of sales tax plus penalty, if any, under the Sales Tax Act and then adjust the balance amount if any towards the amount due under the decree. The appeal is allowed. The judgment and decree of the trial Court are set aside. The suit of the plaintiff is decreed for a sum of Rs.25 lakhs as per the terms of the companypromise subject to exceptions and companyditions specified above. The amount deposited by the receiver into the Court upto this date shall be paid over to the plaintiff. The period of six months from today is fixed for redemption. If the companytesting respondents fail to discharge the decretal amount, the plaintiff shall bring the property for sale immediately on the expiry of six months and companyplete the execution within a period of one year from today. In the event the companytesting respondents pay the decretal amount within the aforesaid stipulated period, the State will be at liberty to recover its sales tax arrears with penalty, if any, under the Act, by sale of the suit schedule properties. As far as the plaintiff and the companytesting respondents are companycerned, they have companypromised and in the companypromise they have agreed to bear the respective companyts through out. As far as the State is companycerned, it is one of the defendants in the suit and it is one of the respondents in this appeal. The trial companyrt also has directed the parties to bear their own companyts. Further, the State is benefited by getting its right of preference adjudicated in a suit filed by the Bank. Under these circumstances, we order numbercosts in this appeal as far as the State is companycerned. The Bank has companye up in appeal by special leave to this Court feeling aggrieved by the decree of the High Court to the extent to which it recognises the right of the State to proceed against the suit property and that too in preference to the Banks right to proceed against the mortgaged property for realisation of its dues. We have heard the learned companynsel for the Bank and the learned companynsel for the partnership firm and its partners, i.e., the borrowers. There has been numberappearance on behalf of the State of Karnataka though served. Two questions arise for companysideration. Firstly, whether the recovery of sales tax dues amounting to crown debt shall have precedence over the right of the Bank to proceed against the property of the borrowers mortgaged in favour of the Bank. Secondly, whether property belonging to the partners can be proceeded against for recovery of dues on account of sales-tax assessed against the partnership firm under the provisions of the Kartanaka Sales Tax Act, 1957. What is companymon law doctrine of priority or precedence of crown debts? Halsbury, dealing with general rights of the crown in relation to property, states where the Crowns right and that of a subject meet at one and the same time, that of the Crown is in general preferred, the rule being detur digniori Laws of England, Fourth Edition Vol.8 para 1076 at page 666 . Herbert Brown states Quando jus domini regis et subditi companycurrunt jus regis praeferri debet - Where the title of the king and the title of a subject companycur, the kings title must be preferred. In this case detur digniori is the rulewhere the titles of the king and of a subject companycur, the king takes the whole.where the kings title and that of a subject companycur, or are in companyflict, the kings title is to be preferred Legal Maxims 10th edition, pp.35-36 . This companymon law doctrine of priority of States debts has been recognised by the High Courts of India as applicable in British India before 1950 and hence the doctrine has been treated as law in force within the meaning of Article 372 1 of Constituiton. An illuminating discussion of the subject made by Chagla C.J. is to be found in Bank of India Vs. John Bowman AIR 1955 Bombay 305. We may also refer to Full Bench decision of Madras High Court in Manickam Chettiar Vs. Income Tax Officer, Madura AIR 1938 Mad. 360 as also to two Judicial Commissioners Court decisions in Peoples Bank of Northern India Ltd. Vs. Secretary of State for India AIR 1935 Sind 232 and Vassanbai Topandas Vs. Radhabai Tirathdas and ors. AIR 1933 Sind 368. Without multiplying the authorities we would straightaway companye to the Constitution Bench decision in M s Builders Supply Corporation Vs. Union of India AIR 1965 SC 1061. The principle of priority of Government debts is founded on the rule of necessity and of public policy. The basic justification for the claim for priority of state debts rests on the well recognised principle that the State is entitled to raise money by taxation because unless adequate revenue is received by the State, it would number be able to function as a sovereign government at all. It is essential that as a sovereign, the State should be able to discharge its primary governmental functions and in order to be able to discharge such functions efficiently, it must be in possession of necessary funds and this companysideration emphasises the necessity and the wisdom of companyceding to the State, the right to claim priority in respect of its tax dues. See M s. Builders Supply Corporation, Supra . In the same case the Constitution Bench has numbericed a companysensus of judicial opinion that the arrears of tax due to the State can claim priority over private debts and that this rule of companymon law amounts to law in force in the territory of British India at the relevant time within the meaning of article 372 1 of the Constitution of India and therefore companytinues to be in force thereafter. On the very principle on which the rule is founded, the priority would be available only to such debts as are incurred by the subjects of the Crown by reference to the States sovereign power of companypulsory exaction and would number extend to charges for companymercial services or obligation incurred by the subjects to the State pursuant to companymercial transactions. Having reviewed the available judicial pronouncements Their Lordships have summed up the law as under - There is a companysensus of judicial opinion that the arrears of tax due to the State can claim priority over private debts. The companymon law doctrine about priority of crown debts which was recognised by Indian High Courts prior to 1950 companystitutes law in force within the meaning of Article 372 1 and companytinues to be in force. The basic justification for the claim for priority of State debts is the rule of necessity and the wisdom of companyceding to the State the right to claim priority in respect of its tax dues. The doctrine may number apply in respect of debts due to the State if they are companytracted by citizens in relation to companymercial activities which may be undertaken by the State for achieving socio-economic good. In other words, where welfare State enters into companymercial fields which cannot be regarded as an essential and integral part of the basic government functions of the State and seeks to recover debts from its debtors arising out of such companymercial activities the applicability of the doctrine of priority shall be open for companysideration. The Constitution Bench decision has been followed by threejudges Bench in Collector of Aurangabad Vs. Central Bank of India AIR 1967 SC 1831. However, the Crowns preferential right to recovery of debts over other creditors is companyfined to ordinary or unsecured creditors. The Common Law of England or the principles of equity and good companyscience as applicable to India do number accord the Crown a preferential right for recovery of its debts over a mortgagee or pledgee of goods or a secured creditor. It is only in cases where the Crowns right and that of the subject meet at one and the same time that the Crown is in general preferred. Where the right of the subject is companyplete and perfect before that of the King companymences, the rule does number apply, for there is numberpoint of time at which the two rights are at companyflict, number can there be a question which of the two ought to prevail in a case where one, that of the subject, has prevailed already. In Giles v. Grover 1832 131 ER 563 it has been held that the Crown has numberprecedence over a pledgee of goods. In Bank of Bihar v. State of Bihar Ors. AIR 1971 SC 1210, the principle has been recognised by this Court holding that the rights of the pawnee who has parted with money in favour of the pawnor on the security of the goods cannot be extinguished even by lawful seizure of goods by making money available to other creditors of the pawnor without the claim of the pawnee being first fully satisfied. Rashbehary Ghose states in Law of Mortgage T.L.L., Seventh Edition, p.386 It seems a Government debt in India is number entitled to precedence over a prior secured debt. The abovesaid being the position of law, the High Court has however proceeded to rely on certain provisions companytained in Chapter XVI of Karnataka Land Revenue Act, 1964 as also the provisions companytained in Sections 13 and 15 of Kartanaka Sales Tax Act, 1957 for holding that the arrears of sales-tax would be entitled to a preference even over the debt secured by mortgage in favour of the appellant Bank. We would numberice the relevant legal provisions. Chapter XVI of Kartanaka Land Revenue Act, 1964 is titled as Realisation Of Land Revenue And Other Public Demand. Sections 158, 190 and 2 relevant parts thereof are extracted and reproduced hereunder- Claim of State Government to have precedence over all others. 1 Claim of the State Government to any moneys recoverable under the provisions of this Chapter shall have precedence over any other debt, demand or claim whatsoever whether in respect of mortgage, judgment-decree, execution or attachment, or otherwise howsoever, against any land or the holder thereof. In all casees, the land revenue for the current revenue year, of land for agricultural purposes, if number otherwise discharged, shall be recoverable in preference to all other claims, from the crop of such land. Definitions In this Act, unless the companytext otherwise requires, - xxx xxx xxx 14 land includes benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth, and also shares in, or charges on, the revenue or rent of villages or other defined areas Recovery of other public demands.- The following moneys may be recovered under this Act in the same manner as an arrear of land revenue, namely - a xxx xxx xxx b xxx xxx xxx c all sums declared by this Act or any other law for the time being in force to be recoverable as an arrear of land revenue. Emphasis supplied Section 13 of the Karnataka Sales Tax Act, 1957 is also relevant. Sub-sections 1 and 3 to the extent relevant are extracted and reproduced hereunder - Sec.13. Payment and Recovery of Tax. 1 The Tax or any other amount due under this Act shall be paid in such manner in such instalments, subject to such companyditions, on payment of such interest and within such time, as may be prescribed. xxx xxx xxx xxx xxx xxx Any tax assessed, or any other amount due under this Act from a dealer or any other person may without prejudice to any other mode of companylection be recovered xxx xxx xxx xxx xxx xxx a as if it were an arrear of land revenue, or xxx xxx xxx xxx xxx xxx emphasis supplied The Act had companye into force on 1.10.1957. With effect from 18.11.1983 the following sub-section 2-A was inserted into the body of Section 15 of the Kartanaka Sales Tax Act, 1957 by Amending Act No.23 of 1983 and came into force on the same day- 2-A Where any firm is liable to pay any tax or penalty or any other amount under this Act, the firm and each of the partners of the firm shall be jointly and severally liable for such payment. We have seen that the companymon law doctrine of priority of crown debts would number extend to providing preference to crown debts over secured private debts. It was submitted by the learned companynsel for the appellant that under the Karnataka Land Revenue Act as also under the Karnataka Sales Tax Act the arrears of sales tax do number become arrears of land revenue they have been declared merely to be recoverable as arrears of land revenue. Relying on the observations of this Court in Builders Supply Corporation case supra , vide para 28, the learned companynsel for the appellant submitted that the appellant being a secured creditor the arrears of sales tax companyld number have preference over the rights of the appellant. It is true that the Constitution Bench has in Builders Supply Corporation case supra observed by reference to Section 46 2 of the Income-tax Act, 1922 that that provision does number deal with the doctrine of the priority of crown debts at all it merely provides for the recovery of the arrears of tax due from an assessee as if it were an arrear of land revenue which provision cannot be said to companyvert arrears of tax into arrears of land revenue either. The submission so made by the learned companynsel omits to take into companysideration the impact of Section 158 1 of the Karnataka Land Revenue Act which specifically provides that the claim of the State Government to any moneys recoverable under the provisions of Chapter XVI shall have precedence over any other debt, demand or claim whatsoever including in respect of mortgage. Section 158 of the Karnataka Land Revenue Act number only gives a statutory recognition to the doctrine of States priority for recovery of debts but also extends its applicability over private debts forming subject matter of mortgage, judgment-decree, execution or attachment and the like. In Collector of Aurangabad Vs. Central Bank of India Supra , the provisions of Hyderabad Land Revenue Act and Hyderabad General Sales Tax Act had companye up for companysideration of this Court. This Court had refused to grant primacy to the dues on account of sales tax over secured debt in favour of the Bank. A perusal of the relevant statutory provisions quoted in the judgment goes to show that any provision pari materia with the one companytained in Section 158 of Karnataka Land Revenue Act was number to be found in any of the local acts under companysideration of this Court in Collector of Aurangabad Vs. Central Bank of India. The effect of Section 190 is to make the procedure for recovery of arrears of land revenue applicable for recovery of sales tax arrears. The effect of Section 158 is to accord a primacy to all the moneys recoverable under Chapter XVI, which will include sales tax arrears. The learned companynsel for the appellant submitted that sub-section 2-A of Section 15 of Karnataka Sales Tax Act companyld number be given a retrospective operation. This submission is misconceived. A legislation may be made to companymence from a back date, i.e. from a date previous to the date of its enactment. To make a law governing a past period on a subject is retrospectivity. A legislature is companypetent to enact such a law. The ordinary rule is that a legislative enactment companyes into operation only on its enactment. Retrospectivity is number to be inferred unless expressed or necessarily implied in the legislation, specially those dealing with substantive rights and obligations. It is a misnomer to say that sub-section 2A of Section 15 of the Karnataka Sales Tax Act is being given retrospective operation. Determining the obligation of the partners to pay the tax assessed against the firm by making them personally liable is number the same thing as giving the amendment a retrospective operation. In Principles of Statutory Interpretation by Justice G.P. Singh, Seventh Edition, 1999, at page 369 it is stated - The rule against retrospective companystruction is number applicable to a statute merely because a part of the requisites for its action is drawn from a time antecedent to its passing. If that were number so, every statute will be presumed to apply only to persons born and things companye into existence after its operation and the rule may well result in virtual nullification of most of the statutes. An amending Act is, therefore, number retrospective merely because it applies also to those to whom pre-amended Act was applicable if the amended Act has operation from the date of its amendment and number from an anterior date. There is, therefore numberquestion of sub-section 2-A of Section 15 of the Karnataka Sales Tax Act being given a retrospective operation. It is prospective. However, it does number make any difference for the facts of the present case. The High Court has relied on Section 25 of the Partnership Act, 1932 for the purpose of holding the partners as individuals liable to meet the tax liability of the firm. Section 25 provides that every partner is liable, jointly with all the other partners and also severally for all acts of the firm done while he is a partner. A firm is number a legal entity. It is only a companylective or companypendious name for all the partners. In other words, a firm does number have any existence away from its partners. A decree in favour of or against a firm in the name of the firm has the same effect as a decree in favour of or against the partners. While the firm is incurring a liability it can be assumed that all the partners were incurring that liability and so the partners remain liable jointly and severally for all the acts of the firm. This principle cannot be stretched and extended to such situations in which the firm is deemed to be a person and hence a legal entity for certain purpose. The Karnataka Sales Tax Act, with which we are companycerned, also gives the firm a legal status by treating it as a dealer and hence a person for the limited purpose of assessing under the Sales Tax Act. It was, therefore, held by a three-judges Bench in Commissioner of Sales Tax, M.P. Ors. v. Radhakrishan Ors. AIR 1979 SC 1588- a firm in a partnership and a Hindu undivided family are recognised as legal entities and as such proceedings can only be taken against the firm or undivided family as the case may be. Neither the partners of the firm number the members of the Hindu undivided family will be liable for the tax assessed against the firm or the undivided Hindu family. However, this principle would have numberapplicability if there be a statutory provision to the companytrary. In the case of Radhakrishan Ors. supra , vide para 7 itself, this Court observed - It may be numbered that S. 276 d of the Income-tax Act specifically includes all partners within the definition of the word firm and a companypany includes directors. In Bombay Sales Tax Act, 1959, under Section 18 it is specifically provided that where any firm is liable to pay tax under the Act, the firm and each of the partners of the firm shall be jointly and severally liable for such payment. In the absence of a specific provision as found in Section 18 of the Bombay Act the partners of the firm cannot be held liable for the tax assessed on the firm. A provision similar to the one included in Section 18 of the Bombay Sales Tax Act has been incorporated in the Karnataka Sales Tax Act as referred to hereinabove and that is why the partners of the borrower firm in the case before us cannot take shelter behind the law laid down by this companyrt in Radhakrishan Ors. supra . Here we may also refer to a two-judge Bench decision of this Court in Third Incometax Officer Anr. Vs. Arunagiri Chettiar 1996 220 ITR 232 SC in which provisions of S.188 A Income-tax Act, 1971 have been numbericed. S.188 A declares a partner and his legal representatives jointly and severally liable along with the firm to pay any tax, penalty or sum payable for the year in which he was a partner. It was observed that S.188 A explicitly provides what was implicit hitherto. In the case at hand the partners are being held liable by reason of Sec.15 2A of the Karnataka Sales Tax Act, 1957. The learned companynsel for the appellant is right in submitting that on the day on which the State of Karnataka proceeded to attach and sell the property of the partners of the firm mortgaged with the Bank, it companyld number have appropriated the sale proceeds to sales tax arrears payable by the firm and defeating the Banks security in view of the law as laid down by this Court in Commissioner of Sales Tax, P. Vs. Radhakrishan Ors. supra . However, still in the facts and circumstances of the case, the appellant Bank cannot be allowed any relief. Section 15 2A of Kartanaka Sales Tax Act had companye into force on 18.12.1983 while the decree in favour of the Bank was passed on 3.8.1992 and is yet to be executed. The claim of the appellant Bank is still outstanding. Even if we were to set aside the sale held by the State, it will merely revive the arrears outstanding on account of sales tax to which further interest and penalty shall have to be added. The amended Section 15 2-A of the Karnataka Sales Tax Act shall apply. The State shall have a preferential right to recover its dues over the rights of the appellant Bank and the property of the partners shall also be liable to be proceeded against.

JUDGMENT ON OUTSTANDING ISSUES Lord Justice Kitchin: This is the judgment of the Court in relation to the outstanding matters following our main judgment [2012] EWCA Civ 671. They are: i) the substantive form of order; ii) costs. We would say at the outset that we have had the benefit of further written submissions from the appellant, Mr Hall, and from counsel on behalf of the respondents, Mr and Mrs Harris and Mrs Moore, to which we have given careful consideration. The substantive form of order Counsel for the respondents have proposed an order which reflects our judgment. Specifically their draft order records that Mr Hall's appeal has been allowed to the extent of substituting the revised declarations set forth at paragraphs [40], [46] and [52] of our judgment for those made by His Honour Judge Pearce-Higgins QC in his order of 4 April 2011 as amended on 22 June 2011 and 2 March 2012. It also records that the cross-appeal by Mr and Mrs Harris has been dismissed. Mr Hall, on the other hand, has proposed an order which bears little or no relation to our judgment and, indeed, includes a series of orders and declarations in relation to matters which were not raised at the hearing of the appeal by Mr Hall or counsel then appearing on his behalf and in relation to which we have made no findings. We have no doubt that the appropriate order to make is that which is proposed by counsel for the respondents. This order accurately reflects the issues raised on the appeal and our findings in relation to them. It is now too late for Mr Hall to seek to re-argue points in relation to which we have expressed our conclusions and to take new points which were not the subject of the appeal and which were not developed before us either in writing or in oral submissions. Costs Counsel for the respondents invite us to order that the respondents should have all their costs of the appeal and the cross-appeal, and that the costs order made by the judge should stand. Mr Hall counters that each party should be responsible for his or her costs from January 2007, the date proceedings commenced. The general principles which must guide the court in exercising its discretion as to costs are set forth in CPR Rule 44.3. So far as relevant to this case, we particularly have in mind the following. The court has a discretion as to whether costs are payable by one party to another and the amount of those costs. If the court decides to make an order about costs the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party but the court may make a different order. In deciding what order to make about costs the court will have regard to all the circumstances, including the conduct of the parties and whether a party has succeeded on part of his case, even if he has not been wholly successful, and any offer to settle which is made. The orders that a court may make include an order that a party must pay a proportion of another party's costs or costs from or until a certain date only. Dealing first with the costs of the appeal and the cross-appeal, we believe the following matters are relevant. First, the respondents have largely succeeded, and in particular have succeeded on the main issue as to whether Mr Hall's right of common was exercisable every year or only one year in three. Second, during the course of the appeal the respondents conceded that Mr Hall may (a) bring vehicles onto Luckwards Hill if necessary to protect the welfare of his animals; (b) cut, remove or prevent noxious weeds subject to the terms set forth in paragraph [46] of our judgment; and (c) secure access to Luckwards Hill through gates B and C and across Luckwards Hill through a second gate on the boundary between the land owned by Mr and Mrs Harris and that owned by Mrs Moore in the manner set forth in paragraph [52] of our judgment. Third, the respondents made these concessions once the case against them had been properly articulated by counsel then acting for Mr Hall in his late skeleton argument and in his oral submissions. Fourth, the cross-appeal by Mr and Mrs Harris failed, although it must be noted this did not occupy very much time at the hearing of the appeal. In all these circumstances we believe that the respondents must be regarded as the overall winners of the appeal proceedings but that justice demands that a discount be applied to their costs to reflect the concessions which they made. We also believe it appropriate to apply a further modest discount to reflect the failure of the cross-appeal. We do not think that a separate order is appropriate in respect of the cross-appeal, given the small amount of time it occupied and the difficulty of separating the costs from the costs of the appeal. There is one further matter we would mention in relation to the costs of the appeal proceedings. The respondents were represented by leading and junior counsel. Mr Hall was represented by junior counsel appearing pro-bono. While we were immensely grateful to leading counsel for his clear and thorough submissions and his constructive approach in addressing Mr Hall's concerns and formulating the concessions to which we have referred, we do not believe that his appearance was necessary and we do not consider that Mr Hall should have to bear any of the costs of his appearance. Having regard to all these matters we believe a fair and proportionate result would be achieved by awarding to the respondents 75% of their overall costs of the appeal and cross-appeal, but excluding the costs of leading counsel. We turn then to the costs order made by the judge at the trial. He directed that Mr Hall must pay those costs. We have reached the conclusion that it is appropriate to leave his order undisturbed, essentially for the reason advanced by counsel for the respondents. The need for the concessions made by the respondents on the appeal was not properly developed by Mr Hall before the judge, notwithstanding there was a post-judgment hearing at which the form of order was discussed. We would ask counsel for the respondents to submit a revised draft order in the light of this judgment.

Order of the President of the General Court of 17 December 2009 – Vereniging Milieudefensie and Stichting Stop Luchtverontreiniging Utrecht v Commission (Case T-396/09 R) Interim measures – Obligation of the Member States to protect and improve ambient air quality – Exemption granted to a Member State – Commission’s refusal to review – Application for suspension of operation of a measure and interim measures – Inadmissibility 1. Application for interim measures – Suspension of operation of a measure – Conditions for granting – Interest of the applicant in obtaining the suspension – Negative administrative decision – Suspension not capable of changing the applicant’s position – Not included (Art. 278 TFEU; Rules of Procedure of the General Court, Art. 104(2)) (see paras 34-35) 2. Application for interim measures – Conditions for admissibility – Link of the measure sought to the pleadings in the main action – Provisional character (Arts 278 TFEU and 279 TFEU; Rules of Procedure of the General Court, Art. 104(2)) (see paras 36-39) 3. Application for interim measures – Interim measures – Measure incompatible with the distribution of powers between institutions – Application seeking to enjoin the Commission to apply a possible annulment judgment in the main action in a particular way – Inadmissibility (Arts 266 TFEU and 279 TFEU) (see paras 41-42) Re: APPLICATION (i) for suspension of operation of Decision C(2009) 6121 of 28 July 2009 declaring inadmissible the applicants’ request for review by the Commission of its Decision C(2009) 2560 final of 7 April 2009 granting the Kingdom of the Netherlands a temporary exemption from its obligations in combating ambient air pollution; and (ii) for interim measures requiring the Kingdom of the Netherlands to comply with those obligations at the earliest opportunity. Operative part 1. The application for interim measures is dismissed. 2. Costs are reserved.

Lord Justice Waller : On the 15th December 2005 we quashed the conviction of the appellant and these are our reasons for so doing. The quashing of this conviction is a further consequence of the gross misconduct during the 1980s by a number of police officers in the now-disbanded West Midlands Serious Crime Squad. A number of convictions have already been before the Court of Appeal and held unsafe. So far as material to this case there is attached to the grounds of appeal a summary relating to the conduct of officers concerned with the appellant identifying the cases where there conduct was called in question, and for convenience that summary is attached as an appendix to this judgment. This appellant was one of those indicted on a twenty-five count indictment referred to by Rose LJ, Vice President, in one of those cases R v Dunne [2001] EWCA Crim 169, an appeal dealing with four others named on that indictment. That indictment was severed. There were thus two trials before McCowan J (as he then was) in January, February and March of 1983. Count 12 on the original indictment related to a robbery of the Erdington Post Office. In the second trial it seems that count became count 5. That was the only count relating to the appellant and to that count he pleaded guilty before the first trial and was sentenced following the second trial to two years, with nine months consecutive for the breach of a suspended sentence. It is that plea of guilty which makes this appellant's position different from others and we will return to that below. Of his co-accused, his uncles Ronald and Donald Brown, were convicted following the first trial and received sentences of 18 years and 12 years respectively. Michael Dunne (his cousin), Patrick Gaughan, Derek Treadaway and Paul Landale were convicted following the second trial and received sentences of 15 years, 12 years (reduced on appeal to 10), 15 years and 12 years respectively. Morgan and Mackay, who had pleaded guilty and given evidence for the prosecution each received sentences of five years. Treadaway appealed but his appeal was dismissed. However he brought civil proceedings and in those proceedings McKinnon J found, at a trial in 1994, that he had been tortured by certain police officers. He also found that the police officers had lied on oath to him and that Treadaway had been cynically denied access to a solicitor. His case was referred back to the Court of Appeal and on the 18th November 1996, in the light of McKinnon J's findings, and in the light of the facts that Mackay's evidence had been tainted by virtue of his being handled by DI Brown and DC Price and that Morgan's evidence had been tainted by virtue of being handled by DS Hornby, the Court of Appeal quashed Treadaway's conviction in trial two. In the light of that decision and in the light of concessions made by the Crown, the Court of Appeal thereafter quashed the convictions of Ronald and Donald Brown in trial one and Michael Dunn and Patrick Gaughan in trial two. The concessions included that, in the light of the findings in the civil proceedings in Treadaway, and in the light of concessions that the Crown had already made in a further case in which the conviction of a man called Twitchall had been quashed "the credibility of the investigation as a whole was undermined". This appellant requested the Criminal Cases Review Commission to consider whether, despite his plea of guilty, his case should be referred to this Court. The thrust of his submission to the Commission was that despite his plea of guilty he was not in fact involved in the Erdington Post Office robbery. His case to the Commission was (1) that he had socialised with a DS Duggan (not a member of the Serious Crime Squad) and had provided information on Dunne and Morgan, linking them to the Erdington robbery; (2) that it was to his great surprise that he was arrested; (3) that he was denied a solicitor and was not allowed to see DS Duggan; (4) that he was told by the officers interviewing him, who were in the main DS Burns and DC Evans, that unless he signed a confession naming names the police would ensure that his uncle and his cousin would be told that he had grassed on them with regard to various robberies; (5) that he signed a statement refusing to name Dunne, but naming Treadaway, even though he did not actually know Treadaway; (6) that he knew if he pleaded not guilty that would make it worse for those named in his statement and in that respect it would make matters worse also for himself; and (7) that his only way of distancing himself was to plead guilty and hope for a lighter sentence. The Commission, in its statement of reasons, referred to certain authorities where the Court of Appeal had had to consider whether convictions should be set aside where there had been pleas of guilty. They referred to R v Forde [1923] 2KB 400 in which Avory J had identified limited circumstances in which the Court of Appeal would interfere. Those circumstances were (1) that the appellant had not appreciated the nature of the charge, or did not intend to admit that he was guilty of it, or (2) upon the admitted facts the appellant could not in law have been convicted of the offence charged. The Commission recognised that there were cases that now went further than Forde, and in particular referred to R v Togher [2001] 3 All ER 463 in which the Court had held that a prosecution might be vitiated by an abuse of process in which event the Court had recognised that a conviction may be quashed despite a plea of guilty. The Commission considered that the appellant's application raised issues as to whether his pleas had been secured by duress, such as to bring him within the first exception in Forde and as to whether there had been an abuse of process on the part of the prosecution, which the Court of Appeal might hold had vitiated the appellant's plea of guilty. The Commission was of the view that, both on the grounds of duress and abuse of process, there was a case for this Court to consider. On duress they put the matter this way:- "63. The Commission has considered whether Mr Brown's plea was secured by duress such as to bring him within the first exception in Forde. The Commission notes the following: 64. It is Mr Brown's account that if he did not sign the confession statement prepared by the police, his uncles and cousins would be told that he was the informant that led to their arrest for a series of armed robberies. 65. From the reports by Peter Crane and DS Owen and Mr Brown's own statements to the Commission, it is clear that Mr Brown was indeed an informant to DS Duggan and in all probability was the initial source to the threat said to have been made by the interviewing officers. Furthermore, the information now available about the activities of the officers involved in Operation Cat lends substantial force to the contention that those officers were determined to get confessions, if need be by the use of oppression, from suspects who were arrested on that day. 66. It is also evident that Mr Brown's cousin, Dunne, had a reputation for violence and that Mr Brown being a relative would have been well aware of this and thus that such threat, if made, would have resulted in genuine fear on his part. 67. Mr Brown's solicitor at trial, Mr Figg, confirms that Mr Brown was in a state of anguish as to what to do in relation to plea. This lends some force to the supposition that Mr Brown was still affected by the threat to expose him if he were to change his plea. 68. The Commission is of the view, therefore, that there is considerable evidence capable of supporting the conclusion that Mr Brown's confession and his subsequent plea were the result of duress." On abuse of process they considered certain authorities dealing with cases where there had been pleas of guilty, to which we will return below. They then put the matter this way:- "74. The following elements in relation to the conduct of the police in Mr Brown's case support an argument of abuse of process: The use of evidence from tainted super-grasses who were handled by corrupt officers. This evidence was used both in the interrogation of suspects and as a major part of the prosecution evidence in the trial of the defendants who pleaded not guilty. The arrest of the defendants followed by apparently concerted measures to ensure that the suspects' requests for the advice of their solicitors was not complied with. There is a substantial body of evidence that some or all of the defendants were prevented from seeing their solicitors by a variety of misrepresentations being made to their respective solicitors. It would seem a reasonable inference that this was agreed in advance by police officers concerned in the investigation. It would also seem unusual that a person undergoing interrogation on suspicion of serious offences, who asked for a solicitor to attend him, would decline the services of that solicitor when he attended the police station. The obtaining of confessions by whatever means from the various suspects. This evidence is capable of supporting the conclusion that these means ranged from extreme illegal violence to unlawful threats. The giving of perjured evidence by the officers at the subsequent trial. 75. The Commission considers that if this evidence is accepted or substantially accepted, it amounts to the proposition that the police were determined to establish evidence, if need be by the use of oppression and false testimony, against persons whom they believed to be guilty of these offences. If this is correct, the Commission considers that this would amount to an abuse of process in the bringing of the prosecutions against the defendants. 76. In relation to Mr Brown's case, the Commission has applied itself to the question in Togher, namely whether it would be "inconsistent with the due administration of justice to allow the pleas of guilty to stand". 77. The Commission considers that, if the court were to conclude that there had been an abuse of process, they would conclude that it is inconsistent with the administration of justice to treat Mr Brown as bound by his guilty plea. The effect of the abuse, if such is established, in Mr Brown's case would be to bring about an admission from which Mr Brown could not resile without risk of disclosure of his informant role and of violent retribution from his associates. Reverting to the judgment in Togher, the Commission does not consider this to be a case where "improprieties in connection with bringing proceedings can be satisfactorily dealt with by the court exercising its power of control over the proceedings. 78. The Commission also considers that the authority of R v Kelly and Connolly lends force to the proposition that if the convictions of Mr Brown's co-accused are regarded as unsafe, having been secured by irregularities in the conduct of the prosecution, this is a relevant consideration in considering whether Mr Brown is bound by the consequences of his guilty plea." They also assessed Mr Brown's exculpatory account as set out in the statements placed before them, and took the view that although they could not conclude whether they were true or not, they were "capable of belief" for the purposes of s.23 of the Criminal Appeal Act 1968. Mr Gordon Aspden put in grounds of appeal and a detailed skeleton argument. He set out in the skeleton the facts and the prosecution case in a way with which we did not understand Mr Sweeney QC for the Crown to disagree. The facts of count 5 concerned an armed robbery which occurred at approximately 11.30 am on Monday 26th November 1979. A security guard, employed by Security Express, was threatened with a sawn-off shotgun outside Erdington Post Office, Birmingham. He was forced to hand over a bag containing in excess of £15,000, together with a quantity of cheques. The prosecution case was that the offence involved six men: Langdale conceived the plan and acted as a lookout; Dunne (the appellant's cousin) helped steal a getaway vehicle. He provided the firearms, the walkie-talkie radio and the overalls that were used. Dunne was present as a lookout; Mackay and Treadaway, each of whom had a sawn-off shotgun and wore a "funny mask" confronted the security guard and stole the money; Morgan acted as a look-out. He also drove vehicles used in the offence, including a stolen van in which the get-away was made. It was alleged that the appellant's role was to act as a lookout. According to the accounts which Morgan and Mackay later gave to the police the appellant was given a walkie-talkie radio. He was familiar with its operation. The prosecution case, which depended on statements from Morgan and Mackay, was to the effect that the appellant parked his motor car on Erdington High Street opposite an alleyway leading to the rear of the post office. The motor car was maroon in colour and variously described as "a Mini" (in Morgan's first confession statement), then as "a Mini, a Wolsley Hornet or a Riley Elf" (in Morgan's witness statement) or "a Riley Elf" in Mackay's witness statement. There was furthermore evidence that, at the material time, the appellant owned a Wolsley Hornet. The Crown case was that, on the day of the robbery, the security van arrived unexpectedly early. The appellant did not therefore have the opportunity to use his walkie-talkie radio. It was thus Morgan who ran to the transit van and informed Mackay and Treadaway. The appellant, on Morgan and Mackay's evidence, drove off and the robbery was carried out as planned. The proceeds of the offence, according to Morgan, were divided up and the appellant and Langdale each received £500. In Mr Aspden's skeleton he describes how DS Duggan (as we have emphasised not a member of the Serious Crime Squad) cultivated the appellant as an informer. In a statement from DS Duggan, obtained in June 2004, he said that the information that the appellant gave on the Erdington robbery was in such detail that [the appellant] must have been present during the robbery. In a later statement DS Duggan retracted that assertion. He would go no further than saying the appellant must have been very close to those concerned to provide the detail that he did. The skeleton then described how, as is common ground, Morgan was arrested and turned informer; how he absconded but was then re-arrested and how in a statement made on his re-arrest he named the appellant as the look-out. It was in that statement that he said that the appellant was in a "Mini, Wolsley Hornet or Riley Elf". That witness statement was dated 6th January 1982. On the morning of 8th April 1982 the appellant was arrested. Mr Aspden accepted the short summary contained in Mr Sweeney QC's skeleton argument of what the police records showed. (1) At 5.30 am the appellant was arrested at his home in Erdington by DS Burns, DC Evans and others SCS officers. The appellant said his arrest for the Erdington robbery was a joke. (2) He was told that he was being taken to Chelmsley Wood police station and arrived there at 5.58 am. He was given forms as to his rights but did not request anyone be informed of his whereabouts. (3) From 6.15-7.00 he was interviewed by DS Burns and DC Evans. He said that his arrest was silly and he wanted to see DS Duggan. The officers told him that was not possible. He denied involvement. Morgan's statement was read to him. He admitted that Dunne was a relative and that he knew Morgan, Mackay, Treadaway and Langdale, but again denied involvement. (4) The same two officers (Burns and Evans) interviewed him again from 7.50-8.10 am. It was pointed out to him that he had insured a Wolsley Hornet at the material time. The appellant again denied involvement, saying in terms that the police would not have had Morgan if it had not been for the information the appellant had given to DS Duggan, who he asked again to see but was refused. (5) The same two officers saw him for a third time from 10.55-11.10 am. The appellant now said that he had been involved in a dummy run for the robbery about two weeks before it took place but had not been involved in the robbery itself and had not been paid £500. (6) At 12.55 pm Mr Neal of the solicitors Pentland and Co rang the police station about the appellant. (7) At 1.22 pm Mr Neal attended the police station and spoke with DCI Speake about the appellant. (8) At 1.35 pm DS Burns and DC Evans spoke with the appellant, who said that he did not want to see Mr Neal, but did want to see the officers' boss. (9) At 1.40 pm DC Evans spoke with Mr Neal and informed him that the appellant did not wish to see him. (10) At 2.15 pm DCI Speake and DI Cooke spoke with Donald Brown (who had been telling those interviewing him at the police station that DS Duggan had been involved in some of the robberies). Brown asserted that the appellant had told him that Duggan had been setting up jobs for him. (11) From 2.32-255 pm DCI Speake and DI Cooke spoke with the appellant, who accepted that he had been asking for Duggan. The appellant said that the allegation that Duggan was setting up armed robberies for him was untrue. He said that the others had got to know that he had been helping Duggan, and had made threats to him and his family. He suggested that they were now trying to set up the appellant to get their own back. He wanted to see Duggan because he had been giving Duggan information and Duggan would be able to help him. It was his information which had led to Morgan's initial arrest. He was told that he would not be able to see Duggan. He said that the only information he could give to the other officers was that he was present at the scene but did not know much of what was going to happen and got away quick when the van arrived. (12) From 3.20-4.00 pm DS Burns and DC Evans interviewed the appellant for a fourth time. The appellant said that he now wanted to tell the truth though he was not going to name Dunne. He said that he had been in the Hornet and that he should have had a radio to tell others that the van was coming. He said that he had seen the van coming in the distance and had panicked and driven off. He had not been paid £500. He made a short statement under caution to similar effect. (13) At 4.15 pm (on the instructions of DCI Speake) Mr Neal was rung by DC Evans and told that the appellant now wished to see him. At 5.15-5.50 the appellant was seen by his solicitor. The appellant's statement produced at this time was in the following terms:- "I, John Lewis Brown, wish to make a statement. I want someone to write down what I say. I have been told that I need not say anything unless I wish to do so and that whatever I say may be given in evidence. Just over two years ago I was approached to go on this job. The job was on a Security Express van in High St. Erdington. I can't remember what day it was. I was supposed to sit in my vehicle that Hornet we were talking about before, and I had to have a walkie talkie and when the van arrived I had to tell them, that was the only part I had to play. Then someone would have called later at my house and give me a drink. What actually happened was on the day of the job I met Morgan and another man who I think was named Treadaway in the High St. at Erdington near to where the job was to come off. They told me where to park my car to take the walkie talkie with me and then tell them by walkie talkie when the van arrived. I was very nervous and when I saw the van in the distance coming towards where the job was coming off I panicked and drove off. I never had any money out of it. I've never been involved in anything like this before and never will again. I'd like to say it was the same day that it was mentioned to me that the job actually happened. I'm very sorry for the part that I took and I felt that by driving away I would be redeeming the situation. It only came on me while I was in the car how serious it all was. I have read the above statement and I have been told that I can correct alter or add anything I wish. This statement is true. I have made it of my own free will." We pause to make certain points. First, Mr Sweeney QC accepts that the above record is false in certain respects. The appellant did wish to see a solicitor during the period prior to his making the confession, but access to a solicitor was denied to him. By the false record the police sought to conceal that fact. Second, the appellant's case is that he only made the confession he did because the police threatened to expose his position as an informer. It is conceded by Mr Sweeney on behalf of the Crown that the appellant's role as an informer would not be generally known to members of his family, (although it might have been "suspected") and that the conduct of the officers involved as demonstrated by the appendix to this judgment makes it more than possible that such threats were made. It is however right to recognise that the position was different by the time that the appellant entered his plea, because statements from Burns and Evans had been served in error in an unedited form on the co-defendants and those statements made clear that the appellant had told Burns and Evans that he was an informer and was seeking special treatment on that account. In the Autumn of 1982 Mackay, who was on remand, also agreed to act as a "super-grass". He also named the appellant as acting as lookout and identified the appellant as driving "a Riley Elf". Mr Aspden in his skeleton correctly accepted that the prosecution case against the appellant depended on (1) the evidence of Morgan and Mackay; (2) the appellant's confession statement and (3) his ownership of the maroon Wolsley Hornet motorcar. There is no contest that, if the appellant had not pleaded guilty and had been convicted by a jury, his conviction would have had to have been quashed. The evidence of Morgan and Mackay was tainted, as is accepted by Mr Sweeney QC. The appellant's confession was quite unreliable, having regard to the denial of access to a solicitor and the probability that Burns and Evans had misconducted themselves in the obtaining of that confession. Since the evidence relating to the maroon Wolsley Hornet could itself have come simply from Burns or Evans, that would have been too slender a piece of evidence on which to hold that the conviction was safe. However, the appellant pleaded guilty and the question is whether that makes any difference. There was a period during which Mr Sweeney, as demonstrated by his first provisional skeleton argument and thereafter in a second and revised provisional skeleton argument, maintained on what the Crown knew as at the date of preparation of those skeletons that the conviction should be upheld as safe in the light of the plea of guilty. Although no further material had since emerged, Mr Sweeney QC, having further reflected and considered the authorities, when it came to the hearing before us, said that he no longer believed it would be right for him to seek to uphold the conviction as safe. By an additional note, Mr Sweeney made clear that he did not seek to maintain certain points which previously he might have sought to do. We have referred to certain of these already, but to summarise them they are as follows: first, Mr Sweeney accepted there had been an improper denial of access to a solicitor; second, he accepted that when he signed at that stage the appellant could only be said to be suspected by others as an informer rather than be known to be such and third he accepted that DS Duggan had not been prepared to put in writing that he was of the view that the appellant was actually involved in the robbery. But these are not in reality the important aspects of the perfectly proper attitude ultimately taken by Mr Sweeney. He referred us to various decisions of the Court of Appeal, the most important of which was the decision in R v Bhatti (unreported) 19th September 2000, in which the Court of Appeal in a judgment given by Potter LJ, having reviewed the authorities, including R v Togher, quashed a conviction despite a plea of guilty. That was a case in which the expert's report relied on by the prosecution and on the basis of which the defendant in that case had pleaded guilty, had later been found to be unreliable. Potter LJ reasoned the matter in this way:- "35. On the basis of the plea the appellant, although being aware from his own expert's report of the possibility of advancing a defence on the basis of a mechanical defect in his steering, whether voluntarily or on advice, waived the advancement of such a defence, not least because of a feeling of moral responsibility. However, on waiver of the appellant's privilege we have examined the conference and attendance notes kept by his solicitors. We have also received clarification and confirmation by counsel for the Crown and the defence as to the course of their discussions preceding the plea of guilty, as well as on the day when the appellant was sentenced. As a result, we are satisfied that; 1. Had the Crown prior to the appellant's plea of guilty been aware of the deficiencies of PC Desmond's report the prosecution would not have proceeded. 2. Equally, and in any event, had the defence been aware that the report was not reliable, the appellant would not have entered a plea of guilty. 3. Had the deficiencies of the report emerged and had the Crown disclosed them at any stage prior to sentence, as we are satisfied would have been done had the truth been known, the appellant would have sought to vacate his plea of guilty. 4. The Crown would have supported the appellant in that application and, had it been successful, would have elected not to proceed. 5. If, contrary to what we are told would have happened, the Crown had proceeded, the defendant would have called his expert witness to attest the possibility of mechanical failure in which event it is possible, and indeed probable, that the jury would have acquitted the defendant. 36. In those circumstances, we are satisfied that the assumption of both the prosecution and the defence as to the reliability of PC Desmond's report as to the reasons for the accident and his dismissal of the suggestion of mechanical failure in the steering were fundamental to the plea of the appellant, and that the subsequent revelation of the worthlessness of that report and opinion fatally undermine that plea. 37. The power of this Court to set aside the verdict as "unsafe" following a plea of guilty has recently been the subject of consideration by this Court in the context of abuse of process in R v Togher & Ors CA 9th November 2000 in which the Lord Chief Justice, Lord Woolf, reviewed the competing strands of authority represented by R v Chalkley and Jeffries [1998] 2 Cr App R 79 and R v Mullen [ 1999] 2 Cr App R 143 as to whether or not the use of the word "unsafe" in section 2(1)(a) of the Criminal Appeal At 1968 was intended to re-enact or to alter the previous practice of this Court by requiring it to concentrate solely on whether or not a conviction was unsafe (in the ordinary sense of "might be wrong"), thereby circumscribing the power on appeal to quash a verdict on the grounds of procedural irregularity or abuse of process. That question arose in the context of the Court's consideration whether, where the issue before the Court concerned the fairness of the proceedings, a finding of lack of fairness according to the criteria of the European Court of Human Rights would necessarily involve a conclusion that the defendant's conviction was unsafe. 38. The court approved and adopted the broad approach which found favour in Mullen. Applying that approach in this case, it seems to us that the unwitting use by the prosecution of the fatally flawed report of PC Desmond, in circumstances where it was acknowledged to be the lynch-pin of the case against the appellant, although not amounting to an abuse of process, was a serious irregularity on which, in substance and in fact, the plea of the appellant was founded, and the subsequent very proper acknowledgment of the position by the Crown has rendered the conviction of the appellant unsafe." Mr Sweeney informed us that he felt bound to make the concessions recorded in his additional note made available to us on the day of the hearing, which included the concessions at paragraph 3.1 in the following terms:- "(1) The principal evidence relied upon by the prosecution against the appellant prior to his plea was that of Morgan, Mackay and the SCS offers DS Burns and DC Evans. (2) DCI Speake and DI Cooke also had dealings with the appellant on 8th April 1982. (3) In relation to DCI Speake, McKinnon J found as a fact that Treadaway had been cynically denied access to a solicitor. (4) The evidence of Morgan is now tainted by virtue of his being handled by the wholly discredited DS Hornby of the SCS, as per the judgment of the Court of Appeal in Treadaway, and in the light of the concessions made by the respondent in Dunne & Others. (5) The evidence of Mackay is now tainted by virtue of his being handled by the wholly discredited DI Brown and DC Price of the SCS – as per the judgment of the Court of Appeal in the light of the concessions made by the respondent in Dunne & Others. (6) In any event, there is considerable force in any submission that the findings in the civil proceedings in Treadaway, combined with the concessions made by the respondent in Twitchell and in Dunne & others and in Hagans and in Wilson mean that the credibility of the investigation as a whole is undermined." Mr Sweeney put the matter this way in paragraph 5 of his additional note:- "(1) Had the matters the subject of the concessions in paragraph 3.1 of the Revised provisional Skeleton Argument, and the liability of DS Burns to be cross-examined as to his role in Gordon [our note-see the appendix to this judgment] been known to the Prosecution before the Appellant's arraignment they would have been disclosed to the Appellant and all other defendants. (2) Had these matters been known at the time, the Prosecution would have offered no evidence. (3) Had these matters emerged in the aftermath of the Appellant's plea, the Prosecution would not have opposed any application to change plea, and would thereafter have offered no evidence. (4) If the Appellant had fought the case and been convicted absent disclosure of the matters now known, there would be no argument open to the Respondent to support the conviction." Mr Sweeney in a broad context submitted that there were matters which, if those prosecuting had been aware of them, should have been disclosed to all defendants in the trial or trials about to take place before McCowan J. If they had been, the prosecutions of all those who have now had their convictions quashed by the Court of Appeal prior to this appellant, would simply not have taken place, and it is unthinkable that any prosecution would have been continued against this appellant. Furthermore, even looking at the matter on a narrower basis by reference to this appellant alone, if what is now known had been known by those prosecuting, it is unthinkable that the case against the appellant would have continued or that the appellant would ever therefore have been placed in the position of considering whether to plead guilty. In the light of those concessions properly made by the Crown, it seemed to us that there exist in this case very exceptional circumstances where, despite the plea of guilty, this appellant's conviction should be quashed. It is for these reasons that we allowed the appellant's appeal and quashed his conviction. APPENDIX 1 TO THE GROUNDS OF APPEAL OF MR. J.L. BROWN Summary of Conduct of Officers Involved in Mr Brown' s Case The officers involved in Mr Brown's case were DS Burns, DC Humphreys, DC Evans, DCI Speake and DI Cook. The Commission has sought to establish whether any of these five officers have been discredited as a result of their conduct in other cases. 1. DS Burns R v Cheetham (30 July 1991) Mr Cheetham was convicted on an indictment of conspiracy to rob. The evidence of DS Burns was challenged due to his involvement in the final interview of Mr Cheetham. In this case, criticism was made of the way in which the interview of Mr Cheetham reads. Mr Cheetham's admissions to the police were scientifically discredited. Although no findings were made against DS Burns, the unreliability of the evidence of other officers involved, was an overwhelming reason for quashing Mr Cheetham's conviction. In his judgment, 'Lord Lane CJ stated: "The only corroboration provided was that of police evidence. Therefore, the reliability of that police evidence is fundamental to the whole appeal. If it is judged not to be reliable, then the conviction, it follows almost inevitably, will be deemed unsafe and unsatisfactory." The conviction of Mr Cheetham was therefore quashed on 30 July 1991. R v Smith & Williams (20 January 1994) The appellants were convicted of robbery and conspiracy to rob. Their convictions were based on the evidence of their alleged confessions and signed statements. Subsequently, the officers involved were discredited in later cases where confessions were found to have been fabricated. DS Burns was one of three officers responsible for interviewing Mr Williams. In quashing Mr William's conviction on 20 January 1994 the Court of Appeal stated: "In considering these cases we have borne in mind that we are not trying the six police officers to whom we have referred and therefore they have not had the opportunity of answering the accusations made against them. We are not, however, concerned with the question whether any case can be made out against them, but rather with the question whether the requisite confidence can be placed in convictions dependent on confessions said by them to have been made by the appellants for which there is no corroboration . . . . Meanwhile this court deeply regrets that these two appellants were convicted on account of the evidence of police officers whose conduct has only been discredited in the later cases to which we have referred. In the particular circumstances of this case, we have come unhesitatingly to the conclusion that the convictions of these appellants, based as they were on the evidence given by these six police officers, were palpably unsafe." R v Gordon (January 1986) DS Burns along with DS James took what was described by the Court of Appeal as "a full, detailed and graphic confession of murder" from Gordon. That confession was subsequently shown to be false when another man, Mr Gayle, confessed independently to officers from another squad that he was responsible for the murder and, by the time of Mr Gayle's trial, prosecuting counsel described Mr Gordon's alibi as "watertight". The prosecution offered no evidence against Mr Gordon. In response to the Commission's enquiries, West Midlands Police (WMP) inform the Commission that DS Burns has never been the subject of any formal discipline proceedings. He is said to have retired from the WMP on 20 July 1997. 2. DC Evans R v Twitchell (26 October 1999) Mr Twitchell was convicted of manslaughter and robbery. DC Evans and DS Brown had interviewed Mr Twitchell the day after his arrest when Mr Twitchell signed further statements created by the officers admitting to the offences in question and a separate offence of robbery. Mr Twitchell's conviction was quashed on 26 October 1999 in light of the findings against the officers in the case of Treadaway. R v Francis (27 April 1994) Mr Francis was convicted of an offence of robbery. It was alleged that. DC Evans had falsified interview records and as a consequence, gave perjured evidence in relation to this. This interview evidence was subsequently discredited by means of expert evidence and thus could not be relied upon by the Crown. As a result, Mr Francis' conviction was quashed by the Court of Appeal on 27 April 1994. R v Gordon (January 1996) DC Evans was involved in this case (detailed above) along with DS Burns in which confessions were shown to be fabricated by the police against the appellant when an independent confession was made by another man to officers at another police station. Subsequently, when the matter came to court in January 1986, no evidence was offered against Mr Gordon. R v Smith (20 January 1994) DC Evans was one of the officers involved in the Smith case (detailed above) along with DS Burns, in which the Court of Appeal concluded that the conviction of Smith, based on the evidence of the police officers involved, was "palpably unsafe". WMP confirm that DC Evans has never been the subject of any formal discipline proceedings and retired on 9 April 2000. 3. DI Cook R v Treadaway (18 November 1996) Dr Cook was present with DS Hornby when Morgan (Mr Brown's co- accused) made his long statements. The evidence of Morgan was clearly tainted in the Court of Appeal's view because of the close contact between him and the officers "'who can no longer be regarded as credible". In response to the Commission' s enquiries, WMP confirm that DI Cook has never been the subject of any formal discipline proceedings. 4. DCI Speake Treadaway (18 November 1996) In the Treadaway case (detailed above) it was alleged that DCI Speake denied Mr Treadaway access to a solicitor and that DCI Speake took a statement from Morgan and gave evidence in his favour when being sentenced. The Court of Appeal was of the view that Morgan's evidence was also clearly tainted due to his involvement with the various officers and thus concluded that the evidence of these officers could not be relied upon. In response to the Commission's enquiries, WMP confirm that DCI Speake has never been the subject of any formal discipline proceedings and retired on 10 January 1988. 5. DC Humphreys In relation to the Commission' s enquiries regarding DC Humphreys, WMP confirm that he has never been the subject of any formal discipline proceedings. -------------------------------------------------- LORD JUSTICE WALLER: On 15th December 2005 we quashed the conviction of the appellant and we are handing down the reasons for so doing. (The clerk raised the question of publication restrictions) LORD JUSTICE WALLER: The position on publication is that he was at one stage quite anxious about publicity, was he not? I am afraid I do not remember what order we made during the appeal. Was there any restriction? MR ASPDEN: My Lord, I am afraid I do not know. I have not spoken to your learned clerk. THE CLERK OF THE COURT: Nothing has been marked on the file, my Lord. It would have been if an order had been made. LORD JUSTICE WALLER: So we made no reporting restrictions at that stage? THE CLERK OF THE COURT: Not from anything that is recorded I can see. LORD JUSTICE WALLER: It was listed as "B", was it not? That was in case anybody wanted to make an application, but it did not happen. We are confident it did not happen. THE CLERK OF THE COURT: Yes. LORD JUSTICE WALLER: Thank you.

JUDGMENT (1) Re. Displacement of Presumption in Article 3(1) MR. JUSTICE LINDSAY : I have before me an application by Dollar Land (Manhattan) Ltd. to restrain advertisement and any further steps being taken by Abdul Ghani El-Ajou, who has petitioned for the winding up of Dollar Land. Anyone familiar with the law reports over the last quarter of a century will have seen both the names of El-Ajou and Dollar Land quite frequently in those reports. There has been a great deal of litigation, and the most recent case came to trial before Mr. Warren, Q.C. as he then was (now Mr. Justice Warren), and he gave Judgment in Mr. El-Ajou's favour. Specific directions were given as to the ability of Dollar Land to appeal in the circumstance that what was required of Dollar Land was payment into court of sums of principal and interest. As I understand the case, the principal money required to be paid in according to that Judgment has been paid, but the interest, which is very substantial, has not. Mr. El-Ajou accordingly has petitioned for the winding-up of Dollar Land for failure to pay that interest. There are two principal questions which arise, but I am only at this stage dealing with one of them, which emerged rather late in the consideration of the case by the parties and was raised by Mr. Levy on behalf of Dollar Land urging that under Council Regulation 1346/2000/EC/Article 3, which is headed 'International Jurisdiction', there was in fact no jurisdiction to wind up Dollar Land in the United Kingdom, or, more specifically, in England and Wales. If that is well-founded, then it must be right to prohibit Mr. El-Ajou going further with advertisements and so on. There is no point in advertising a petition which is doomed to fail. This has been dealt with as a preliminary point. I need to look therefore at Article 3, which says this: "The Courts of the member state within the territory of which the centre of a debtor's main interest is situated shall have jurisdiction to open insolvency proceedings. In the case of a company or legal person, the place of the registered office shall be presumed to be the centre of its main interest in the absence of proof to the contrary." It transpires that Dollar Land has a curious history as to its registered office. It began life as incorporated in England and Wales. In April 1999 it adopted a Memorandum and Articles, exporting its registered office to Brussels, Belgium. But, in October 2004 it adopted further provisions which brought its registered office back into this country - I think, in fact, to Wembley. Miss Harman, for Mr. El-Ajou, has the benefit of the presumption which I have just read in para. 1 of Article 3. But, it is accepted by both her and Mr. Levy, for Dollar Land, that the presumption is rebuttable. What, then, is needed to rebut it, and has it been rebutted? That reference to the 'centre of a debtor's main interest' (its "COMI") is amplified a little, but importantly, in the preamble no. 13 to the Council Regulation on Insolvency Procedures, which says this: "The centre of main interest should correspond to the place where the debtor conducts the administration of his interests on a regular basis, and is therefore ascertainable by third parties". I think those last words - '-- and is therefore ascertainable by third parties - are of great importance. It is of the essence that there is a recognised need of third parties to be able to ascertain the centre of main interest (and hence where relief may properly be sought) tolerably readily and even without, perhaps, the co-operation of the debtor concerned. What then is relied upon to displace the presumption? Mr. William Stern has put in a witness statement. He is a consultant to the company. He is well remunerated as consultant. It is proper that he should be a consultant and no more because he is serving a disqualification as a director that began in 2000 and runs to 2012. But as such consultant - and it later transpires he is a person authorised to depose in this application on behalf of Dollar Land - he says a number of things. At para. 14 of his witness statement he refers to 'the migration in March 1999 to Belgium'. Quite remarkably, he fails to mention the re-migration in October 2004 which I have mentioned. He then goes on, "All of the Applicant's directors are Belgian or French". That seems not to be so - one is Swiss and one is a Netherlands Antilles company. Then he says, "The board meets in Brussels". Well, where a board actually meets is not, it seems to me, a matter to be given very much weight in ascertaining where the COMI is. In particular, it is not the sort of thing that a third party would readily be able to ascertain. He continues, "Its meetings are conducted in French". Well, it may be that the minutes of meetings are sometimes in French. Even then, it may be that a parallel text in English is used. But how the meetings themselves are conducted, and in what language, is not amplified beyond that simple assertion. Its accounts, he says, are expressed in euros. But, that, it seems to me, is not an indication of the company having no COMI in the United Kingdom. All its business is in Belgium, it is said. Well, true it is that it once owned a large property - a block of property - in Belgium, but that was sold. Its main activity since the sale would seem to have been negotiations with the Atenor - another company - and litigation, chiefly in England (or perhaps exclusively in England) in relation to dealing with the proceeds. I am not all convinced that it has any independent business, or that that independent business is in Belgium. "In distinction to this", continues Mr. Stern, "the Applicant has had no directors resident in the United Kingdom since 1999". Well, so be it. But, it has had a consultant here, and a well-remunerated consultant here. Indeed, its own writing paper indicates that response (at any rate in that case) was to be made to Mr. William Stern's address in London. "It has a bank account in Belgium", continues Mr. Stern. But, that is not the sort of thing that a third party would necessarily know, or even be able to ascertain. I come back to emphasising those words: "-- and is therefore ascertainable by third parties". It says it has no office other than its registered office in England and Wales. Well, that might be so, but I am not convinced either that it has what one might call a working office anywhere else. It says it conducts no business in England and Wales. But, in a sense, its litigation has been an extremely important aspect of its existence over the last few years, and that was in England. It is said that it has no assets within the jurisdiction. That may be true. It has a chose in action. Where that is situate, I am far from sure. But, merely that it has no assets within the jurisdiction does not really point greatly to where its COMI is. It has no employees in England, it is said. But I come back to the fact that it has an important consultant to it, remunerated at some £50,000 per year, in this country. The fact that he is not an employee seems not necessarily to be of any great importance if he is at all events a consultant. Emphasising the last words "-- and is therefore ascertainable by third parties" I do not find that there is sufficient evidence to displace the presumption in Article 3(1). Hence, as it seems to me, there is jurisdiction so far as concerns Article 3(1) .

The appellant, Mahavir Prasad, who stands companyvicted under Section 302 I.P.C. and sentenced to undergo life imprisonment has preferred this criminal appeal challenging the companyrectness of the judgment made in Criminal Appeal No. 801 of 1971 on the file of the Rajasthan High Court at Jaipur Bench. The deceased, Prem Bai, was married to one Durga Prasad who was arrayed as an accused along with the appellant, but acquitted by the Trial Court itself. It seems that there was some misunderstanding between the deceased and her husband, Durga Prasad, as the latter had entertained some suspicion about the character of the deceased. In companynection with the marriage of the brother of the deceased, the deceased had gone to her parents house at Nawalgarh in May, 1970. Some letters were exchanged between Durga Prasad and Ram Gopal, the brother of the deceased. In one of the letters dated 10-6-70, Durga Prasad even went to the extent of suggesting Ram Gopal to put an end to her life in order to save the honour of the family. Subsequently he ex-pressed regrets and offered reconciliation. Then he wrote a letter to Ram Gopal that he would be sending Shankar Lal his brother to bring the deceased back. However, instead of Shankar Lal, the appellant who is the younger brother of Durga Prasad was sent to Nawalgarh to bring the deceased back to the house of Durga Prasad. The appellant reached Nawalgarh on 2-10-1970 and left the village with the deceased on 4-10-1970 but the deceased did number reach the village. On 14-10-70, Ram Gopal received a letter purports to have been written by one Mali Ram stating that Prem Bai had developed some pain in the abdomen during the companyrse of her train journey and that on her way to Jaipur for treatment she met her death and had been cremated at Jaipur. Ram Gopal went to Bharu-ki-Dhani and asked the appellant about the companytents of the letter but the appellant pleaded ignorance. Not being satisfied with the version given by the appellant, Ram Gopal submitted a companyplaint before the Superintendent of Police on 16-10-70 which report was endorsed to the Station House Officer, Neem-ka-Thana for taking appropriate proceedings. On the companyplaint of Ram Gopal, the law was set on motion. According to the prosecution, the dead body of Prem Bai had been recovered from a well situated near Sarson Wali Dhani on 5-10- 70 and the body was number identified by anyone. An inquest was held on the dead body and thereafter the body had been disposed of. After companypletion of the investigation, the chargesheet was laid against the appellant and two others, namely, Durga Prasad and Ram Narain. The Trial Court discharged Ram Narain and acquitted Durga Prasad. Nonethe-less the appellant was companyvicted and sentenced as aforementioned which companyviction has been companyfirmed by the High Court. Hence this appeal. Admittedly, there is numberdirect evidence to companynect that appellant with the crime in question. The prosecution rests its case only on circumstantial evidence to prove its case, they being 1 Durga Prasad wrote the letters exh. P-16 17 to the brother of the deceased Ram Gopal 2 the appellant left the village Newalgarh in 4-10-70 in the companypany of the deceased and 3 the appellant alone returned to the Village Bharu-ki-Dhani. Even assum ing these circumstances create some suspicion against the appellant, they cannot take the place of evidence and establish the charge of murder. According to the medical evidence, the probable cause of death was asphyxia due to drowning. The appellant companyes with an explanation stating that the deceased left his companypany with a broken heart while both of them were at the Railway Station that he did number know as to what had happened afterwards that he stayed overnight in a Dharamshala and then returned back and informed his brother and that, thereafter, companying to know that a dead body was in the hospital, he went there and saw the dead body of the deceased, but after having become panicky returned to the village. Whether this explanation is totally acceptable or number, it cannot be companypletely ruled out from companysideration.

MR JUSTICE SAUNDERS: This is an application under CPR 5.4 (2) by the BBC for copies of documents in the court file of an application by Mr Taranissi for permission to seek judicial review of a decision by the Human Fertilisation and Embryology Authority. In that judicial review permission hearing, permission had been initially refused on paper but was granted after a fully contested permission hearing before Mr Justice Mitting. Subsequently, it appears that that action was compromised by the parties. The BBC were not a party to that action but they are the defendants to a libel action brought by Mr Taranissi arising out of a Panorama programme which purported to investigate the activities of Mr Taranissi. In that libel action the BBC have pleaded justification. There are a number of part heard applications going on in front of Mr Justice Eady in relation to the libel action including, I believe, applications for discovery. The BBC make this application as a non party under CPR5.42. The BBC believe, it seems to me for good reason, that it is likely that the court file of the judicial review proceedings contains documents relevant to the issue of justification in the libel action. Notice of this application has been served on both Mr Taranissi and the Human Fertilisation and Embryology Authority as being the parties to the original judicial review hearing. The Human Fertilisation and Embryology Authority do not oppose the application on the basis of undertakings being given by the BBC which they have already indicated they are prepared to give. Mr Taranissi, while indicating through his solicitor in correspondence an intention to oppose the application, has not attended. His solicitor originally asked the BBC to adjourn the case so that counsel who had been involved in the judicial review proceedings could attend this hearing. The BBC were prepared to accommodate a short delay but not one of the length which had been necessary to assure her attendance. No application to adjourn has been made to the court on that basis by Mr Taranissi and he has not pursued his opposition at this hearing. There was a suggestion made at one stage by Mr Taranissi's solicitor that this application should also be heard by Mr Justice Eady along with the application for the libel action. Whilst superficially attractive, as Mr Justice Eady has a much better knowledge of the issues in the libel action than I, that suggestion has not been pursued before me by Mr Taranissi; and indeed the issues are not the same as to whether to order disclosure in a libel action as to whether to allow inspection of the court file on an application under 5.4C2. There seems therefore no valid reason why I should put off or adjourn to Mr Justice Eady consideration of this application. In their application, the BBC have identified the general class of document that they wish to see. I am satisfied that this is not an exercise to look through the whole of the court file to see if there is anything in it which might possibly assist which could probably be described as a fishing expedition. The reason for the application is not directly concerned with obtaining publication in the public interest or in pursuit of the principle of open justice; it is clearly to assist the BBC in their libel action. Indirectly it is concerned with the public interest because that public interest is the basis of the plea of justification in the libel action. In any event, I am satisfied on the authorities to which I have been referred that an application for disclosure for the purposes of collateral litigation does not mean in any sense that the order cannot be made. These documents were all put before Mr Justice Mitting in a public hearing. They were all documents which were at least referred to during the course of that hearing although, of course, it cannot be said that the judge had read them from start to finish; but they were put before the judge as being relevant matters to put before him for the purpose of making his decision. This was, of course, an application for permission for judicial review made in open court to which the public are perfectly entitled to have access so as to understand why the order was made as it was. As the application to Mr Justice Mitting was an application for permission, the judgment is short and does not refer in terms to many or any of the documents which are referred to in this application, but nevertheless they were matters which he would have considered directly or indirectly in the course of reaching his decision. If the file contains details relevant to the issue which are likely to be contested in the libel action, and it seems likely to me that they will contain details which are relevant to those issues, then it seems to me to be clearly in the interests of justice that both parties to the libel action should have access to them; of course, Mr Taranissi will have had access to them already. Accordingly, I grant the application and make the order as asked. MR BARCA: I am very grateful. Would it assist the court if we draw up a minute of the order? MR JUSTICE SAUNDERS: It would assist me inordinately. MR BARCA: My Lord, I am grateful. We will get the details perhaps from your associate and arrange it. Is your Lordship emailed in that regard? MR JUSTICE SAUNDERS: Absolutely, yes. Do you have my email address? MR BARCA: I am conscious of the time. There is just one matter arising, it is more a matter of mechanics and it is often tidal country that barristers and judges are not aware of what goes on in the offices. MR JUSTICE SAUNDERS: We just make the orders. MR BARCA: We just make the orders, but actually there should be no doubt as to when one tries to put the order into effect so that the Administrative Court listing office has the mechanisms in place to allow the court file to be retrieved, and documents produced from it, in accordance with the order. MR JUSTICE SAUNDERS: If you have any difficulty, I hope and I assume that you will not have, except that they are swamped with work, but apart from that, if you do have any difficulty then when you have the email, pass it on to me and I will try and sort it out. MR BARCA: What I was going to suggest is having a rider to the order saying that permission to apply to your Lordship in writing for guidance in the event of difficulties. MR JUSTICE SAUNDERS: Certainly, include that in the order. MR BARCA: I am very grateful. MR JUSTICE SAUNDERS: Thank you very much for your help.

MR JUSTICE OUSELEY : Bideford Town Council is a Parish Council in Devon, a local council under the Local Government Act 1972. Public prayers are said at full meetings of the Council, which are held in public and monthly, and on two other annual special occasions, but not at committee meetings or extraordinary meetings. They are thought by some to have been said at the Town Council's meetings since the era of Queen Elizabeth the First. Minutes first record prayers at Council meetings in 1941. Prayers are not recorded in the minutes in the 1970s; but they are recorded again in 1988, and have continued to be said at the full Council meetings ever since. There are a number of other Councils in Devon and probably elsewhere which hold prayers at the start of their Council meetings. This practice is challenged by the National Secular Society, which campaigns for the separation of religion from public and civil life. It decided to take up the case following complaints by the second Claimant, Mr Bone, a Liberal Democrat former Bideford Town councillor, whose motions to stop prayers being said were rejected by the majority of councillors on two occasions. He had to be joined as a Claimant in order for Human Rights Act arguments to be mounted, since the National Secular Society could not be a "victim" for the purposes of the Human Rights Act, whereas he could. The challenge claims that the practice breached the prohibition on religious discrimination in the Equality Act 2006, and the replacement "public sector equality duty" in the Equality Act 2010: it discriminated indirectly against persons, such as Mr Bone, who had no religious beliefs, and it was not justifiable under those Acts. The practice interfered with Mr Bone's right not to hold religious beliefs under Article 9 ECHR, and not to be discriminated against for that lack of belief under Article 14. It was also outside the powers of s111 Local Government Act 1972. The Council said that no councillor was made to attend that part of the meeting; they could choose to stay and not participate; there was no discrimination or none of any substance, and it was justified as providing a fitting start to the Council's deliberations, one to which the members had democratically agreed. No statutory authority was required, but if it were, the language of s111 LGA 1972 was amply wide enough to cover it. The facts The Town Council has 16 members for the four wards of the 16000 population of Bideford. They are summoned to the full meetings of the Council by letter from the Town Clerk. The same modestly formal style is used routinely: "You are hereby summoned to attend a meeting of Bideford Town Council to be held in the Council Chamber…for the purpose of transacting the following business." The letter then sets out the agenda. The first item is "Prayers by [a local named clergyman]". The second item is the taking of apologies for absence, deliberately second, so that those who do not wish to attend prayers are not marked as absent. These are meetings which the public are entitled to attend by the Public Bodies (Admissions to Meetings) Act 1960, as the letter of summons says. The minutes of the meetings commence with the list of those present; the first item minuted is "Prayers", followed by apologies for absence. The Council's Standing Orders, made under Schedule 12 paragraph 42 of the Local Government Act 1972 for the regulation of its proceedings, make no specific reference to prayers in the order of business. One of the items is "Other business specified in the agenda issued with the summons to attend the meeting." Mr McLauchlan, the Town Clerk, describes what happens in his witness statement. I quote: "A full Council meeting starts with everyone being asked to stand whilst the Mayor enters the Chamber. Once the Mayor is in his place he will ask everyone to sit. The offering of prayer is at the invitation of the Mayor after he has formally opened the meetings. The mayor will then introduce the invited Minister and he/she will then proceed to offer prayers. Councillors and members of the public are not expected to participate in prayer and are free to leave the Council Chamber during the saying of prayers. During prayers Councillors are seated. The prayer offered is a prayer led by a Christian Minister from one of the local churches. In all there are about 8 Christian churches in Bideford and each have, at one time or another, been invited to say prayers. The prayer time normally takes about 2-3 minutes. After the prayers have been said and the person leading the prayers has left the Chamber, apologies are taken. For those who do not wish to stay in the Chamber during prayers they are able to come back into the Chamber during the time prayers have finished and apologies are taken." The invited ministers come from all the local denominations; Quakers have also been invited for reflection. Mr Bone said that there was usually a short homily, followed by a prayer for the Council and its deliberations, sometimes ending with the Lord's Prayer, in which those present were asked to join. All prayers ended "Amen". No attempt was made to make it clear that Councillors who did not wish to participate could withdraw. There had been no objection to the practice until Mr Bone was elected in 2007. He made no complaint for 9 months, and then in January 2008 he proposed a motion that prayers cease: it was a tradition no longer appropriate, which could deter some from seeking office, contrary to equality policies. His motion was defeated by 9 votes to 6, with 1 abstention. He withdrew a similar motion in March 2008, but in September 2008 put forward another motion which would have replaced prayers with "a short period of silence". This was defeated by 10 votes to 5. A campaign by humanists and the National Secular Society then ensued. This litigation is part of that campaign. Mr McLauchlan explained why the Council had adopted and continued this practice: "I believe that the saying of prayers is a valuable part of any full Council meeting. For some it is to seek guidance and help on the matters on the agenda to be discussed. For others it is a time of quiet reflection and contemplation. It enables all of us to focus on the matters at hand and that we are there to serve the local community as best we can. It is a privilege and responsibility to be an elected member and it is good to remember that we are not there to serve our own interests but the interests of the people of Bideford." He could see no advantage or disadvantage to any Council member or member of the public from the practice. It was part of the traditional role which Christian churches played on many occasions in the country's public life. He saw this litigation as part of a wider threat to the participation of the Christian churches in other ceremonial and public memorial occasions. Mr Bone is not a Christian, and does not wish to participate in or even to be thought to be associated with acts of religious observance. He regards "the introduction of religious observances into civic life" as "inappropriate and needless; it discriminates against those holding different beliefs, or no beliefs at all, and causes upset, embarrassment, distress and inconvenience." Even if Councillors were told "politely" that they could withdraw, "it would still be unacceptable because they ask for divine guidance and affirm Christian belief." He thought that the seeking of such guidance could undermine confidence in the Council, and that there was some emphasis on being a Christian which excluded others. There was no evidence that the saying of prayers had advanced decision-making or a sense of community among members or the wider Bideford public. He felt that he either had to participate in the prayers, or to leave the chamber immediately after the Mayor entered, which he would find "embarrassing and inconvenient…especially so because the press and public attend most meetings." So he remained, feeling "embarrassed and awkward." He did not wish to arrive late. He felt excluded from the role of Mayor, since the Mayor is expected to participate in an annual civic service. He is aware of Bideford people who would wish to stand for election as councillors but do not do so because of this practice of holding prayers. He decided not to stand again because of this practice. The nature of the issue I think it important that the narrow scope of the issue before me be explained. The issue is solely about whether prayers can be said as a part of the formal business transacted by the Council at a meeting to which all Councillors are summoned. It is quite wrong for the Defendant to suggest that the Claimants would be introducing a bar on acts of worship before the meeting, thus hindering the exercise by Councillors who wished to pray of their right to do so. The Claimants object to the fact that the saying of prayers is a part of the Council's business, to which all Councillors are summoned. It is on the agenda of business to be transacted, and its transaction is minuted. The Claimants do not object to Councillors saying prayers together, led by a cleric, just before the Council meetings begin, but Councillors would not be formally summoned to that gathering. They accept that these gatherings could be held in public, on Council premises, even in the Council Chamber, as part of the Council's dealing with its property. Mr Wolfe accepted that the Council meetings could be adjourned for the purpose of holding such a gathering, but it would not take place as part of the Council's business. The Claimants had no objection either to some short period of quiet contemplation or reflection as part of the Council meeting, in which members would prepare themselves in their own ways for the public duty ahead; those who wished to do so could pray silently, and, it follows to my mind, could use the same prayers as each other in silent communion. The Claimants' objection was to the fact that there was a religious component to the formal Council business. They regarded what they suggested as a modest degree of change, which did not detract from the individual Councillor's freedom of religion. But to the Council, an important aspect of the tradition was that prayers were indeed said as part of the meeting, and not in some gathering beforehand. This small element of Christian observance, at the outset, put Councillors in mind of their public duties, reflecting the way in which Christianity and Judaeo-Christian values permeate our society, and the role of the established Church as part of the fabric of national life. Besides, those who did not wish to participate were free not to do so, either by leaving or by sitting silently through prayers. They would not be marked as absent, if they left, since attendance was not taken until after prayers. Although it is possible that there is an element of the tactical concession in the stance taken by the Claimants, which might be rejected in another case, I do think that if the Claimants are right in their arguments here, they are also right that the practices which they have accepted could replace those stopped would be lawful. The Defendant saw success for the Claimants as threatening a range of other occasions, traditional, ceremonial, military or civic, national or local, in which a religious element, usually through the Christian Church, plays its part; and there are elements in what the Claimants have said at various times which suggest distaste for, and a campaign against, such a role. But I am not concerned with those circumstances. Nothing before me persuaded me that if the Claimants were right in their arguments here, they would inevitably succeed in any other particular aspectsof their campaign, so that I should reach a conclusion other than the one to which I have come. As the prayers at Bideford Town Council were always Christian, or occasionally Quaker led, the same arguments would apply to the effect on persons of other religious beliefs as well as those who had no beliefs. Indeed, the same arguments would apply were the prayers of another religion to be said at the meetings of other Councils to the discomfort of Christians, members of other religions, or of those who had no religious beliefs at all. The Local Government Act 1972 and vires The duties of Parish councillors and the way in which a Parish Council must conduct its business are laid down in the Local Government Act 1972. S99 and Schedule 12 Part II govern the meetings. There have to be at least 4 meetings a year. One third of the membership represents a quorum. Issues are decided by simple majority vote. The names of those present have to be recorded and minutes have to be kept. Paragraph 10(2) requires notice to be given of the meeting, a summons to attend has to be sent to the members by the proper officer, and it must specify "the business proposed to be transacted". The Schedule is silent about prayers. S85 contains the duty to attend meetings of the authority, failing which, after a period, the absentee ceases to be a member. S111 (1) of the LGA 1972, which applies to Parish Councils, provides: "(1) Without prejudice to any powers exercisable apart from this section but subject to the provisions of this Act and any other enactment passed before or after this Act, a local authority shall have power to do any thing which is calculated to facilitate, or is conducive or incidental to, the discharge of any of their functions." Although this argument was put third and very shortly in the order of submissions by Mr Wolfe, I regard it as the logical and crucial starting point. It is clear that the saying of prayers takes place, and is intended to take place, as part of the formal business of the Council: the letter of summons makes that clear, as do the agenda and the minutes. Prayers take place after the meeting is formally opened. There are penalties associated with regular non-attendance at meetings, which show that attendance at Council meetings is part of the duties of a Councillor. Attendance at meetings is necessary for a Council to discharge its business as a local democracy, and is one task which the electorate would normally expect of its Councillors. I do not regard the point at which apologies for absence are taken as of significance: absence may not be noted, but it remains absence from the formal meeting. The Council accepts that the formal meeting has begun before apologies are taken. There is no specific statutory power to say prayers or to have any period of quiet reflection as part of the business of the Council. I do not accept Mr Dingemans' suggestion that saying prayers is an act of such a nature that it does not require statutory authority, even by reference to s111 of the 1972 Act. That provision is, as his later note showed, the basis for all the implied powers which a Council might wish to exercise; the word "functions" in s111 "embraces all the duties and powers of a local authority; the sum total of the activities Parliament has entrusted to it. Those activities are its functions." See Lord Templeman in Hazell v Hammersmith and Fulham LBC [1992] 2 AC 1 at p29F. S111 is the statutory expression of the powers implied by common law for corporations. Even if an act could fall into a category outside s111 but for which no statutory authority was required at all, saying prayers would not be one of them: it can be controversial, the importance attached by the Council to saying prayers as part of the meeting means that it cannot be treated as a trivial matter. The Council has on two occasions by a majority voted to retain public prayers at its full meetings. But that does not give it power to do what it has no power to do. S111 requires the prior identification of the function to which the acts in issue are incidental. The purpose of the meetings is to transact the business of the Council, which business is made up of the various express and implied functions, duties and powers, which it possesses. The question therefore is whether saying prayers "is calculated to facilitate, or is conducive or incidental to the discharge of any of their functions." Although there is scope for a wide interpretation to be given to those words, the courts have set their face against an interpretation which would cover the incidental to the incidental, see for example R v Richmond LBC ex p McCarthy & Stone (Developments) Ltd [1992] 2 AC 48. The language also requires an objective standard or test: it is not a question of whether the Council reasonably considers that a particular act would facilitate or be conducive to or incidental to the discharge of its functions. "Calculated" does not mean "thought likely by the Councillors", but requires an objective judgment of what is likely to facilitate the discharge of functions. That said, I would accept that the reasoned view of elected Councillors in that respect would often be very persuasive. I do not doubt that the Councillors who voted for the continued saying of public prayers believe, or are prepared to accept, that the practice facilitates or is conducive or incidental to the transaction of business, and do so for reasons of belief and support for tradition, as summarised by Mr McLauchlan. I am sure that his experience as Town Clerk has equipped him to understand and express accurately what motivates the Councillors in this respect. I have, however, come to the conclusion that s111 does not permit the public saying of prayers as part of the formal meeting of the Council, as an incident of the transaction of its business. There is a contradiction at the heart of the Council's position. It has made the prayers part of the formal business of the Council, yet it says that Councillors, summoned to its meetings, are not obliged to be present for this incident to the transaction of business nor to participate in it. I do not think that what falls within the scope of s111, as an incident to the transaction of the business of the meeting, can then be regarded as such that attendance for it is unnecessary or optional, in distinction from all other business. In effect it is treated as being outside the scope of the meeting. I do not see that it can be calculated to facilitate the transaction of business or any other functions if, for it to take place at all, it is necessary to give Councillors the choice not to attend. Nor can it be conducive to the transaction of business or to the exercise of any functions, if it does not matter if Councillors attend or not. If the Council does not regard it as business for which attendance is summoned, then it should not be on the agenda. If it regards it as business to which the summons applies, it cannot make attendance for it optional on the grounds that participation could be objectionable to some Councillors. No such arrangement would be necessary for a few minutes silent reflection. This is reflected in the point that, having summoned Councillors to attend a meeting at which there is a religious component, the Council makes attendance for that religious part optional. This is because it recognises that Councillors, of whatever religion or none, may not wish to attend prayers as part of a political meeting, where decisions are to be made about civic matters, however non-partisan its meetings may be. It respects that view. It has arranged matters so that Councillors need not attend and will receive no adverse attendance record if they do not. But it turns the Council meeting from one in which all Councillors are entitled to participate equally on all matters, qualified equally through being elected, into a partial gathering of those Councillors who share a particular religious outlook, or who are indifferent to it or, as in the case of Mr Bone, too embarrassed to leave in public. That cannot satisfy s111. The same objection does not apply to a few minutes silent reflection on the duties ahead, which each can observe in their own way. I do not see that it can be calculated to facilitate, or br conducive to or incidental to formal public Council deliberations as a whole, for the majority to include as part of their formal deliberations a ceremony from which some absent themselves or feel themselves to be excluded, perhaps under protest or in resentment. The majority acknowledge such response or feelings to be ones which it is right to accommodate; such feelings are in that sense a reasonable response to the course of action preferred by the majority. I appreciate that the saying of prayers may cross party lines, but I cannot see that it would be different from incorporating some other form of religious or secular but potentially divisive ceremony, such as the singing of a political party's song, into the meeting. Those reasons apply where there is a minority vote against the practice but would not apply to a unanimous vote in its favour. However, there are two other reasons why the practice is in my view beyond the power of the Council. I have no difficulty in understanding how a few minutes quiet reflection at the outset on the better performance of the forthcoming public duty may assist Councillors to perform better, but the task for the Council is to show that it is the specifically religious character of prayers, in public and in the formal part of the meeting, which advances the transaction of Council business, and the performance of the underlying functions. I have no difficulty in accepting that some Councillors believe that it helps them and those who do not believe in God but for whom prayers may be offered. However, even quite a wide interpretation of s111would still require the Court to take a view about the extent to which public prayers in the formal Council meeting were likely to facilitate, or be conducive to or incidental to, the performance of the Council's functions. That is not a view which the Court should form, let alone when some are disturbed in the performance of their duties by just such public prayers. It is not for a Court to rule upon the likelihood of divine, and presumptively beneficial, guidance being available or the effectiveness of Christian public prayer in obtaining it. S111 cannot be construed so as to impose such an obligation on the Court. As a general point, although I deal separately with the question of discrimination and human rights, I do not think that the 1972 Act, dealing with the organisation, management and decision-making of local Councils, should be interpreted as permitting the religious views of one group of Councillors, however sincere or large in number, to exclude or, even to a modest extent, to impose burdens on or even to mark out those who do not share their views and do not wish to participate in their expression of them. They are all equally elected Councillors. This conforms with what Laws LJ said in his reserved judgment on the permission application in McFarlane v Relate Avon Ltd [2010] EWCA Civ 880, [2010] IRLR 872 at paragraph 22. "The precepts of any one religion, and belief system, cannot, by force of their religious origins, sound any louder in the general law than the precepts of another. If they did, those out in the cold would be less than citizens and our constitution would be on the way to a theocracy, which is of necessity autocratic. The law of a theocracy is dictated without option to the people, not made by their judges and governments. The individual conscience is free to accept such dictated law, but the State, if its people are to be free, has the burdensome duty of thinking for itself. So it is that the law must firmly safeguard the right to hold and express religious beliefs. Equally firmly, it must eschew any protection for such a belief's content in the name only of its religious credentials. Both principles are necessary conditions for a free and rational regime." That passage was approved by Munby LJ and Beatson J in R (Johns) v Derby City Council [2011] EWHC Admin 375. Accordingly, I have come to the view that the Council has no power to hold prayers as part of a formal Council meeting, or to summon Councillors to a meeting at which such prayers are on the agenda. Discrimination The relevant discrimination provisions in the Equality Act 2006 are no longer in force but were applicable at the time when the action was commenced and for most of the time when the practice complained of was occurring. They were repealed with effect from 1 October 2010, and replaced by the public sector equality duties in s149 of the Equality Act 2010 and the discrimination provisions in s19. Much of the argument was directed to the 2006 Act. S45 of the 2006 Act dealt with direct and indirect discrimination. The Claimants rely only on indirect discrimination. S45 (3) provided: "(3) A Person ("A") discriminates against another ("B") for the purposes of this Part if A applies to B a provision, criterion or practice- (a) which he applies or would apply equally to persons not of B's religion or belief, (b) which puts persons of B's religion or belief at a disadvantage compared to some or all others (where there is no material difference in the relevant circumstances), (c) which puts B at a disadvantage compared to some or all persons who are not of his religion or belief (where there is no material difference in the relevant circumstances), and (d) which A cannot reasonably justify by reference to matters other than B's religion or belief." "Religion" includes a reference to a lack of religion; s44. By s52, it was made unlawful for a public authority exercising a function of a public nature to do any act which constituted discrimination. The meetings at issue are unquestionably within the scope of that duty. Certain bodies and certain activities are expressly exempted from this. The two Houses of Parliament were exempted. Mr Wolfe for the Claimants put some weight on s52(4)(k)(iii) which stated that the section did not apply to action in relation to "acts of worship or other religious observance organised by or on behalf of an educational institution (whether or not forming part of the curriculum." This, he argued, implied that such acts were covered by the section in other circumstances. The School Standards and Framework Act 1998 s71 enables pupils not to receive religious education and not to attend religious worship in certain circumstances. This, argued Mr Dingemans QC for the Defendant, was why the exemption in the 2006 Act was there and no wider inference could be drawn from its presence. S19 of the 2010 Act deals with indirect discrimination; there are differences between the wording of s19 of the 2010 Act and s45 of the 2006 Act. I set out s19: "(1) A person (A) discriminates against another (B) if A applies to B a provision, criterion or practice which is discriminatory in relation to a relevant protected characteristic of B's. 2) For the purposes of subsection (1), a provision, criterion or practice is discriminatory in relation to a relevant protected characteristic of B's if- (a) A applies, or would apply, it to persons with whom B does not share the characteristic, (b) it puts, or would put, persons with whom B shares the characteristic at a particular disadvantage when compared with persons with whom B does not share it, (c) it puts, or would put, B at that disadvantage, and (d) A cannot show it to be a proportionate means of achieving a legitimate aim." The word "particular" in relation to disadvantage is to be noted in s19 (2)(b), and the language in (d) of proportionality in relation to a justified aim. Mr Wolfe accepted that the predicate for his submissions on discrimination is that his submissions on vires are wrong, and that it is lawful under the 1972 Act to have a formal Council meeting at which prayers are part of the business to be transacted. And that can only be on the basis that they are calculated to facilitate or are conducive to or incidental to the carrying out to the Council's functions, even though not all Councillors wish to attend or, if present, to participate in them; and the Councillors can arrive after or leave for that part of the business without penalty nor is any record kept of any non-attendance. That rather confirms my view that the practice is not lawful since the premise that a Councillor is free to absent himself or to ignore the business in hand is a half-truth; it ignores the role which he plays as an elected Councillor and which his electorate is entitled to expect him to play, without dispensation or special arrangements to accommodate his religious beliefs or lack of them. The claim was based on indirect discrimination and not on direct discrimination. Applying the framework of s45 of the 2006 act, it was not at issue but that the saying of prayers was a practice covered by the Act. Mr Wolfe submitted that it was applied equally to anyone who attended a meeting of the full Council, whatever their belief or lack of belief. The Claimants contended that it put persons who shared Mr Bone's lack of belief at a disadvantage compared to at least some others, and put Mr Bone at a disadvantage compared to at least some who did not share his lack of belief. The Council could not reasonably justify this nor had they done so by reference to matters other than Mr Bone's lack of religious belief. Having to make a choice, visible with embarrassment or disturbance in public, was a disadvantage. Using the framework of s19(2) of the 2010 Act, Mr Bone contended that he, and others who shared his lack of religious belief, would be put at a particular disadvantage when compared to those who did not share that lack of religious belief, and that the Council could not show it to be a legitimate aim proportionately pursued. The Council had not applied its mind to what its legitimate aim might be or to what was a proportionate means of achieving it. What Mr MacLauchlan said in his witness statement was not adopted by the Council, and came after the challenge anyway, as an attempt to justify what had not been properly considered as required by the duty in s149. The Council had rejected the Claimants' suggestions that prayers take place in the Council Chamber or elsewhere in the Town Hall before the meeting was opened. The Defendant contended that the practice was not applied to Mr Bone, since he was free to stay or go. He suffered a disadvantage in the way he described but that was not a disadvantage within the Act since it was too slight. The disadvantage suffered by Mr Bone was no more than that he had to choose either to leave the meetings, with whatever embarrassment or inconvenience that might cause to him, or to stay passively, while others participated in prayers which he was under no obligation to join. He was no more disadvantaged than someone whose beliefs were not compromised by the prayers but who did not wish to participate. In reality, it was Mr Bone, who was requiring the adoption of a practice which reflected what he himself wanted along with others who had no religious beliefs, discriminating against those who wished to observe the practice of saying prayers in the meeting because of their religious beliefs or acceptance of traditional practices. The practice was legitimate or reasonably justified in a society which did not observe a strict separation of Church and State, and proportionate since it facilitated the rights of those who wished to pray, promoted the well-being of the Councillors and a sense of social cohesion and community. It facilitated the Council's functions. Prayers were not offered at Committee meetings, Councillors were free not to participate, whether they stayed or not, and a cross-section of religious views within Bideford were invited, including Quakers who offered quiet reflection. The first question is whether the practice is applied to Mr Bone, since he may leave or stay at his choosing. This requires the practice to be carefully defined. I use the short hand of "saying prayers" elsewhere in the judgment but that should not obscure the true nature of the practice. It is not simply saying prayers; it is saying prayers as part of the formal business of the Council which he is summoned to attend. Mr Dingemans accepted, in para. 37 of his skeleton argument, that the practice was applied to Mr Bone but in oral argument, contended that it was not, on the ground that Mr Bone was free to go, as were any others who, for whatever reason, wished to do so. If he chose to stay, he could choose not to participate, and did not do so through his mere presence. On the predicate necessary for the discrimination arguments, this practice is not in my judgment applied to Mr Bone. I accept that he is free to arrive after or depart before the start of prayers, in the sense that the Council accepts his entitlement to make a personal choice to go or stay, and if to stay not to participate, and applies no constraints or disapproval to his decision either way. I find it surprising though that Mr Bone says he did not know he was free to go or stay, and not participate. As I have said earlier however, I find the concept of a Councillor being free, as the Defendant implies, to come and go during formal business an odd one. How can it satisfy s111 if it is not a practice applied to him as to all Councillors even if his fellow Councillors do not make him stay or seek to apply any penalty or disapproval to him were he to go, or stay and not participate? But on the premise that s111 permits the practice, it is one which he can opt not to attend or to participate in. I do not think that the practice of saying prayers is applied to someone who can choose whether or not to stay. It is not applied to him simply because he has to make a choice about it. The main argument focussed on disadvantage and particular disadvantage. Mr Dingemans did not contend that Mr Bone was not one of a group or pool who experienced similar circumstances or who would potentially do so, in so far as it was necessary to identify such a group. I have reservations about Mr Wolfe's argument on this score, but express no concluded view: the extent of local or national non-belief does not advance the issue; the desire of the electorate that he attend Council meetings cannot logically help support, on the premise on which I am examining these issues, an argument that business should not be facilitated in this way; nor can the mere fact that some Councillors may feel "uncomfortable" or vote against the practice create a disadvantaged group. A lack of willingness to stand because of the practice and complaints from some members of the public may not establish group disadvantage as opposed to disparate bodies who simply dislike the practice. Turning to disadvantage on the basis that there is a group which shares or would share the same circumstances, the second question is whether those who share Mr Bone's lack of religious belief, and Mr Bone, are or would be put at a disadvantage through the practice of saying prayers, by comparison with those whose beliefs are not compromised by willing presence during or participation in the observance of prayers. I accept Mr Dingemans' argument that there has to be a certain threshold, albeit not a high one, before a set of circumstances can be described as a disadvantage or a particular disadvantage. These are ordinary words, however, to be applied without undue analysis or with undue sensitivity. I accept that the analysis in R (Watkins-Singh) v the Governing Body of Aberdare Girls' High School [2008] EWHC 1865(Admin), [2008] ELR 561 is correct but could be misinterpreted so as to lead to an inappropriately high standard. There is no requirement for exceptional disadvantage; see "particular" as emphasising not exceptional, but specific or identifiable and more than objectively insignificant. I accept that Eweida v British Airways plc [2009] IRLR 78, EAT, and [2010] EWCA Civ 80, [2010] IRLR 322 shows that disadvantages can exist from seemingly quite small distinctions, such as the prohibition on wearing a religious symbol outside a civil uniform. The fact that someone may be hostile to a practice does not mean that its observance puts him at a disadvantage. Mr Bone sought election to a public position where he can expect and must have accepted that his views and beliefs might be the more open to public observation, and reticence about public knowledge of what might be regarded as personal matters has less significance than for a private individual. This has nothing to do with whether Mr Bone, or those of like views would be eligible for election to the office of Mayor; his concern about a wider range of civic functions at which there would be a religious element does not rise for consideration here. He is not compelled to participate. The disadvantage he asserts to himself, and to other Councillors whose lack of religious beliefs might lead them to feel compromised by being present during the saying of prayers, is that of either arriving after prayers, or staying in silence, ignoring what goes on around them but perhaps seeming inadvertently disrespectful, or leaving, disturbing their papers and concentration just before the substantial business begins, with a degree of public embarrassment since the press and public are usually present. This seems to me it is of no real significance. I would not regard it as a disadvantage for these purposes. I see very little difference between that and the arrangements made for those who do not wish to attend an act of corporate worship in schools, but who nonetheless have to be found somewhere to go under supervision, or who have to leave the classroom in which a lesson in religious education, in which they do not participate, is about to take place. S52(4)(k)(iii), and its specific exemption from the Act for religious worship in schools, seems to me more relevant in that respect than as showing that prayers in public meetings, which Councillors were free to attend or not, were discriminatory. (I see little weight to be attached to the provision itself in that respect since this was an obvious topic to dealt with by specific statutory provision, and the 1998 Act made specific provision for pupils not to attend in certain circumstances.) I also see very little difference in that respect between what he experienced as a Councillor and rejects, and an informal gathering of like-minded Councillors meeting, which he would accept, held shortly beforehand in the Council Chamber, but not closed to the public, which out of courtesy he leaves while setting out his papers, or remains in quietly reading but perhaps with a degree of embarrassment. Were the meeting to be adjourned for the purpose of prayers, which Mr Wolfe acknowledged could not be objected to, the same disadvantage of departure under the public gaze, or staying without participation, would arise, either for him or for those leaving for the purpose of prayers. Of course, I accept that there is a constitutional difference, and I attribute importance to that when considering vires, but the predicate for the consideration of the discrimination argument is that there is no statutory bar to that practice. If the Council is entitled to have public prayers at its formal meetings, contrary to my first conclusion, they are also an optional part of the lawful conduct of Council meetings and business of the Council to which Mr Bone was elected, and by the rules of which he has to abide. It is he who is seeking that a lawful but optional practice, chosen here by the majority of Councillors, which is the way in which such decisions are lawfully made, should be stopped to accommodate his particular lack of beliefs. His beliefs or lack of them have in fact been accommodated, and he would be seeking something more than a dispensation or special rule to accommodate him. He is seeking that others abandon a practice, lawfully chosen, which it is lawful for them to choose, so that he does not have to make any accommodation for them, but they do for him. I do not see that the feelings of discomfort or exclusion which he has, and which he says are shared by a number of other actual or possible Councillors in the minority on this issue, should be regarded as a discriminatory disadvantage when its elimination would prevent the degree of comfort or composure which the majority seek being achieved, merely substituting one set of uncomfortable feelings for another. It seems to me that the Claimants' arguments are close to the situation which would have existed if in Ladele v London Borough of Islington [2009] EWCA Civ 1357, [2010] IRLR 211, the registrar who objected to undertaking any part in civil partnership ceremonies, had not merely been permitted to opt out but had succeeded in preventing such ceremonies being undertaken by others because it embarrassed her to be singled out. Likewise if an accommodation on religious grounds is made by a shop so that an employee does not have to handle a product such as alcohol, but which requires that employee to ring for another to conduct the sale, it would be extraordinary if the practice of selling alcohol was regarded as being applied to the first employee, or applied to his or her disadvantage such that the practice had to stop, because the accommodation marked out the employee for having particular religious views. Of course, this perception depends on it being Mr Bone who is being accommodated because he is free to leave the meeting while prayers are said. This depends upon the saying of prayers in those circumstances being lawful under s111 of the 1972 Act, which I do not accept. I do not think that the analysis is advanced by debating whether or not those who do have religious beliefs but do not want to participate in the prayers, if any, are treated in the same way, so that any difference in treatment is not discriminatory on religious grounds. I think that sidesteps rather than grappling with the issue. If the practice is lawful under the 1972 Act, but imposes a disadvantage on Mr Bone and others such as to require justification, and has to be shown to be a proportionate means of meeting a legitimate aim, the Council has in my view shown that it meets that requirement. The judgment on that issue requires a starting point which I do not accept is correct. However, without it, the arguments on the issue of lawfulness and discrimination become confusingly entangled. The saying of prayers has to be taken of itself to be an act, calculated to facilitate the conduct of the Council's business, conducive to it or incidental to it. Members are entitled to opt for their inclusion in the formal meetings of the Council for that reason. That itself provides the basis for the justification of the practice, its legitimate aim. What Mr MacLauchlan sets out in his witness statements is no more than an elaboration of the way in which the saying of prayers is seen by him to fit within s111 of the 1972 Act. There is no great difference between part of the justification for prayers, that is mental preparation for public service, and the justification which the Claimants accept for having a short period of quiet reflection before as part of the meeting. I do not accept Mr Wolfe's argument that that should be seen as an explanation not endorsed by members, and as an illegitimate rationalisation after the event for a practice which might never have been justified on that basis. Of course, he is right to say that the courts have been vigilant to prevent that sort of reasoning becoming an excuse for not fulfilling various equality duties, including those now in s149 of the 2010 Act; see for example R (Elias) v Secretary of State for Defence [2006] EWCA Civ 1293, [2006] 1 WLR 3213 per Mummery LJ at paragraphs 129-132. In most circumstances, what has been provided here would fail such a test. However, the starting point is that s111 provides the basic justification for the practice. Mr MacLauchlan, because of his position and the time he has occupied it, would know how the Councillors in the majority had expressed themselves in the course of the two debates on just this issue, and what their views were as vouchsafed on other occasions. This was not an issue which reared its head shortly before this action began, hitherto unconsidered or ignored. Nor is there anything surprising or original or simply convenient about the reasons, such as to cause doubt as to whether they were the true reasons in fact. The reasoning does not involve any statistical work which earlier consideration could have caused to be examined differently. Mr Wolfe also contended that the practice could not be a proportionate means of achieving the aim, even if it were legitimate, since the same aim could be achieved by either a short period of quiet reflection at the start of the meeting or by prayers for those who wished to participate in them before the meeting. I would regard that as a strong point in his favour, and it certainly supports my view that s111 does not permit prayers to be said as part of the formal meeting. But, once it is accepted that prayers can be a lawful part of the meeting, fulfilling the requirements of s111, it is difficult to see how alternatives, which either involve no prayers or none in the formal meeting, can meet that aim at all. Whether seen as part of the justification or as moderating steps which go to proportionality, the fact that absences are not recorded until after prayers, that there is no compulsion to stay during them or to participate, all contribute to the conclusion that if justification is required, what is done here justifies or is a proportionate means of attaining the legitimate ends espoused by the majority. These have to be balanced against what is at worst a fairly marginal disadvantage suffered by Mr Bone, the alternative to which is that the majority experience a roughly equivalent disadvantage. Both are debating over the extent to which a belief or none can be manifested as part of the business of a Council meeting. Mr Bone believes that none should be and not only because he has no religious beliefs; the others believe that they are entitled to manifest them because they hold them to be relevant to the business in hand, or, if they have no very clear or firm beliefs as is not unusual in this area, because they represent a tradition which they are content to maintain. There is force in Mr Dingemans' argument that it is Mr Bone who is trying to force his lack of observance on those who prefer the alternative course, and not vice versa. The points which I make in paragraphs 56-57 are also relevant to the reasonableness of the justification for the practice and the proportionality of the way in which it is implemented. Mr Wolfe challenged the evidential basis for the Council's view that the saying of prayers was likely to facilitate the conduct of Council business: a number of Councillors were opposed to the practice; a substantial minority of UK residents had no religion, and most Bideford residents did not attend regular Sunday worship, although there was little evidence of other religions in Bideford. There was no evidence that saying prayers facilitated the conduct of business. I am not sure that that is a contention which, of its nature, can be proved or disproved by forensic evidence. It would have been interesting were the Council to produce it; I expect that its source and probative force would have been debatable. But the sense of public duty performed for others and not for self, and adherence to a long-standing local tradition supported by most elected Councillors, are sufficiently evidenced in Bideford by what Mr MacLauchlan says. There is no evidence of general or significant objection by the voters of Bideford to the practice, however personally indifferent to the practice of any religion. I accept that the practice of saying prayers is capable of generating real hostility from those who are not adherents of the religion invoked. Hostility towards non-participants or non-co-religionists would be strong evidence of real disadvantage; and where that is so, it is difficult to see that it could be justified or a legitimate aim proportionately pursued. But, although that has occurred elsewhere, it has not occurred in Bideford. That risk, however, rather supports my conclusion about what s111 of the 1972 Act, applicable generally throughout England and Wales, permits. I do not see the potential for it as sufficient to amount to a disadvantage here though. Obviously, some Councillors disagree that this is an appropriate practice, as no doubt do some Bideford residents, but I do not consider that their disagreement with its usefulness under s111 can be taken of itself as showing that the contrary view as to its usefulness is wrong. This evidential point may go to s111 in the first place, but if my conclusions on that are wrong, there is simply a division of view as to its usefulness resolved democratically. Articles 9 and 14 ECHR Article 9 ECHR holds that "everyone has the right to freedom of thought, conscience and religion." Freedom to manifest religious beliefs, which includes public worship, is "subject only to such limitations as are prescribed by law and are necessary in a democratic society… for the protection of the rights or freedoms of others." Article 14 requires Convention rights to be secured without discrimination on the grounds of religion, political or other opinion. S13 of the Human Rights Act 1998 requires a court, where the determination of any question under the Act might affect the exercise by a religious organisation of the rights under Article 9 to have "particular regard to the importance of that right." Mr Bone and the Defendant each claim that it is the stance of the other which threatens to breach these Articles. Mr Bone contends that the practice of saying prayers at the start of the meeting infringes his freedom of religion, thought and conscience, and his right not to be associated with any religion. It is not disputed that Article 9 protects the right not to hold religious views. It discriminates against him on the grounds of his lack of religion because it is for that reason that he is treated differently by the Council from the way in which it treats those other Councillors who do have a religious belief. The Council must show that the discrimination can be objectively and reasonably justified, and discrimination on religious grounds is one of those where the court should scrutinise the asserted justification with especial care; R (Carson) v Secretary of State for Work and Pensions [2005] UKHL 37, [2006] 1AC 173. As Lord Hoffmann said in R(SB) v Governors of Denbigh High School [2006] UKHL15, [2007] 1 AC 100, para 50, "Article 9 does not require that one should be allowed to manifest one's religion at any time and place of one's choosing"; nor does Article 9 protect every act motivated by religious belief. The Defendant contends that it is the freedom of religious expression of the majority of Councillors which is threatened, and that there is no discrimination against Mr Bone. It accepted that Article 9 included the right not to hold or practise a religion. Mr Bone, and any Councillor, could stay or leave during prayers without penalty; there was no interference with his views or compulsion in them. There is no requirement that a reason for leaving be given; some may not wish to participate in a religious meeting in a Council meeting or in public. It was different from the situation in Buscarini v San Marino [2000] 30 EHRR 208, where elected MPs could not take their seats unless they took the oath which referred to the Holy Gospels. The starting point, again, is that, contrary to my first conclusion, there is no statutory bar on the practice of saying prayers as they are currently said. Mr Bone is free to stay or leave during prayers. It is in accordance with the law. It is not discriminatory, or to the extent that it is, it is justified. I cannot see that his freedom of religion, thought or conscience is infringed by the degree of embarrassment he feels, which is no more than is inherent in the exercise by the others of their freedom to manifest their religious beliefs, and his freedom to stay without participating or to leave. It is their freedom which would be infringed were he right; that limitation is not prescribed by law - on the hypothesis that there is no restriction in the LGA 1972. S13 of the Human Rights Act is relevant here. I do not accept Mr Dingemans' argument that because Mr Bone had chosen to stand for election to a Council which had this practice, he had accepted the burden of its continuance until he could change it by democratic vote, as if elected office were akin to the civil partnership registrar whose job required her to do what her religious beliefs forbad, where the terms of the former did not have to be changed to accommodate the dictates of the latter; Ladele v London Borough of Islington [2009] EWCA Civ 1357, [2010] IRLR 211. This fails to recognise that becoming an elected representative is more than just a job for a politician; it is the fundamental right of the electorate to choose whom they wish to represent them in the body to which they have elected him. If it is an interference with the right not to hold religious views, or if it is an unnecessary or unjustifiable interference or act of discrimination, this cannot be treated as a case of voluntary submission. I do not accept Mr Dingemans' argument that the requirements of a pluralist state meant that preventing prayers in a Council meeting breached Article 9. Pluralism does not mean that one religion is entitled to manifest itself on such occasions. I derived no assistance one way or the other from Lautsi v Italy App 30814/06 18 March 2011, BAILII: [2011] ECHR 2412, in which the routine presence in state school classrooms of a crucifix, which was not used for worship, religious instruction or as an expression of allegiance, was held not to contravene Article 9. It was a passive and traditional national symbol in Italian state schools. That does not help on the question of whether communal prayers in the business meetings of elected members is an infringement of Article 9. This case appeared also to provide some support for the notion that secularism falls within Article 9. I do not need to resolve this issue, because it arose from a misapprehension as to the Claimant's case. He is a secularist; others who may call themselves humanists may share some of the same aims. But it is not as a secularist or because of his views on secularism that the Claimant asserted a breach of Article 9 or discrimination. His case is put simply on the basis of discrimination against and interference with his right not to hold or to have to manifest religious beliefs. However, the notion that the question of whether prayers can be said at a Council meeting should turn on whether an elected member's human rights are infringed, balancing the rights of others, suggests strongly to me that the true answer to their lawfulness is to be found in a proper construction of s111 of the 1972 Act. Conclusion The saying of prayers as part of the formal meeting of a Council is not lawful under s111 of the Local Government Act 1972, and there is no statutory power permitting the practice to continue. If it were lawful, the manner in which the practice is carried out in the circumstances of Bideford does not infringe either Mr Bone's human rights nor does it unlawfully discriminate indirectly against him on the grounds of his lack of religious belief.

Lord Justice Simon Brown: Receivers appointed by the court pursuant to section 37 of the Supreme Court Act 1981 and RSC Order 30 must look for their remuneration and expenses to the assets within their receivership. Such is the clearly established position at common law. What, however, is the position with regard to receivers appointed under Part VI of the Criminal Justice Act 1988 (“the CJA”) and the Drug Trafficking Act 1994 (“the DTA”), receivers appointed by the High Court with a view to conserving and realising the assets of a defendant in parallel criminal proceedings who may become subject to a confiscation order? How are these receivers to be remunerated and reimbursed? More particularly, is the defendant liable for these expenses irrespective of whether or not he is convicted and a confiscation order is made against him, or only upon the making of such an order? These fundamentally are the questions raised by these three conjoined appeals. Two of the cases (which I shall refer to respectively as “Hughes” and as “R & Another”) were decided together by Hooper J at first instance. His conclusion, set out in a lengthy and thoughtful reserved judgment dated 21 December 2001, was that: “98. The receiver may not use an unconvicted defendant’s assets to meet the costs of the receivership. Subject to an exception where there has been unreasonable behaviour on the part of the defendant (paragraph 59 above), costs of a receivership may only be met out of a convicted defendant’s assets and out of the amount ordered to be paid by the defendant under any confiscation order subsequently made against him. It follows that an acquitted defendant or a third party affected by a receivership order is not required to bear the receiver’s costs out of those of his assets of which the receiver has taken possession. … the costs of a receivership may only be recovered from the assets of a defendant in the circumstances set out in section 81(5) [of the CJA], namely out of any amount paid by the receiver to the justices’ clerk in satisfaction of a confiscation order.” The third case (“Anderson”) was decided ex tempore by Collins J on 18 February 2002 when a somewhat different conclusion was arrived at. Collins J, whilst stating that he “would certainly follow Hooper J if [he] was dealing with an unconvicted defendant or in relation to third parties whose rights had not yet been determined”, pointed out that Anderson has been convicted, and held that although no confiscation order had yet been made against him, the receiver could recover his costs and remuneration but only insofar as they arose from managing, and only out of, certain specified assets which the defendant acknowledges to be his (and not other assets which the defendant contends are owned by third parties albeit no third party has yet so contended). In all three cases the prosecution (HM Customs & Excise in Hughes and Anderson, the Crown Prosecution Service in R & Another) appeal with the permission of the judge below. It is the prosecution’s case that the receiver’s remuneration and expenses should come in the first place from the estate under his control and then, if a confiscation order is made, from any sums realised and remitted to the justices’ clerk under section 81(5); only if no funds are available from those sources should they come from the prosecutor under section 88(2) of the CJA (the prosecutor then having the possibility in certain cases of reimbursement under section 81(6)). With that brief introduction let me turn next to summarise the essential statutory scheme insofar as it relates to receivers, which I shall do exclusively by reference to the provisions of the CJA, those of the DTA being in all material respects identical. The Legislative Framework Section 76 of the CJA provides that the High Court’s powers under sections 77 and 78 are exercisable where proceedings have been instituted against any person for a relevant offence or the court is satisfied that a person is to be charged with such an offence and in either case the court is also satisfied that a confiscation order may result. Section 77 deals with restraint orders and provides that the High Court may by such an order “prohibit any person from dealing with any realisable property, subject to such conditions and exceptions as may be specified in the order”. “Realisable property” for these purposes is defined by section 74 to mean “any property held by the defendant” (a definition widened by section 102(7): “property is held by any person if he has any interest in it”) and “any property held by a person to whom the defendant has directly or indirectly made a [relevant] gift”. Section 77(6)(a) provides that a restraint order may be discharged or varied in relation to any property (section 77(7) providing that such an application may be made by any person affected by the order). Section 77(6)(b) provides that a restraint order shall be discharged on the conclusion of the relevant proceedings (“conclusion” being defined by section 102(12) to include the acquittal of a defendant and the satisfaction of any confiscation order made against him). Section 77(8) I must set out verbatim: “77(8) Where the High Court has made a restraint order, the court may at any time appoint a receiver - (a) to take possession of any realisable property; and (b) in accordance with the court’s directions, to manage or otherwise deal with any property in respect of which he is appointed, subject to such exceptions and conditions as may be specified by the court; and may require any person having possession of property in respect of which a receiver is appointed under this section to give possession of it to the receiver.” Sections 78 and 79 deal with charging orders. Section 80(1) provides that where a confiscation order is made or varied and the proceedings in question have not been concluded and the order or variation is not subject to appeal the High Court may, on an application by the prosecutor, exercise the powers conferred by subsections (2) to (6) of section 80. Those include: “80(2) The court may appoint a receiver in respect of realisable property.” The following subsections provide that the court may empower a receiver appointed under section 80(2) or under section 77 or in pursuance of a charging order inter alia to enforce any charge and may order any person to give up possession of realisable property to the receiver, and may empower the receiver to realise any realisable property and so forth (subsection (8) providing that a reasonable opportunity shall first have been given for persons holding any interest in the property to make representations to the court). Section 81 has loomed large in the argument and much of it I must now set out: “Application of proceeds of realisation and other sums 81(1) Subject to subsection (2) below, the following sums in the hands of a receiver appointed under this Part of this Act or in pursuance of a charging order, that is - (a) the proceeds of the enforcement of any charge imposed under section 78 above; (b) the proceeds of the realisation, other than by the enforcement of such a charge, or any property under section 77 or 80 above; and (c) any other sums, being property held by the defendant; shall first be applied in payment of such expenses incurred by a person acting as an insolvency practitioner as are payable under section 87(2) below and then shall, after such payments (if any) as the High Court may direct have been made out of those sums, be applied on the defendant’s behalf towards the satisfaction of the confiscation order. (2) If, after the amount payable under the confiscation order has been fully paid, any such sums remain in the hands of such a receiver, the receiver shall distribute them - (a) among such of those who held property which has been realised under this Part of this Act, and (b) in such proportions, as the High Court may direct after giving a reasonable opportunity for such persons to make representations to the court. (3) The receipt of any sum by a justices’ clerk on account of an amount payable under a confiscation order shall reduce the amount so payable, but the justices’ clerk shall apply the money so received for the purposes specified in this section and in the order so specified. (4) The justices’ clerk shall first pay any expenses incurred by a person acting as an insolvency practitioner and payable under section 87(2) below but not already paid under subsection (1) above. (5) If the money was paid to the justices’ clerk by a receiver appointed under this Part of this Act or in pursuance of a charging order, the justices’ clerk shall next pay the receiver’s remuneration and expenses. (6) After making - (a) any payment required by subsection (4) above, and (b) in a case to which subsection (5) above applies, any payment required by that subsection, the justices’ clerk shall reimburse any amount paid under section 88(2) below. (7) The justices’ clerk shall finally pay any compensation directed to be paid out of any sums recovered under the compensation order under section 72(7) above. (8) Any balance in the hands of the justices’ clerk after he had made all payments required by the foregoing provisions of this section shall be treated for the purposes of section 61 of the Justices of the Peace Act 1979 (application of fines, etc) as if it were a fine imposed by a magistrates’ court.” (Any balance goes in short into the Consolidated Fund and not to the prosecutor.) I need not set out subsections (9) and (10). Section 82(2) provides that the High Court’s powers under sections 77 to 81 “shall be exercised with a view to making available for satisfying the confiscation order … the value for the time being of realisable property held by any person by the realisation of such property”. Section 82(4) provides that such powers “shall be exercised with a view to allowing any person other than the defendant or the recipient of any [relevant] gift to retain or recover the value of any property held by him”. I can move now to section 88: “Receivers: supplementary provisions 88(1) Where a receiver appointed under this Part of this Act or in pursuance of a charging order takes any action - (a) in relation to property which is not realisable property, being action which he would be entitled to take if it were such property; (b) believing, and having reasonable grounds for believing, that he is entitled to take that action in relation to that property, he shall not be liable to any person in respect of any loss or damage resulting from his action except insofar as the loss or damage is caused by his negligence. (2) Any amount due in respect of the remuneration and expenses of a receiver so appointed shall, if no sum is available to be applied in payment of it under section 81(5) above, be paid by the prosecutor or, in a case where proceedings for an offence to which this Part of this Act applies are no instituted, by the person on whose application the receiver was appointed.” I must refer finally to section 89: “Compensation 89(1) If proceedings are instituted against a person for an offence or offences to which this Part of this Act applies and either - (a) the proceedings do not result in his conviction for any such offence, or (b) where he is convicted of one or more such offences - (i) the conviction or convictions concerned are quashed, or (ii) he is pardoned by Her Majesty in respect of the conviction or convictions concerned, the High Court may, on an application by a person who held property which was realisable property, order compensation to be paid to the applicant if, having regard to all the circumstances, it considers it appropriate to make such an order. (2) The High Court shall not order compensation to be paid in any case unless the court is satisfied - (a) that there has been some serious fault on the part of the person concerned in the investigation or prosecution of the offence concerned, being a person mentioned in subsection (5) below; and (b) that the applicant has suffered loss in consequence of anything done in relation to the property by or in pursuance of an order under this Part of this Act. …” (Subsection (5) names various persons involved in the investigation and prosecution of offences.) RSC Order 115 sets out the rules for the exercise by the High Court of its jurisdiction in proceedings under the CJA and the DTA. (Part I of the Order applies expressly to the DTA and by rule 23 is applied also to the CJA.) Rule 3 provides for an application for a restraint order or a charging order (to either of which may be joined an application for the appointment of a receiver) to be made by the prosecutor. Rule 4(1) provides: “4(1) A restraint order may be made subject to conditions and exceptions, including but not limited to conditions relating to the indemnifying of third parties against expenses incurred in complying with the order, and exceptions relating to living expenses and legal expenses of the defendant, but the prosecutor shall not be required to give an undertaking to abide by an order as to damages sustained by the defendant as a result of the restraint order.” Under the heading “Receivers”, rule 8(1)provides: “8(1) Subject to the provisions of this rule, the provisions of Order 30, rules 2 to 8 shall apply where a receiver is appointed in pursuance of a charging order or under sections 26 or 29 [of the DTA, these being mirrored by sections 77 and 80 of the CJA].” RSC Order 30 makes provision for receivers. Rule 3 provides: “3(1) A person appointed receiver shall be allowed such proper remuneration, if any, as may be authorised by the court. (2) the court may direct that such remuneration shall be- (a) fixed by reference to such scales or rates of professional charges as it thinks fit; or (b) assessed by a costs judge or a district judge.” Rule 5 makes provision for receivers’ accounts: “5(1) A receiver shall submit such accounts to such parties at such intervals or on such dates as the court may direct. … (3) Any party who is dissatisfied with the accounts of the receiver may give notice specifying the item or items to which exception is taken and requiring the receiver within not less than 14 days to file his accounts with the court … (4) Following an examination by or on behalf of the court of an item or items in an account to which objection is taken the result of such examination must be certified by [the relevant court] and an order may thereupon be made as to the incidence of any costs or expenses incurred.” The point at issue here being one of general application and not dependent upon the facts of any particular case, it is unnecessary to set out in detail the circumstances of these individual cases. A brief account, however, serves to illustrate the sort of situation which arises in practice and to highlight, not least by reference to the substantial sums involved, the obvious importance of the appeals. Hughes Two of the respondents in Hughes, Nicholas Hughes (“Nicholas”) and C were charged on 12 April 2000 with having conspired to cheat HM Customs & Excise of VAT by dishonestly causing to be made taxable supplies of mobile telephones, receiving payment including VAT, and failing to pay the VAT to the Commissioners. Nicholas was a 50% shareholder in Fones 2 Go (Supplies) Ltd (“the company”), the other 50% shareholder being his brother, Timothy, who was never charged. C was an employee of the company. On 3 May 2000 Sullivan J made a restraint order preventing Nicholas from dealing with his assets, including “shares in, the undertaking and assets held in the name of [the company]”, and preventing the company from dealing in any way with its assets. At the same time Sullivan J appointed Ms Dayman of BDO Stoy Hayward as receiver and she assumed control of the company’s assets. The order included what have become standard provisions in these cases: “11. The costs of the Receivership shall be paid out of the assets received or managed by the Receiver and in priority to any other payment required or provided for by this Order (other than the costs of realisation provided by paragraph 8(f) above [which gave the receiver power to discharge from the proceeds of the realisation of the defendant’s assets the costs of and incidental to such realisation]) but if no assets or insufficient assets are so received or so managed the costs of the Receivership to the extent of the deficiency shall be paid by HM Customs & Excise. 12. The Receiver shall act in accordance with the letter of agreement [exhibited] and the Receiver shall supply to the defendant copies of any accounts and reports supplied to HM Customs & Excise in accordance with the said letter of agreement.” Paragraph 6 of the letter of agreement (again in common form) reads: “REMUNERATION It is proposed to seek an order from the Court that your costs in this matter should be costs in the receivership; that is to say that your costs shall be paid out of the monies you bring in during the course of this receivership. Before drawing any remuneration you shall obtain the written approval of HM Customs & Excise to the payment being made and in default of agreement your remuneration shall be determined by the High Court. In all cases HM Customs & Excise reserves the right to insist upon taxation of all your costs and the costs of any solicitors instructed by you. You will be allowed to draw such remuneration and pay any disbursements from any realisations every two calendar months provided that accounts have been submitted to and approved by HM Customs & Excise. Should your remuneration and expenses exceed the sum realised, HM Customs & Excise is prepared to indemnify you to the extent of the sum inclusive of your remuneration, costs expenses and disbursements although exclusive of VAT less any sums available to you from the property under your management. …” Timothy made an application to vary that Order but on 8 May 2001, before his application came to be heard, the judge at Cardiff Crown Court directed that not guilty verdicts be entered against Nicholas and C in relation to all counts; following a public interest immunity hearing the Crown had decided to offer no evidence against them. On the following day, 9 May 2001, Moses J discharged the restraint and receivership order, save as against C who on 30 November 2000 had been charged with an unconnected offence. Hooper J’s judgment records: “12. At the time of the receivership [the company] had a cash balance in its account of some £160,000. [The company] was, so the applicants say, trading healthily and making a profit. With the arrest and subsequent remand in custody of the applicants [the company] ceased trading. The costs of the receivership are some £40,500. The substantial portion of those costs was incurred in following up and bringing into the receivership other assets of Nicholas, said by the receiver not to have co-operated as fully as he might. This is challenged. … 16. Insofar as C is concerned, a man of modest means and very aggrieved by what has happened (so I am told), the costs of the receivership order incurred in the period from April 2000 to 30 November 2000 [ie between the receivership order and C being charged with an unconnected offence] amounted to some £34,000. Those costs were apparently incurred in tracing down his assets.” Upon the respondents’ application that they should not in the event be held liable for the receiver’s cost, Hooper J deleted those paragraphs in the Order which had permitted the receiver to use the respondents’ assets to meet the costs, indicating finally that: “Should there be an issue as to unreasonable obstructive behaviour which the [prosecutors] wish to have decided, I shall do so at some appropriate time.” R & Another On 29 February 2000 both respondents were charged with defrauding a public body. They now face two trials at the Central Criminal Court the first of which, estimated to last six months, is unlikely to begin for many months yet: we are told that some 16 million documents are being examined. On 3 March 2000 Moses J made restraint and receivership orders in what I may call the usual terms, Ms Dayman again being appointed to act the receiver and manager of the respondents’ assets. The restraint order lifted the corporate veil of the respondents’ company and vested its assets in the receiver, the allegation being that the company had been used as a vehicle to carry out the offences. In July 2000 the respondents applied to discharge the orders on the grounds that “the receivership is not necessary and for it to continue will be to the detriment of the defendants and the public interest”. It is not, I think, disputed that the company is well-managed and continues to trade successfully with an annual turnover of some £12.5 million. It engages in a highly specialised business and the receiver contributes little to it. Her essential concern, of course, is to ensure that assets are not removed outside the jurisdiction so as to frustrate any future confiscation order. Her role is restricted essentially to supervising and in effect auditing what is already a professionally audited company. Langley J refused the discharge application on the basis that the court was bound to take a prudential view of the case. Following the failure of that application the respondents by solicitor’s letter dated 27 June 2001 sought undertakings from the prosecution (further to standard undertakings already given, including one to “pay the reasonable costs of anyone other than [the two respondents and their company] which have been incurred as a result of compliance with this order …”) as follows: “4. In the event of the discharge of this order and the acquittal of the respondent in the criminal proceedings against him, the CPS will pay to the respondent the costs paid by him to the receiver under this order. 5. If the court later finds that this order has caused other loss to the respondent, and decides that the respondent should be compensated for that loss, the CPS will comply with any order the court may make.” The letter ended: “We consider that the onerous nature of the restraint orders and the time and expense demanded of our clients in complying with them are such that they ought properly to be reflected in undertakings to compensate the respondents in the event of the prosecution failing. Given the court’s inability to impose such terms upon you without your consent, you will note that, if we do not receive a positive response from you within 14 days, we propose to apply to the court for the discharge of the orders.” Upon the CPS’s refusal (expressly based upon In re Andrews [1999] 1 WLR 1236, to which I shall shortly come) to give such undertakings, the respondents made the further application which became linked to the similar application in Hughes and was ultimately heard by Hooper J. Hooper J’s judgment records: “21. The receiver has so far invoiced some £376,000 [we are told that this has now increased to some £440,000] in respect of her costs including VAT. All the receiver’s costs, whether incurred in the management of [the company] or otherwise, are being paid by the company. The total bill is expected to be in the region of some £500,000 by the end of the criminal proceedings.” The same order was made below as in Hughes, ie the court deleted from the orders the paragraphs which permit the receiver to use the assets under her control to meet the costs of the receivership. Anderson On 21 May 2000 the respondent was charged with a large-scale conspiracy to import cocaine and on 21 June 2000 Forbes J made a restraint order against him. On 2 March 2001 the respondent was convicted at Canterbury Crown Court and he was subsequently sentenced to 25 years’ imprisonment. His application for leave to appeal against conviction was refused by the single judge in January 2002; his renewed application to the full court remains outstanding. Confiscation proceedings were, and remain, adjourned; an order is contemplated in the eventual sum of (very approximately) £19 million. On 5 February 2002 a management receivership order was made by consent by Maurice Kay J, the issue of the receiver’s remuneration (before any confiscation order is made) being adjourned in the light of Hooper J’s prior decision in Hughes. That issue came before Collins J on 18 February 2002 with the result already sufficiently indicated in paragraph 3 above. So much for the facts. Anyone interested in their further exposition is referred to the respective judgments below. Having set out the legislative provisions substantially as I have done above, Hooper J next considered in detail this court’s decision in In re Andrews [1999] 1 WLR 1236 upon which the prosecutors place considerable reliance. Andrews, the appellant, was an acquitted defendant. Following his acquittal (with an order that his costs be paid out of central funds) and the discharge of the restraint order made in respect of his realisable property, the receiver released to him the assets taken save for some £10,000 to cover the expenses of the receivership. The appellant thereupon sought against the prosecution (HM Customs & Excise) an order for costs in the civil proceedings (in which the restraint order had been made and the receiver appointed), such costs to include the £10,000 retained by the receiver. The order was sought under section 51 of the Supreme Court Act 1981 which provides that: “(1) … the costs of and incidental to all proceedings … in the High Court … shall be in the discretion of the court. (2) … rules of court … may make provision for regulating matters relating to the costs of those proceedings … [it being provided by rule 43.2 that ‘“costs” includes fees, charges, disbursements, expenses, remuneration …’].” Ward LJ, giving the leading judgment in the Court of Appeal, concluded: “I am, with unfeigned reluctance, compelled to conclude that, even if the expenses of the receivership are within the definition of costs, they are not costs ‘of and incidental to [the] proceedings’. They must lie where they fall.” He then observed that the court had not been addressed upon Article 1 of the First Protocol to the ECHR (the appeal having been heard before the Human Rights Act came into force). Earlier in his judgment Ward LJ had said: “The case therefore boils down to this. A receiver and manager properly appointed properly recoups her properly incurred costs of the receivership from an asset she has received. Now that the receivership order has been (or is treated by the parties as having been) discharged, should those costs of the receivership lie where they fall?” Having then referred to a number of common law authorities on receivers - notably Gardner -v- London Chatham & Dover Railway Co (No 1) (1867) LR 2 Ch App 201, Boehm -v- Goodall [1911] 1 Ch 155, Evans -v- Clayhope Properties Limited [1988] 1 WLR 358 and finally Mellor -v- Mellor [1992] 1 WLR 517 which “held that the receiver’s lien over the assets gave him a continuing right to possession even after the discharge of the receivership order and accordingly he was entitled to an order charging all the assets available to him during the currency of his receivership with the amount of his costs and remuneration” - Ward LJ continued: “So much appears to be settled. The ordinary rule is that receivers should not accept their appointment unless satisfied that the receivable assets shall be sufficient to meet their claim for costs and for remuneration or that they would be otherwise indemnified, by contract or by order of the court, by the party responsible for their appointment. In this case there was an agreement between the receiver and HM Customs and Excise that Customs and Excise would indemnify the receiver if she were unable to bring in sufficient assets to meet her costs. That did no more than replicate the statutory provision [under section 88(2) of the CJA] …” (p1243) In short, it appears to have been the common assumption in Andrews that the appellant’s only prospect of recovering the receiver’s expenses was by way of a section 51 order. As to that, Ward LJ would plainly have liked to find for the appellant. His judgment, besides his concluding expression of “unfeigned reluctance”, includes the following passages: “Though the receivership proceedings were not part of the criminal trial as such, they were incidental to it and my sense of fairness dictates to me that he should be indemnified in respect of any loss he has suffered through these ancillary proceedings. If I had any discretion to exercise, I would unhesitatingly exercise it in the appellant’s favour. [p1244] … the unfairness to the appellant is manifest to me … I find it intrinsically unfair that the appellant should be indemnified in the Crown Court but not in the Queen’s Bench Division where the proceedings should stand or fall with the criminal proceedings.” (p1245) Having reached, without any expression of regret, the same conclusion that “the remuneration of the receiver is an expense of the receivership not costs incidental to the proceedings in which he is appointed”, Aldous LJ continued: “I would add that in my judgment Mr Mitchell was right in his submission that this really was a claim for compensation dressed up as an application for an award of costs; and it is therefore most significant that by section 89 Parliament laid down a carefully regulated code for such a claim. Consequently, in my judgment, section 89 is the proper avenue for a compensation claim of this kind, provided of course the claimant can bring himself within the rather strict requirements of the section. I should add as a footnote that RSC Ord 115, r 4(1) specifically stipulates that ‘the prosecutor shall not be required to give an undertaking to abide by an order as to damages sustained by the defendant as a result of the restraint order.’” Hirst LJ merely agreed that the appeal should be dismissed. The respondents’ principal argument with regard to Andrews is that it proceeded upon a false basis, everyone there having wrongly assumed that the receiver had been entitled during the course of the receivership to deduct her expenses from the value of the estate. That argument prevailed before Hooper J and is now maintained before us. The respondents contend, and Hooper J found: (a) that the legislation on its true construction unambiguously provides that the prosecution shall pay the receiver’s remuneration and expenses unless and until a confiscation order is made against the defendant; alternatively (b) that such is the construction to be given to the legislation in the light of section 3 of the Human Rights Act, 1998 to ensure its compliance with the respondents’ rights under Article 1 of the First Protocol. Only secondarily do the respondents (through Mr Newman QC) advance the alternative argument that, to give effect to the respondents’ Convention rights, section 51 could and should be construed more widely now than the Court of Appeal in Andrews, without the benefit of the Human Rights Act, felt able to construe it. The respondents recognise that ever since this statutory scheme was first introduced (in the Drug Trafficking Offences Act 1986) the legislation has been applied as if statutory receivers (as I shall call them) are entitled to recover their expenses from the assets under their control just like their common law counterparts. As Hooper J recorded, “The [respondents] agree that what they describe as the ‘clear and unambiguous scheme’ of the Act has not been followed. ‘The departure from that scheme has been a wholesale one since the commencement of the Act’”. As against that, however, the respondents cite with relish from Mitchell, Taylor & Talbot’s work Confiscation and the Proceeds of Crime, 2nd Edition (January 1997), paragraph 3-112, under the heading “Remuneration of Receivers”: “… the scheme of the legislation is that the receiver’s costs should be met by the prosecutor and then if the defendant is convicted and a confiscation order is made the prosecutor will be reimbursed from the sums paid in satisfaction of the compensation order.” Plainly, however, the true construction of the legislation can turn neither on the way it has been applied down the years nor on the views expressed by legal commentators. It is time rather to consider the language of the statute itself. The respondents’ argument on the statute focuses mainly on sections 81(5) and 88(2) which alone actually refer to the receiver’s “remuneration and expenses”. As has been seen, section 81(5) provides that (after paying any insolvency practitioner’s expenses) “the justices’ clerk shall next pay the receiver’s remuneration and expenses”, providing only that the clerk was paid the money by the receiver (or in pursuance of a charging order) in the first place. Section 88(2) provides that, if the receiver is not paid under section 81(5), “[A]ny amount due in respect of [his] remuneration and expenses” shall be paid by the prosecutor (with the prosecutor then having a right to be reimbursed under section 81(6) if, say, the justices’ clerk has received monies from other sources). Unless a confiscation order has been made, runs the argument, no money will have been paid to the justices’ clerk out of which the receiver can recover his remuneration and expenses under section 81(5). Accordingly, he must in those circumstances look to the prosecutor alone for payment. That, indeed, is precisely what section 88(2) appears to require. Nor, submit the respondents, is this in the least surprising: fairness dictates that only in the event of the defendant being convicted and a confiscation order made against him should he bear the costs of the receivership. Ward LJ expressed himself strongly of that view in Andrews, and some years earlier Schiemann J in In re W (The Times, 13 October 1994), had adopted the same approach in requiring the prosecutor to pay the costs of restraint proceedings upon the defendant’s acquittal: “If he is acquitted, [the accused person’s] assets are unfrozen. The question essentially is: should the innocent individual pay the costs of taking part in proceedings initiated by the Commissioners of Customs & Excise or should the public at large? In my judgment it should be the public at large. Prosecutions are launched on our behalf, and if someone is acquitted by the verdict of the jury, them one can see in retrospect that he should not have been troubled in the matter. There is no blame to be attached to Customs & Excise, but it seems right to me that in principle the public should pay.” The respondents urge that that reasoning with regard to the costs of restraint proceedings applies with equal force to the remuneration of receivers. The first argument against the respondents’ approach is this: a receiver’s expenses may well include all sorts of outgoings which on their face plainly ought to be borne out of the estate under his management. Take just a few examples. The receiver may insure or repair the defendant’s property. He may spend considerable time and incur all sorts of expenses (travelling costs and the like) managing what might otherwise be inadequately managed property or business activities. The defendant may be in custody on remand, perhaps for a substantial period, and the receiver may have to conduct his entire business. He will, after all, be responsible for it as a principal. If, say, the defendant were running a hotel, the receiver would have to engage and pay staff and incur all the manifold other expenses of such an enterprise. Sections 81(5) and 88(2) refer to the receiver’s expenses as well as his remuneration. Although at one point in the argument the respondents sought to distinguish between different kinds of expenses - to allow the receiver, for example, to charge upon the estate for a replaced boiler - no such distinction is in truth available. As certainly Mr Purnell QC acknowledged, if the respondents’ argument be right, the prosecution would ultimately have to bear all these expenses unless ultimately a confiscation order were made. But that, he submits, unfortunate for the prosecution though it is, is the price to be paid for badly drafted legislation - for trying to bolt onto a new statutory restraint scheme certain features of the common law jurisdiction. The argument sits a little uneasily alongside Mr Brodie’s submission that this legislation provides a “plain, comprehensive, sensible and fair statutory scheme”, but let that pass: the real question is whether Parliament could have intended to leave the prosecution liable for all the expenses of a receivership unless only a confiscation order were made, and whether, in particular, sections 81(5) and 88(2) compel such a result. Mr Mitchell QC’s central argument to the contrary focuses first on the use of the word “receiver” to describe the person being appointed under this legislation to conserve, manage and realise assets. A receiver is a recognisable creature of the common law, an officer of the court, someone whose essential rights, powers and duties have been established down the years. It is not apparently disputed that a receiver appointed under the CJA - despite the statute’s silence on the matter - will have the right, for example, to bring an action or to sell property. Why then, unless the statute expressly so provides, should he be denied the other ordinary consequences of his receivership, including not least the right (indeed the requirement) to recover the costs of the receivership from the assets under his control? Take a receiver appointed under section 77(8) (who for convenience can be called a management receiver, in contrast to an enforcement receiver appointed under section 80(2) to realise the defendant’s assets once a confiscation order has been made). A management receiver will manifestly have to be paid his remuneration and expenses on an interim basis during the (often protracted) course of his receivership; so much is recognised on all sides. In any ordinary receivership these costs would be met out of the managed assets and that, certainly, is how payment has always been made under the CJA and DTA - generally, indeed, by specific orders of the court made on the receiver’s appointment. Do sections 81(5) and 88(2) dictate to the contrary? At first blush one of the respondents’ stronger arguments is that section 81(5) really makes little sense if the receiver can in any event deduct his costs from the assets under his control. Why, they ask rhetorically, would he in those circumstances pay over to the justices’ clerk a gross sum of money so as to enable the clerk then to pay his remuneration and expenses? Inevitably, he would first deduct them. There is, however, an answer to this question and it provides, perhaps, the key to a proper understanding of the remuneration provisions of the statute. The reason why it is necessary, once a confiscation order has been made, for a receiver (whether appointed initially as a management receiver or only later as an enforcement receiver) thereafter to pay over any sum to the justices’ clerk gross of his remuneration and expenses is because, as provided by section 81(3), that sum operates to reduce the amount payable under the confiscation order. In the great majority of cases the amount of the confiscation order is determined not by reference to the calculated benefit of the defendant’s criminality, but rather by reference to the substantially lesser value of his realisable property. Once the latter has been established and the confiscation order made, it would clearly be wrong to deplete the value of the defendant’s assets by deducting the receiver’s costs until such assets have been paid to the justices’ clerk and thus reduced the amount payable under the order. That is not to say, however, that before any confiscation order is made the receiver cannot in the usual way recover his remuneration and expenses from the assets, and nor is that precluded by section 88(2). Section 88(2) is simply one of two “supplementary provisions” for receivers and its effect is merely to ensure that if in any case (including where no proceedings have been instituted - see the concluding part of the sub-section) the receiver has not been paid in full, he shall be paid by the prosecutor or whoever else was responsible for his appointment. I have no difficulty in construing the words “[a]ny amount due in respect of the remuneration and expenses” as meaning any such amount outstanding irrespective of whatever may have been paid in the past. Indeed, the words “any amount due in respect of” at the beginning of subsection (2) may be thought strictly superfluous were the subsection to be referring to the whole of the remuneration and expenses since appointment. Similarly “the receiver’s remuneration and expenses” in section 81(5) can refer equally to any outstanding such amounts as to their entirety during the whole course of the receivership. There is a further difficulty in the respondents’ approach. It arises with regard to defendants who fail to cooperate in the receivership. As will have been seen from paragraph 98 of Hooper J’s judgment (see paragraph 2 above), he held that if the defendant increases the costs of the receivership by unreasonable obstructive behaviour - a factual issue left outstanding in Hughes (see paragraph 23 above) - an exception arises to the general rule. In paragraph 59 of his judgment, Hooper J had said that: “… should a defendant increase the costs of the receivership by unreasonable obstructive behaviour, the receiver could have a remedy against a convicted defendant against whom a confiscation order has been made, by seeking payment of the increased amount under section 81(1) and could have a remedy against an acquitted or convicted defendant under section 51 [of the Supreme Court Act, 1981].” (Hooper J added in paragraph 60 that “the receiver could also, of course, seek an order from this court preventing the obstructive behaviour”) This seems to me an unsatisfactory conclusion. In the first place it weakens the respondents’ central argument and, indeed, the judge’s central holding as to the true construction of the statute (as, of course, does Collins J’s substantially more flexible view as to how the statute operates in a case like Anderson). Secondly, however, the point at which non-cooperation becomes unreasonable obstructive behaviour will often be difficult to determine, as will the additional costs thereby occasioned. Given that the essential purpose of the receivership is to preserve the defendant’s assets (either because, through being in custody, he is unable to do so himself, or so as to safeguard them “from dissipation and secretion” - see In re P (Restraint Order: Sale of Assets) [2000] 1 WLR 473, 482), the question who is to bear the costs of the receivership should no more turn on the extent of the defendant’s cooperation than on the extent to which the receivership in fact benefits rather than depletes the estate. In short, persuasive though at first blush the respondents’ arguments appeared, and readily though I acknowledge the principle urged by Mr Chawla QC that any doubt as to the proper construction of expropriatory legislation of this nature must be resolved in favour of the defendant, I have come to the clear conclusion that the respondents’ approach can be seen to misunderstand the scheme of the legislation and to be unsustainable. Statutory receivers are to be treated precisely as their common law counterparts save to the extent that the legislation expressly provides otherwise. The statute is not to be regarded as an entirely self-contained code incorporating nothing from the common law. The fact that, unusually (although not uniquely - consider such cases as Hoffman-la-Roche -v- Secretary of State for Trade & Industry [1975] AC 295 and Attorney-General -v- Wright [1988] 1 WLR 164), the prosecutor cannot be required to give a cross-undertaking in damages (see RSC Ord 115, r 4(1) above) does not constitute so fundamental a difference between statutory and common law receivers as to give rise to wholly discrete schemes for their remuneration. What then of the human rights arguments? In particular, do the respondents enjoy rights under Article 1 of the First Protocol which require Part VI of the CJA (or, failing that, section 51 of the Supreme Court Act) to be construed differently from how, as already indicated, in my judgment it otherwise falls to be construed? Article 1 provides: “Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No-one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. The preceding provisions shall not, however, in any way impair the right of the State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.” It is common ground that the regime of restraint and receivership orders is not contrary to Article 1 - see Raimondo -v- Italy (1994) 18 EHRR 237. There is a significant public interest in ensuring that criminals do not profit from their crimes and that the proceeds of crime are confiscated in the event of conviction. It is acknowledged also that this public interest extends to preventing the dissipation of assets prior to trial to ensure that any confiscation order made will not be thwarted. The respondents submit, however, that it by no means follows that the costs of such a regime should fall onto an unconvicted or acquitted defendant. Where, as here, competing rights have to be considered, questions arise as to whether the measures taken are (i) in the public interest, (ii) appropriate for achieving its aim, (iii) proportionate, and (iv) achieve a fair balance between the demands of the general interest of the community and the requirements of the protection of the individual’s right - see, for example Sporrong & Lonroth -v Sweden (1982) 5 EHRR 35 and Lithgow -v- United Kingdom (1986) 8 EHRR 329. In pursuit of the common cause an excessive burden should not be imposed upon any individual. Accordingly, an unconvicted or acquitted defendant (and still more obviously an innocent third party) should not be deprived of his property (or, if he is, he should thereafter be compensated for it). Hooper J accepted this argument below: “96. In my judgment to deprive an unconvicted defendant of his assets or to deprive a third party of his share of lawfully obtained assets which he jointly owns with a defendant (whether unconvicted, convicted or acquitted) to pay for the costs of receivership is a disproportionate measure in the fight against crime and thus a breach of Article 1 of the First Protocol. It would upset the fair balance which should be struck between the protection of property and the general interest.” I entirely accept that an acquitted (or indeed unconvicted) defendant must for these purposes be treated as an innocent person - see particularly Minelli -v- Switzerland (1983) 5 EHRR 554 and Sekanina -v- Austria (1994) 17 EHRR 221 (I did not understand Mr Newman’s reliance on Article 6 of the Convention, essentially for the presumption of innocence under Article 6(2), to extend beyond this proposition.). I cannot accept, however, that for this reason it must be regarded as disproportionate, still less arbitrary (another contention advanced by the respondents), to leave the defendant against whom restraint and receivership orders have been made uncompensated for such loss as they may have caused him - unless, of course, by establishing “some serious fault” on the prosecutor’s part he can bring himself within the strict requirements of Section 89. It is common ground that acquitted defendants are not, save in the most exceptional circumstances, entitled to compensation for being deprived of their liberty whilst on remand or indeed for any other heads of loss suffered through being prosecuted. In my judgment it is no more unfair, disproportionate or arbitrary that they should be uncompensated too for any adverse effects that restraint and receivership orders may have had upon their assets. I simply cannot recognise in this legislative scheme objections of the sort identified by Sir Andrew Morritt VC respectively in Wilson -v- First County Trust [2001] All ER 229 (with regard to consumer credit agreements) and in Aston Cantlow PCC -v Wallbank [2001] 3 All ER 393 (condemning as arbitrary the historical form of taxation constituted by the liability for chancel repairs of former rectorial glebe land) both relied on by Mr Purnell. Legal costs (construing this terms as widely as required by Rule 43.2 - see paragraph 31 above) are one thing; the losses consequent on prosecution - and any restraint and receivership proceedings ancillary to such prosecution - are another. Whilst, therefore, I agree with Schiemann J’s judgment in In re W that the costs of restraint proceedings, upon an acquittal, should indeed be borne by the public rather than by the acquitted defendant, I do not agree that such an approach carries across to the remuneration and expenses of any linked receivership. I respectfully share the view expressed by Aldous LJ in Andrews that what the respondents in these cases are really claiming is compensation and in my view this is so whether, as there, the claim was advanced under section 51 of the Supreme Court Act, or whether, as here, the argument is put principally in terms of reading down the CJA so as to preclude receivers from recovering their remuneration and expenses from unconvicted defendants’ assets in the first place. I should say a word next about third parties, not least recognising that one of the respondents in the Hughes case, Timothy, is to be so regarded. The court should, in my judgment, be astute wherever possible to protect the rights and interests of third parties. As persons affected by a restraint order they have, of course, the right under section 77(7) to seek its variation or discharge - a right in fact exercised here by Timothy Hughes, although his application was in the event overtaken by the not-guilty verdicts entered against the other respondents. The court can if necessary expedite such an application. Quite why Timothy’s application here was not progressed is unclear. The court is required too under section 82(4) (see paragraph 10 above) to exercise its powers “with a view to allowing [an innocent third party] to retain or recover the value of any property held by him”. Note also the possibility in certain circumstances of compensating a third party under section 88(1) if the receiver has acted negligently in relation to non-realisable property. It is difficult to regard this legislation as riding roughshod over the rights of innocent third parties. It follows from all this that in my judgment (i) the restraint and receivership legislation has been correctly understood and applied down the years to allow the receiver, unless and until a confiscation order is made, to recover his costs from the assets under his control, and (ii) that I do not regard its operation in this way, without compensation for the acquitted defendant (unless under section 89), as being in conflict with the human rights (in particular the property rights) of those affected. I would accordingly allow the respective prosecutors’ appeals in all three cases. I would nevertheless add this. Given that restraint and receivership orders can, as perhaps these very cases show, bear heavily upon the individuals involved and may leave acquitted defendants with substantially depleted assets, the court should, in deciding whether initially to make, and whether thereafter to vary or discharge, such orders, weigh up the balance of competing interests with the greatest care. The Crown’s concern to safeguard an accused’s property against dissipation or removal abroad must always be weighed against the possibility that the price to be paid will fall upon an innocent man. It is important that this legislation continues to be operated to strip criminals of their ill-gotten gains. But it is important too that the court keeps a close control over those it appoints to act as receivers on its behalf and that costs are not too readily incurred, particularly before any confiscation order is made. There is one final point to be made. Paragraph 6 of the letter of agreement in Hughes’ case (see paragraph 20 above), incorporated into the court’s restraint and receivership order by paragraph 11 of that order (see paragraph 19 above), both in common form, provides for the receiver’s remuneration to be agreed between the receiver and the Commissioners and only in default of that by the High Court. As we observed during the course of the hearing, this arrangement is difficult to reconcile with RSC Ord 30, r 3 (see paragraph 15 above). Although the issue is not strictly before us on these appeals, first instance judges who make these orders should be alerted to the need under rule 3 to retain control over the way the receiver’s remuneration is fixed. Lord Justice Laws: For the reasons set out by Simon Brown and Arden LJJ, I, too, would allow these appeals. Lady Justice Arden: I agree with Simon Brown LJ that this appeal must be allowed for the reasons which he gives. I would like to add some additional reasons and observations of my own. The Statutory Construction issue I agree that the receiver may be paid her remuneration out of the assets over which she is appointed. Further support for this conclusion can be found in other aspects of the statutory scheme in Part VI of the Criminal Justice Act 1988 (as amended). That scheme contains no provisions for the removal or retirement of a receiver or for the payment of remuneration to a former receiver. In the normal way, when a receiver vacates office, he continues to be entitled to his lien arising as a matter of law until all the costs of the receivership and his remuneration have been paid. Section 77(8) empowers the High Court to appoint the receiver “subject to such exceptions and conditions as may be specified by the court”. The absence of any express reference in Part VI to the receiver’s lien, and to what is to happen when a receiver vacates office gives rise, in my judgment, to the implication that Parliament left this matter to the High Court to be dealt with in the terms of the order made by it. In addition, in section 87(1), where an insolvency practitioner (for example, a liquidator or trustee in bankruptcy) is appointed and by mistake realises realisable property which is subject to a restraint order, section 87(1) provides for him to receive his expenses and remuneration out of the assets and not from the prosecution. (Section 87(1) contains a specific reference to a lien because the insolvency practitioner is in the circumstances postulated a trespasser and therefore would not have a lien as a matter of law). In my judgment, it is difficult to see why an insolvency practitioner should have a lien in these circumstances if a receiver who was acting properly under the terms of the order of the court does not have such a lien. The Convention point The essential issue is whether the statutory scheme with which this appeal is concerned is reasonably proportionate. The starting point is that when the provisions of the statutory scheme are examined in detail it is clear that the Legislature took the view that it was in the public interest that restraint and receivership orders should be made in the restricted circumstances set out in Part VI of the Criminal Justice Act 1988 (as amended). It is unnecessary for me to describe the scheme comprehensively because the salient features of it have already been described by Simon Brown LJ. There are additional conditions for the protection of persons adversely affected in sections 76 and 77. For instance, the court cannot exercise the power to make a restraint order if there has been undue delay in bringing the proceedings or a prosecution is unlikely to be proceeded with (section 76(1A)). The court cannot appoint a receiver unless there is a restraint order in place (section 77(8)). Moreover, the court cannot make a restraint order where a person has not yet been charged unless the court is satisfied that the person is to be charged and that the making of the confiscation order may result from proceedings for that offence (section 76(2)). Further, if proceedings are not brought within a reasonable time, the court must discharge the restraint order (section 76(4)). Finally, there is an unqualified jurisdiction to vary or discharge a restraint order on the application of any person (section 77(7)). In addition, the court is given power to award compensation to third parties whose assets are mistakenly seized (section 88(1)). Such compensation can also be awarded to defendants who are charged but not convicted (section 89(1)). This compensation could in an appropriate case include reimbursement of receivership costs and expenses, but under section 89(1) it is only available if there has been a serious default on the part of the prosecutor and the proceedings would not otherwise have been instituted. In my judgment, contrary to the view taken by the judge, the proportionality of a restriction of this nature on compensation for unconvicted defendants has to be viewed in the light of the Legislature’s view that restraint and receivership orders properly made are in the public interest. So viewed, in my judgment, the restriction is proportionate when viewed against the aim sought to be achieved. However, a discrete issue arises about the absence of a right to compensation for defendants who were never charged and third parties who are affected by a receivership order where the defendant was never charged. Such persons have no right to compensation because section 89(1) only applies if proceedings have been instituted but the defendant has been acquitted (or pardoned). It is not clear why these third parties and defendants are excluded from section 89(1). The point has not been argued, but I would reserve for argument in a future case the question whether in a situation where there is a serious default by the prosecutor there would be a violation of Convention rights if compensation were not available for this group of persons. Remuneration I agree with what Simon Brown LJ has said about the terms of any order of the court as to the receiver’s remuneration. The practice of the Chancery Division is set out in the ‘Guide for Receivers in the Chancery Division’, referred to at paragraph 22.6 of the Chancery Guide (Civil Procedure, Vol 2 (2002) para. 1 – 139). This states that:- “The receiver’s remuneration must be authorised by the court. Unless the court directs it to be fixed by reference to some fixed scale, or percentage of rents collected, it is assessed by the court, but in the first instance the receiver should submit his remuneration claim to the parties for approval. If the claim is accepted by the parties, the court should not normally be concerned to intervene, but it must at least formally authorise the remuneration.” The commentary in the Civil Court Practice, 2002, Vol. 1, page 1219 is to the same effect. The annotation to RSC Order 30, r.3 in Civil Procedure, Vol.1 (2002) page 1281 contains a less full description of the practice set out in the passage quoted in the preceding paragraph and needs to be read with care as it makes no express reference to RSC Order 30, r.3(1) (summarised in the first sentence of that passage). RSC Order 30, r.3(1) is an important provision which should not be overlooked. In the circumstances, I agree that these appeals should be allowed. Order: Appeals allowed with costs here and below against the various unsuccessful respondents. Permission to appeal to the House of Lords refused, but provided a petition to appeal to the House of Lords is filed within 28 days and pursued with due expedition, there will be no assessment of costs until it is disposed of. Further orders made according to the draft provided by counsel as amended after the judgment was handed down. (Order does not form part of the approved judgment) © 2002 Crown Copyright

Case C-586/08 Angelo Rubino v Ministero dell'Università e della Ricerca (Reference for a preliminary ruling from the Tribunale amministrativo regionale del Lazio) (Directive 2005/36/EC – Recognition of diplomas – ‘Regulated profession’ – Selection of a predefined number of persons on the basis of a comparative assessment conferring a qualification limited in time – National academic qualification for appointment – University lecturer) Summary of the Judgment Freedom of movement for persons – Freedom of establishment – Workers – Recognition of professional qualifications – Scope of Directive 2005/36 (Arts 39 EC and 43 EC; European Parliament and Council Directive 2005/36, Art. 3(1)(a)) The fact that access to a profession is reserved to candidates who have been successful in a procedure to select a predefined number of persons on the basis of a comparative assessment of the candidates rather than by application of absolute criteria, which confers a qualification the validity of which is strictly limited in time, does not mean that that profession constitutes a regulated profession within the meaning of Article 3(1)(a) of Directive 2005/36 on the recognition of professional qualifications. Nevertheless, in the context of such a selection procedure, Articles 39 EC and 43 EC, which guarantee to the nationals of the Member States access to activities, in a self-employed or employed capacity, without discrimination based on nationality, require qualifications obtained in other Member States to be accorded their proper value and to be duly taken into account. (see paras 34-36, operative part) JUDGMENT OF THE COURT (Eighth Chamber) 17 December 2009 (*) (Directive 2005/36/EC – Recognition of diplomas – ‘Regulated profession’ – Selection of a predefined number of persons on the basis of a comparative assessment conferring a qualification limited in time – National academic qualification for appointment – University lecturer) In Case C‑586/08, REFERENCE for a preliminary ruling under Article 234 EC from the Tribunale amministrativo regionale del Lazio (Italy), made by decision of 9 July 2008, received at the Court on 29 December 2008, in the proceedings Angelo Rubino v Ministero dell’Università e della Ricerca, THE COURT (Eighth Chamber), composed of C. Toader, President of the Chamber, K. Schiemann (Rapporteur) and P. Kūris, Judges, Advocate General: N. Jääskinen, Registrar: R. Grass, having regard to the written procedure, after considering the observations submitted on behalf of: – Mr Rubino, by F. Brunello, avvocato, – the Italian Government, by G. Palmieri, acting as Agent, and by F. Quadri, avvocato dello Stato, – the Greek Government, by E. Skandalou and S. Vodina, acting as Agents, – the Slovak Government, by B. Ricziová, acting as Agent, – the European Commission, by H. Støvlbæk and L. Prete, acting as Agents, having decided, after hearing the Advocate General, to proceed to judgment without an Opinion, gives the following Judgment 1 This reference for a preliminary ruling concerns the interpretation of Articles 3(1)(c) EC and 47(1) EC, and of Directive 2005/36/EC of the European Parliament and of the Council of 7 September 2005 on the recognition of professional qualifications (OJ 2005 L 255, p. 22). 2 The reference has been made in the course of proceedings between Mr Rubino and the Ministero dell’Università e della Ricerca (Ministry for Universities and Research; ‘the Ministry’) concerning the Ministry’s rejection of Mr Rubino’s request to be included in the list of holders of the national academic qualification for appointment as a lecturer (‘the NAQ’) held by the Ministry. Legal context Directive 2005/36 3 Directive 2005/36 reorganised and rationalised the provisions of earlier directives and, in particular, replaces Council Directive 89/48/EEC of 21 December 1988 on a general system for the recognition of higher-education diplomas awarded on completion of professional education and training of at least three years’ duration (OJ 1989 L 19, p. 16) and Council Directive 92/51/EEC of 18 June 1992 on a second general system for the recognition of professional education and training to supplement Directive 89/48 (OJ 1992 L 209, p. 25). In accordance with recital 14 in the preamble to Directive 2005/36, the recasting by that directive does not affect the mechanism of recognition established by Directives 89/48 and 92/51. 4 It is apparent from Article 2(1) of Directive 2005/36 that it is to apply to all nationals of a Member State wishing to pursue a ‘regulated profession’ in a Member State other than that in which they obtained their professional qualifications. 5 Article 3(1)(a) and (b) of Directive 2005/36 contains the following definitions: ‘For the purposes of this Directive, the following definitions apply: (a) “regulated profession”: a professional activity or group of professional activities, access to which, the pursuit of which, or one of the modes of pursuit of which is subject, directly or indirectly, by virtue of legislative, regulatory or administrative provisions to the possession of specific professional qualifications; in particular, the use of a professional title limited by legislative, regulatory or administrative provisions to holders of a given professional qualification shall constitute a mode of pursuit ... (b) “professional qualifications”: qualifications attested by evidence of formal qualifications, an attestation of competence referred to in Article 11, point (a)(i) and/or professional experience’. 6 Article 11 of Directive 2005/36 is headed ‘Levels of qualification’. Article 11(a)(i) provides: ‘For the purpose of applying Article 13, the professional qualifications are grouped under the following levels as described below: (a) an attestation of competence issued by a competent authority in the home Member State designated pursuant to legislative, regulatory or administrative provisions of that Member State, on the basis of: (i) … a specific examination without prior training …’ 7 Article 13 of Directive 2005/36, headed ‘Conditions for recognition’, provides in paragraph 1 thereof: ‘If access to or pursuit of a regulated profession in a host Member State is contingent upon possession of specific professional qualifications, the competent authority of that Member State shall permit access to and pursuit of that profession, under the same conditions as apply to its nationals, to applicants possessing the attestation of competence or evidence of formal qualifications required by another Member State in order to gain access to and pursue that profession on its territory. Attestations of competence or evidence of formal qualifications shall satisfy the following conditions: … (b) they shall attest a level of professional qualification at least equivalent to the level immediately prior to that which is required in the host Member State, as described in Article 11.’ National legislation 8 On 6 November 2007, Legislative Decree No 206 implementing Directive 2005/36/EC on the recognition of professional qualifications and Directive 2006/100/EC adapting certain Directives in the field of freedom of movement of persons, by reason of the accession of Bulgaria and Romania (decreto legislativo n. 206 – Attuazione della direttiva 2005/36/CE relativa al riconoscimento delle qualifiche professionali, nonché della direttiva 2006/100/CE che adegua determinate direttive sulla libera circolazione delle persone a seguito dell’adesione di Bulgaria e Romania) was adopted (ordinary supplement to GURI No 261 of 9 November 2007; ‘Legislative Decree No 206/2007’). 9 However, according to the national court’s interpretation of that legislative decree, it is not applicable to the profession of university lecturer. 10 In Italy, it is not necessary either to hold a formal qualification or have professional experience to join that profession. 11 The selection process for university lecturers is governed in Italy by Law No 230 laying down new provisions concerning university lecturers and researchers and authorising the Government to reorganise recruitment of university lecturers (legge n. 230 – Nuove disposizioni concernenti i professori e i ricercatori universitari e delega al Governo per il riordino del reclutamento dei professori universitari) of 4 November 2005 (GURI No 258 of 5 November 2005; ‘Law No 230/2005’) and by Legislative Decree No 164 reforming the rules governing the recruitment of university lecturers in accordance with Article 1(5) of Law No 230 of 4 November 2005 (decreto legislativo n. 164 – Riordino della disciplina del reclutamento dei professori universitari, a norma dell’articolo 1, comma 5 della legge 4 novembre 2005, n. 230) of 6 April 2006 (GURI No 101 of 3 May 2006; ‘Legislative Decree No 164/2006’). 12 Article 1(5) to (9) of Law No 230/2005 provides as follows: ‘5. In order to reform the rules governing the recruitment of university lecturers, while ensuring a selection process suitable for the type of functions to be carried out, the Government shall have authority to adopt, within six months of the date of entry into force of this law and having regard to the autonomy of the universities, one or more legislative decrees, in compliance with the following principles and criteria: (a) before 30 June each year, the Minister for Education, Universities and Research shall institute, by decree and by academic sector and discipline, procedures to award the [NAQ], separately for first-level lecturers and associate professors, by laying down, inter alia: (i) the detailed rules for defining the maximum number of persons who can obtain the [NAQ] for each category and discipline, according to requirements; that number shall be indicated by the universities, increased by a maximum quota of 40%, financial cover being guaranteed, with the proviso that the [NAQ] shall not imply any entitlement to teach; procedures and time-limits in respect of the invitation to take part in, performance of and conclusion of the aptitude tests which are held at the universities, ensuring that the measures and decisions taken by the selection boards are published; in each discipline, at least one post must, however, be offered to the holders of the [NAQ] per 5-year period for each category; … 6. Candidates considered suitable and not called upon following procedures already organised or whose files have been approved shall retain the [NAQ] for a period of five years from its award. Appointment to first-level lecturer or associate professor posts by the various universities, by calling upon successful candidates found to be suitable … must in any event be made in accordance with the procedures … … 8. The universities shall fill first-level lecturer and associate professor posts following procedures governed by their own regulations, which ensure a comparative assessment of the candidates and publication of decisions, and are reserved to those persons who hold the [NAQ] referred to in paragraph 5(a) … 9. The universities … may fill a percentage not exceeding 10% of first-level lecturer and associate professor posts by direct appointment of foreign or Italian specialist researchers employed abroad who have obtained abroad a teaching qualification at the same level …’ 13 Article 3 of Legislative Decree No 164/2006, entitled ‘National academic qualification’, provides: ‘1. The [NAQ] shall be obtained following procedures instituted by Ministerial Decree, for each academic sector and separately for the categories of first-level lecturer and associate professor. 2. The [NAQ] shall be awarded within the limits of the quotas set in the notice sent to candidates who hold the ‘piena maturità scientifica’ for the category of first-level lecturer and the ‘maturità scientifica’ for the category of associate professor. 3. Possession of the [NAQ] shall constitute a mandatory condition for participation in the procedures referred to in Article 1(8) of the law and shall not imply any entitlement to hold a post as a university lecturer. 4. For the purposes of participation in the recruitment procedures, the [NAQ] shall be valid for four years from its award.’ 14 Article 9 of Legislative Decree No 164/2006, entitled ‘Work of the evaluation committees’, provides: ‘1. The committees which sit at the universities where the aptitude tests are held shall elect their chairperson and define the general criteria and procedures for comparative assessment of the candidates applying, so far as is possible, nationally and internationally recognised parameters. … 3. In order to assess academic output, other academic qualifications and the general curriculum vitae of the candidate, including teaching activity and any professional and organisational experience, the committee shall take account of the following criteria: (a) the originality and innovation of the candidate’s academic output including publications, patents and innovative projects and methodological rigour; (b) the individual contribution of the candidate, ascertained analytically, to group work, where [that contribution] can be identified; (c) leadership and coordination of research groups; (d) the suitability of the candidate’s activity as regards the disciplines in the sector for which the procedure has been instituted or the interdisciplinary matters which they cover; (e) the academic importance of publications and their distribution within the academic community; (f) whether academic output has been continuous over time, with regard also to the development of knowledge in the specific sector; (g) the importance and nature of teaching posts, certified by the bodies concerned; (h) the importance and nature of activities carried out in the clinical and therapeutic domain and in any other professional or occupational domain in which associated experience and competence are expressly required or supplement the candidate’s general profile. 4. The committee’s decision as to the candidate’s academic output, qualifications and overall merit shall be reached by reference specifically to the criteria set out in paragraphs 1 and 3. 5. After assessment of academic output and qualifications, in the context of the aptitude tests for the category of associate professor, the candidates shall take a teaching test and defend their academic output. The call for candidates may provide that the tests are to be taken in the foreign language which is the object of the comparative assessment. In [the context of] the tests for the category of first-level lecturers, the candidates shall defend their academic output and those who do not hold the qualification of associate professor shall also take a teaching test which supplements the general assessment. … 9. On completion of its work, the committee shall indicate, after a comparative assessment, by decision of the majority of its members, the candidates considered worthy of the qualification of [NAQ] within the limits of the quotas fixed in the call for candidates.’ The dispute in the main proceedings and the question referred for a preliminary ruling 15 After working as an academic since 1991, in 2005 Mr Rubino, an Italian national, obtained the ‘Habilitation’ (Facultas Legendi) in the discipline of oceanography and the ‘Lehrbefugnis’ (Venia Legendi) in the Faculty of Earth Sciences, University of Hamburg (Germany), which qualify him to teach at a university as a full professor in the German higher education system. 16 Mr Rubino currently works as a physical oceanographer at the Cà Foscari University of Venice (Italy) and since 1999 has been on the roll of university researchers. 17 Since 14 September 2007, Mr Rubino has, on a number of occasions, applied to have the qualifications he acquired in Germany recognised in Italy, in order to be entered on the register of holders of the NAQ. 18 The Ministry has, however, rejected those applications, by decision of 23 January 2008. It disputes the equivalence of the ‘Lehrbefugnis’ obtained in Germany to the NAQ in the Italian university system, taking the view that Legislative Decree No 206/2007 was not applicable. It is of the view that the profession of lecturer does not constitute a regulated profession in Italy, as it concerns staff recruited by means of a selection procedure in which candidates may participate without being required to hold a specific educational qualification. 19 Mr Rubino brought an action before the Tribunale amministrativo regionale del Lazio (Regional Administrative Court of Lazio) against the decision of the Ministry, submitting that it was contrary to Community law, in particular to Directive 2005/36. 20 Taking the view that there was some doubt as to whether the Italian rules were compatible with Community law, the Tribunale amministrativo regionale del Lazio decided to stay the proceedings and refer the following question to the Court for a preliminary ruling: ‘Is it contrary to the Community principles concerning the abolition of obstacles to the free movement of persons and services between Member States of the [European] Community, and the mutual recognition of diplomas, certificates and other evidence of formal qualifications, set out in Articles 3(1)(c) [EC] and 47(1) [EC], and the provisions contained in Directive 2005/36 … for national legislation, such as the [national] rules laid down in Legislative Decree No 206/2007, to exclude university lecturers from the scope of the regulated professions for purposes of the recognition of professional qualifications?’ The question referred 21 According to the national court, it is not necessary either to hold a formal qualification or have professional experience in order to have access to or pursue the profession of university lecturer in Italy. 22 Accordingly, the question referred must be understood as asking, essentially, whether the fact that access to that profession is reserved to candidates who have been successful in a selection procedure such as that leading to the NAQ means that that profession constitutes a regulated profession within the meaning of Article 3(1)(a) of Directive 2005/36. 23 It should be borne in mind, in that context, that the definition of ‘regulated profession’ for the purposes of Directive 2005/36 is a matter of Community law (see, by analogy, with regard to Directive 89/48, Case C‑234/97 Fernández de Bobadilla [1999] ECR I‑4773, paragraph 14, and Case C‑285/07 Burbaud [2003] ECR I‑8219, paragraph 43). 24 It follows from Article 3(1)(a) of Directive 2005/36 that where the conditions for taking up or pursuing a professional activity are directly or indirectly governed by laws, regulations or administrative provisions requiring possession of certain professional qualifications, that activity constitutes a regulated profession. 25 Under Articles 3(1)(b) and 11(a)(i) of Directive 2005/36, the professional qualifications in question may, inter alia, consist of qualifications attested by evidence of formal qualifications or an attestation of competence issued on the basis of a specific examination without prior training. 26 Mr Rubino submits that the NAQ constitutes an attestation of competence issued on the basis of a specific examination without prior training within the meaning of Article 11(a)(i) of Directive 2005/36. He infers that it is a professional qualification within the meaning of Article 3(1)(b) of that directive and that, consequently, the profession of university lecturer is, in Italy, a regulated profession within the meaning of Article 3(1)(a) of that directive. Mr Rubino concludes that, by virtue of Article 13(1) thereof, the qualifications which he obtained in Germany entitle him to be entered in the register of holders of the NAQ. 27 It must, however, be noted that it follows from case-law that the general systems for the recognition of diplomas laid down by Directives 89/48 and 92/51 do not concern the choice of selection and recruitment procedures for filling posts and they cannot be relied on as the basis for a right actually to be recruited. Those systems do no more than require the recognition of qualifications obtained in one Member State in order to allow their holder to apply for a job in another Member State, in accordance with the selection and recruitment procedures which govern access to regulated professions in that Member State (see, to that effect, with regard to Directive 89/48, Burbaud, paragraph 91). Those principles remain unchanged following the reorganisation and rationalisation resulting from the adoption of Directive 2005/36. 28 Accordingly, an applicant cannot rely on Directive 2005/36 to obtain a dispensation from part of a selection and recruitment procedure. 29 It is apparent from the documents before the Court and from the Italian rules cited by the national court that obtaining the NAQ constitutes a selection stage in the recruitment procedure for university lecturers. 30 That procedure comprises two stages the first of which consists in obtaining the NAQ. The names of the holders of that qualification are entered in a register and can subsequently, in the second stage of the selection procedure, apply for a specific post in a university and, consequently, be recruited on the basis of criteria which vary from university to university. 31 With regard, more particularly, to the selection procedure leading to obtaining the NAQ, Article 1(5)(a)(1) of Law No 230/2005 and Articles 3(2) and 9(9) of Legislative Decree No 164/2006 provide that the maximum number of persons who can obtain that qualification is fixed in advance for each discipline according to the needs indicated by the universities. In addition, it follows from Article 1(8) of Law No 230/2005 and Article 9 of Legislative Decree No 164/2006 that selection is on the basis of a comparative assessment of the candidates who sit the tests rather than by application of absolute criteria. Furthermore, by virtue of Articles 1(6) of Law No 230/2005 and 3(4) of Legislative Decree No 164/2006, the NAQ is valid for a limited period of time. 32 It must be pointed out that the fact of having been successful in a procedure to select a predefined number of persons on the basis of a comparative assessment of the candidates rather than by application of absolute criteria, which confers a qualification the validity of which is strictly limited in time, cannot be regarded as a professional qualification within the meaning of Article 3(1)(b) of Directive 2005/36. 33 In that context, the fact cited by Mr Rubino that Article 1(9) of Law No 230/2005 permits universities, in derogation from the rules normally applicable, to fill 10% of lecturer positions by direct appointment of foreign or Italian specialist researchers employed abroad who have obtained abroad a teaching qualification at the same level is not in itself relevant to the answer to be given to the question referred in respect of Directive 2005/36. Moreover, it is not in dispute that, in the main proceedings, Mr Rubino does not rely on that derogating provision, but seeks to be included in the register of holders of the NAQ without having to undergo the selection procedure laid down by the applicable national rules. 34 Having regard to the reference in the question referred to the Court to the provisions of the EC Treaty concerning fundamental freedoms, it must nevertheless be recalled that Articles 39 EC and 43 EC guarantee to the nationals of the Member States access to activities, in a self-employed or employed capacity, without discrimination based on nationality. Consequently, it is for the national authorities to ensure, in particular, that, in the context of a selection procedure such as that leading to registration as a holder of the NAQ, qualifications obtained in other Member States are accorded their proper value and are duly taken into account (see, by analogy, Burbaud, paragraphs 99 and 100). 35 In the light of all of the foregoing, the answer to the question referred to the Court is that the fact that access to a profession is reserved to candidates who have been successful in a procedure to select a predefined number of persons on the basis of a comparative assessment of the candidates rather than by application of absolute criteria, which confers a qualification the validity of which is strictly limited in time, does not mean that that profession constitutes a regulated profession within the meaning of Article 3(1)(a) of Directive 2005/36. 36 Nevertheless, Articles 39 EC and 43 EC require qualifications obtained in other Member States to be accorded their proper value and to be duly taken into account in such a procedure. Costs 37 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable. On those grounds, the Court (Eighth Chamber) hereby rules: The fact that access to a profession is reserved to candidates who have been successful in a procedure to select a predefined number of persons on the basis of a comparative assessment of the candidates rather than by application of absolute criteria, which confers a qualification the validity of which is strictly limited in time, does not mean that that profession constitutes a regulated profession within the meaning of Article 3(1)(a) of Directive 2005/36/EC of the European Parliament and of the Council of 7 September 2005 on the recognition of professional qualifications. Nevertheless, Articles 39 EC and 43 EC require qualifications obtained in other Member States to be accorded their proper value and to be duly taken into account in such a procedure. [Signatures] * Language of the case: Italian.

OPINION OF MR ADVOCATE-GENERAL ROEMER DELIVERED ON 13 OCTOBER 1970 ( ) Mr President, Members of the Court, The two references for preliminary rulings (Cases 16/70 and 17/70) which were debated during the same hearing on 16 September 1970 and on which I must today deliver an opinion relate to the interpretation of Regulation No 1134/68 (OJ Special Edition 1968 [II] p. 396) adopted by the Council on 30 July 1968 within the framework of the common agricultural policy. In order properly to understand the problems to which it gives rise the following observations may be of assistance. As we know from other cases, the essential characteristic of the common organizations of the agricultural markets is the regulation of prices. The common prices are expressed therein in units of account the value of which was fixed by Regulation No 129 of the Council of 23 October 1962. In relation between individuals and the national administrations entrusted with the implementation of the regulations relating to the agricultural markets such prices together with other elements (levies, refunds and the prices on world market) are generally converted into national currency in accordance with the official parities and only amounts expressed in national currenly appear in official documents. Other cases have brought to our notice that in various situations sums which must be paid to or by individuals (levies and refunds) may be fixed in advance and in this connexion the periods of time applicable are of variable length (here I refer to what appears in the Commission's statement at pages 5, 6 and 7 of the French version). It is self-evident that when such sums are thus fixed in advance, as very often happens, a subsequent alteration either to the value of the unit of account or to the parity of the currency of the Member States or of third countries may involve disturbances if transactions are nevertheless carried out on the basis of the advance fixings. In fact the amounts expressed in national currency are not always adjusted in terms of those fluctuations which amounts to saying that they no longer correspond to the ratio previously established between the parity of the national currency and the value of the unit of account. In providing that the Member States are to apply the principle of nominalism, the Commission showed that this was so in the present case and that it consequently imperilled a principle essential to the Common Market: the principle of the uniformity of price relationships. In order to obviate these problems the Council adapted Regulation No 653/68 of 30 May 1968 (OJ Special Edition 1968 [1], p. 121) and Regulation No 1134/68. The former relates to alterations to the value of the unit of account within the framework of the common agricultural policy and to measures for the adjustment of the various agricultural prices together with the amounts referred to in Article 1 of Regulation No 129. Regulation No 1134 was adopted in implementation of Article 6 of Regulation No 653 paragraph 1 (c) of which provides that ‘The Council, acting … on a proposal from the Commission shall adopt … rules to be applied where there is an alteration in the relationship between the parity of a Member State's currency and the value of the unit of account with respect to amounts fixed in units of account and expressed in national currency’. This implementing provision lays down the methods for recalculating and adjusting certain amounts which are calculated in terms of the prices prevailing on the international markets (including certain amounts fixed, such as those for levies and refunds) if there is an alteration in the parity of the currencies (of Member States or of third countries), an alteration to the value of the unit of account or an adjustment of agricultural prices. Furthermore, in order to protect those persons who have obtained an advance fixing for certain transactions and who, after the alteration, would have been obliged to effect on altered conditions transactions still to be carried out, the various provisions of the regulation (Articles 1, 2 and 4) provide that such persons may by application to ‘the competent authority within thirty days of the entry into force of the measures fixing the recalculated amounts, obtain cancellation of the advance fixing and of the relevant document or certificate’. This provision entered into force on 4 August 1968. There is, however, another vital point: under Article 7 of the regulation the system in question is to apply to all transactions ‘carried out from the date of its entry into force’. This amounts to saying that in order to exclude all risk of disturbances the Community legislature has extended the scope of the regulation to advance fixings previously requested when the provision in question was not yet in force and when the persons concerned who had obtained them could not have expected an alteration of the amounts or cancellation of their certificates. Since it affected existing legal relationships, such an extension of scope clearly required that transitional arrangements be made in order that the persons concerned might take into account the new risk and, if they so desired, protect themselves against it. This was also laid clown by Article 7 which provides as follows: ‘However, any person who before that date has obtained advance fixing or concluded an agreement with an intervention agency for a transaction still to be carried out after that date may, by written application which must reach the competent authority within thirty days of the entry into force of this regulation, obtain cancellation of the advance fixing and of the relevant document or certificate, or cancellation of the agreement’. This provision on which the Court is asked to give a ruling in the present case. You are aware of the points at issue arising from that interpretation. The Hoofdproduktschap voor Akkerbouwprodukten (the Netherlands agency under public law with administrative duties in the economic sphere and having in particular various powers within the framework of the organizations of the agricultural markets) notified the plaintiffs in the main actions of the new provisions through a circular letter giving the date on which that system would enter into force. This circular letter reached the plaintiffs on 28 August 1968 and furthermore stated that according to the interpretation of the Minister for Agriculture and Fisheries, with which the Hoofdproduktschap agreed, there were four conditions for the application of Article 7 of Regulation No 1134/68. Two of them require the consideration of the Court today: first, that in accordance with which the cancellation may relate only to amounts not yet imported or exported when the application was lodged and secondly, that in accordance with which between 3 August and the day of lodging the application no import or export might be made within the framework of the fixing in question. In fact, the provisions thus notified are important to the plaintiffs because of the fact that before the entry into force of those provisions they had requested and obtained advance fixing of export refunds and that, since they had not yet entirely exhausted the certificates obtained for this purpose, it was still possible to use them after the entry into force of the regulation. More precisely (in the case of the plaintiff in Case 16/70 the question turns on the advance fixing of a refund which was obtained on 29 April 1968 and was valid until 31 March 1969 for exports of malt, 1520 metric tonnes of which remained to be exported on 4 August 1968. In April and May 1968 the applicant in Case 17/70 obtained the advance fixing of various refunds relating to the export of products manufactured from barley and oats. The certificates relating to those exports were valid until 31 August 1968 and 30 September 1968 respectively. The decision making the reference (page 16 of the original Dutch text) states the quantities covered by those certificates still outstanding on 4 August 1968. If it is conceded that the conditions notified by the Hoofdproduktschap to the plaintiffs are relevant, there is no doubt that it was impossible for them to benefit from the option to cancel laid down in Article 7 of Regulation No 1134/68 since in fact it has carried out further exports after 4 August 1968 on the basis of the certificates issued before that date. (Full details of this point also are contained in the decision making the reference). On 2 September 1968, however, after receiving the circular letter the plaintiffs approached the Produktschap voor Granen, Zaden en Peulvruchten (that is to say, the Netherlands agency empowered to implement the provisions in question) for the cancellation of their certificates in so far as they were not yet entirely used at 4 August 1968. Likewise, on 2 September 1968 they made an additional protest to the Hoofdproduktschap against the tenor of the circular letter, declaring that they considered it to be incompatible with Regulation No 1134/68 of the Council, at least with regard to the two abovementioned conditions. Both their claims were rejected. We are aware that by decisions of 9 and 17 September the Produktschap voor Granen, Zaden en Peulvruchten, far from rejecting the argument contained in the Hoofdproduktschap's circular letter, dismissed the applications for cancellation in so far as the certificates in questions had been used after 4 August 1968 and before lodging the applications. This decided the undertakings concerned to apply on 7 October 1968 to the College van Beroep voor het Bedrijfsleven (the appropriate Netherlands court for settling disputes relating to economic legislation to which public agencies are parties). The object of those actions is to obtain the annulment of the circular letter in dispute together with the decisions rejecting their applications for the cancellation of the certificates, to obtain a ruling that those applications should be granted and, at least with regard to the plaintiff in the main action in Case 16/70, to obtain damages for the injury suffered. The College van Beroep declared first of all that the submissions .made to it were inadmissible in so far as they related to the Hoofdproduktschap's circular letter. In addition, since it considered that the plaintiffs' claims could only be appraised on the basis of an interpretation of Community law (in this case Article 7 of Regulation No 1134/68) and that it is a court of final instance, the College van Beroep suspended proceedings and, by a decision of 10 April 1970 requested the Court under Article 177 of the EEC Treaty to give a preliminary ruling on the following questions: (1) Does the correct interpretation of the second paragraph of Article 7 of Regulation No 1134/68 of the Council of the European Communities imply that the cancellation provided for in this provision refers exclusively to the entire quota still remaining on 4 August 1968 to which the advance fixing relates? (2) If the reply to Question (1) is in the affirmative, is cancellation also available if, between 4 August 1968 and the dates of lodging the application for cancellation, the quota to which the advance fixing relates has been entirely or partially imported or exported, or is it only possible if no import or export has been effected within the framework of the said fixing between 4 August 1968 and the date of lodging the application for cancellation? (3) If the reply to Question (1) is in the negative, does the correct interpretation of the second paragraph of Article 7 imply that cancellation of the advance fixing is permissible with regard to the balance of the quota outstanding at the date of lodging the application or cancellation or for a part thereof, even if part of the quota to which the advance fixing relates was imported or exported between 4 August 1968 and the date of lodging the application for cancellation? (4) if the reply to question (1) is in the negative, must the second paragraph of Article 7 be taken to mean that it is also possible to cancel the advance fixing with regard to one or more import or export transactions which were effected between 4 August 1968 and the date of lodging the application for cancellation? Such are the questions on which I shall endeavour to give my opinion, on the basis of the written observations submitted by the plaintiff in the main action in Case 16/70, the two defendants, the Commission and the Netherlands Government and on the basis of the oral arguments presented at the hearing by the parties to the main actions and by the Commission. 1. With regard to the first question, whether the cancellation provided for in the second paragraph of Article 7 of Regulation No 1134/68 may only relate to the entire quota for which the advance fixing was granted and which is still outstanding on 4 August 1968, the plaintiffs in the main action and the Commission consider that a negative reply must be given whilst the defendants in the main actions and the Netherlands Government advocate an affirmative reply. In broaching this problem, which is moreover inseparable from Questions (3) and (4), one argument may certainly be dismissed from the outset: this is the argument which the plaintiffs base on the administrative practice followed in other Member States. If, in fact, this argument is of no assistance to them, it is not only because it was not fully clarified in the main proceedings but principally because it is impossible to rely on the weight of examples in interpreting legal provisions and consequently, although reference to a prevailing administrative practice may have a certain value, it constitutes at the most indication. As is always important in matters of interpretation, let us begin by considering the wording of the provision in question and see what indications may be derived from it. The defendants in the main actions and the Netherlands Government emphasize in particular that the wording of the second paragraph of Article 7 concerns a transaction still to be carried out after that date (that is to say, after 4 August 1968) and for which an advance fixing has been obtained and that the provision mentions the cancellation of the advance fixing and of the relevant document or certificate. They observe that it is drafted in the same way as the analogous provisions inserted in Article 1 (2), Article 2 (2) and the second subparagraph of Article 4 (1) of Regulation No 1134/68: in those provisions also the word ‘transaction’ appears only in the singular. They consequently assert that it seems logical to consider that the obligation to export arising from an advance fixing, which still remains on 4 August 1968, forms an entity and does not relate to the various export procedures to be completed within the context of that obligation. They add furthermore that the wording of Article 4 (1) (a) supports this view since with regard to the date of fixing the amounts in question reference is made to a transaction and moreover there is added the expression ‘part of a transaction’ which does not appear in Article 7. Indeed a certain logic cannot be denied those deductions for, as the defendants in the main actions emphasize, there is no longer any doubt that the expression ‘transaction’ appearing in Article 7 cannot refer to the export contract concluded with a customer, as it plainly does not relate in any way to the granting of the certificate. This is clear from the definition of the time for carrying out the transaction appearing in Article 6 of Regulation No 1134/68 which only considers the point when the obligation to export arises under the rules of public law and does not take into account the fulfilment of the obligations as they arise from the contract. Nevertheless, like the Commission, one cannot consider that the argument thus put forward is absolutely conclusive. First of all, it is certainly impossible literally to accumulate the sentences in which the cancellation of the certificate occurs and to consider this as forming an entity. This is recognized by the defendants in the main actions and the Netherlands Government themselves since in this connexion they only take into consideration the part of a transaction still to be carried out after 4 August 1968 and consequently divide the transaction, at least in this respect. Secondly I think that strictly speaking the definition which Article 6 gives for the word ‘transaction’ indicates that it necessarily relates to each of the stages of exportation since it is the completion of each of those stages which constitutes the occurrence of the event ‘on which the amount involved in the transaction becomes due and payable’. But as soon as it is recognized that this is indeed the case (and I consider that the wording of the provision in question does not leave the slightest doubt in this respect), one has no more difficulty than the Commission in also explaining why the word ‘transaction’ is only employed in the singular in Article 7. In any event I consider that it seems probable that the use of the singular originates in the need to use a general term encompassing all the acts listed in the annex to Regulation No 1134/68. In fact the draftsman of Article 7 might equally well have employed the following wording: ‘for an importation or an exportation still to be carried out after that date’, a formula which shows more clearly that it is dealing solely with the importation or exportation considered in isolation and that it does not relate to the obligation to import or to export considered as a whole. In addition, two very simple reasons also indicate that the second paragraph of Article 7 must indeed be understood in the way that I have just explained: first the meaning which the word ‘transaction’ bears in current usage, and secondly, the fact that the general, rule in administrative and commercial practice is that amounts entered on the certificate and those involved in the transaction do not generally coincide, in other words a certificate, far from being exhausted after a single transaction, is usually issued for a large number of transactions and in order to carry them out the amount entered on the certificate may be broken down if so desired. On the basis of a reasonable interpretation of the wording employed in the various provisions of Regulation No 1134/68, I am thus induced to favour the Commission's view or at any rate to state that it is indeed difficult to find a convincing reason for the interpretation advocated by the defendants and the Netherlands Government. This is moreover why the latter rely on other considerations to which in my view they attach much greater importance. They refer again to the option to cancel worded similar terms in Articles 1, 2 and 4 of Regulation No 1134/68; they investigate the recitals in the preamble to the regulation for the reasons which decided the legislature to provide such an option and relate those reasons to Article 7 which is in question in the present case. In this connexion the following passage in the recitals is of particular significance to them: ‘such an adjustment must not prejudice persons who have obtained an advance fixing … and … they should therefore be allowed to cancel that fixing’. The defendants in the main action and the Netherlands Government deduce from this passage that the legislature was guided above all by the desire to avoid prejudicial effects. On the basis of this view they maintain the following line of argument: when an occurrence envisaged by the regulation in question arises, that is to say, an alteration of parities followed by the adjustment of the amounts of the levies and refunds and when it is possible immediately to estimate what the results will be, if the person concerned, instead of instantly applying for the total cancellation of the certificates not yet exhausted, carried out various further transactions and does not subsequently indicate an intention to avail himself of his option to cancel the certificates, this attitude shows that in fact the alteration of the amounts has not prejudiced him and if he endeavours to obtain cancellation it is for other reasons, for example, in order to obtain a benefit if the amount of refunds at the prevailing rate should be adjusted to his advantage. Such an action cannot be tolerated as it is not in accordance with the objectives of the law. The defendants supported by the Netherlands Government, claim that if this holds good within the framework of Articles 1, 2 and 4 it must also be so in the case of Article 7, which amounts to saying that if the conditions laid down are fulfilled the person concerned may not begin by using the outstanding certificates for a certain period before applying for their cancellation. This line of argument incontestibly carries weight but in the end it will be seen that it too is irrelevant. The first objection which can be made against it is that even within the framework of Articles 1, 2 and 4 that is to say within the framework of the option to apply for cancellation following the alteration in parities, it does not: seem completely correct. In fact it is by no means certain that if, on the adjustment of the amounts of the levies and refunds the person concerned did not immediately request the complete cancellation of the certificates fixed in advance but still outstanding, he has not been prejudiced in any way by such adjustment. It may also happen that, by not having applied for an immediate cancellation and having carried out various transactions on the basis of the new conditions, the person concerned is less prejudiced than he would have been if he had obtained an immediate cancellation, in other words contrary to the view of the Netherlands Government, even if the adjustment of the amounts of the levies and refunds fixed in advance is clearly unfavourable to the persons concerned, it is not inconceivable from an economic point of view that they should delay availing themselves of the option to apply for cancellation. There is, however, another basic finding which I must make and indeed it is more important than the foregoing: this is that, both with regard to the role played by the option to cancel and to the reasons which led the Community legislature to make provision for them, it must be wrong to identify Article 7 with Articles 1, 2 and 4. No doubt one may consider, as the defendants in the main actions and the Netherlands Government rightly do, that the aim of the provisions inserted in Articles 1, 2 and 4, which henceforth are permanent features of the arrangements for advance fixing of which the persons concerned were aware when they obtained the certificate, is to protect such persons against prejudicial effects presenting a real and current threat or to contain such prejudicial effects within certain limits: but it is undoubtedly incorrect to speak also of'prejudicial effect with regard to Article 7. What was envisaged in this case was that a new role made applicable to existing legal situations might give rise to a risk not previously existing (the risk of being obliged to accept on the alteration of parities the adjustment of amounts fixed in advance or the cancellation of the certificates in question). In order to be able to deal with this the persons concerned were given the option to apply for the cancellation of certificates issued before the entry into force of Regulation No 1134/68. This amounts to saying that the essential characteristic of Article 7 is that it constitutes a transitional provision which may be applied only to the case with regard to which legal reasons induced the legislature to establish it. In deducing this characteristic we have thereby discovered the factor which is conclusive for the definition of the scope of Article 7. I consequently arrive at the following decisive finding: by reason of the protective nature of such a provision which alone justifies the serious and unforeseeable effect on pre-existing legal relationships, the only conceivable interpretation is a wide one and not the narrow interpretation advocated by the Netherlands Government. It is also clear that this wide interpretation necessarily leads me to assert that the cancellation may relate to the entire quota still remaining at 4 August 1968 on the advance fixing certificate as also to the part of that quota. This is the sole interpretation of the second paragraph of Article 7 of Regulation No 1134/68 which can be correct, as is indicated moreover by the following very important considerations. In fact the option to apply for the cancellation of a certificate breaks a fundamental rule relating to the issue of the certificates: that in accordance with which the person concerned is bound to carry out the transaction contemplated which the legislature has even ensured by providing for a deposit. Exceptions of this nature must be applied as restrictively as possible as this is the sole means of limiting the disturbances which they may involve in the functioning of the common organizations of the agricultural markets. It consequently appears that from the point of view of the common organizations of the markets as well, when the wording of the provision allows it, as is the case in the second paragraph of Article 7, such cancellation of certificates is permissible only if their interpretation is as restricted as possible. I should finally like to observe that this is the only interpretation which provides a reasonable explanation for the length of the period of time provided by the second paragraph of Article 7. If it were considered that the sole option open to the persons concerned was either to refrain from applying for cancellation or to obtain the cancellation of the advance fixings for the entire amount still outstanding on 4 August 1968, a much shorter period would have sufficed to make this choice. All these considerations, both on the basis of the letter and the spirit of the second paragraph of Article 7 of Regulation No 1134/68, consequently lead me to conclude that the first question must be given a negative reply; in other words to concur with the plaintiffs in the main actions and with the Commission in asserting that the cancellation obtained on the basis of Article 7 need not necessarily relate to the entire quantity still outstanding on 4 August 1968 to which the advance fixing relates. 2. Since the second question was only put should the first receive an affirmative reply, the result of my examination ipso facto allows me to dispense with consideration of the problems which it raises. 3. With regard to the third question whereby the College van Beroep requests the Court to rule whether an application may be made for cancellation of the advance fixing with regard to the quota still outstanding at the date of lodging the application for cancellation no matter what amounts have been imported or exported on the basis of the advance fixing between 4 August 1968 and the date of lodging the application, the Court will have no difficulty in resolving it if it adopts the reply which I suggest should be given to the first question. With regard to the third question the finding is in fact unavoidable that, if the persons concerned use an export certificate with an advance fixing after the entry into force of Regulation No 1134/68, this nevertheless does not preclude them from lodging an application for cancellation with regard to the remaining quantities. If this were not so the sole alternative with which they would in principle be faced would be either an immediate renunciation of any export for a certain period (more precisely, until the issue of new certificates) which, as we have seen, might involve disadvantageous commercial consequences, or not to make use of the option to apply for cancellation provided in the second paragraph of Article 7, which would mean that they were unable to take adequate precautions against the new risk to which Regulation No 1134/68 gives rise. There is no doubt, as I have shown above, that it would be difficult to reconcile this situation with the protective role which it was intended should be played by the transitional arrangements established by the second paragraph of Article 7. I wish to observe in addition that the persons concerned often do not control the date of customs clearance, that is to say, the date on which the goods are released from the customs. Consequently the carrying out of a transaction and the use of a certificate might occur after the entry into force of Regulation No 1134/68 although the holder of the certificate was unaware in advance of the date of export. There is a final consideration militating in favour of the interpretation which I put forward: this is that there is sometimes delay in the distribution of the Official Journal and consequently publication of the regulations in all the official languages at times takes place only after their entry into force. Moreover, according to the declarations of the plaintiffs in the main actions, this was so in the case of Regulation No 1134/68. It is clear that this constitutes yet another reason indicating why the certificates with advance fixings were used after 4 August 1968 without knowledge of the existence of Regulation No 1134/68. It is furthermore impossible to maintain that the use of such certificates is necessarily to be regarded as a renunciation of the option to apply for cancellation under the second paragraph of Article 7. All these considerations consequently show that, as the plaintiffs in the main actions and the Commission have advocated, an affirmative answer must indeed be given to the third question. 4. Finally, by its fourth question the College van Beroep also asks the Court to rule whether the option to apply for annulment under the second paragraph of Article 7 may be extended to exportations already effected, if in other words the cancellation may have retroactive effect, or if on the contrary it may only relate to amounts outstanding at the date of lodging the application. In this connexion the plaintiffs in the main action are alone in claiming that the provisions in question must be widely interpreted, which is to their advantage, although in the course of the hearing before the College van Beroep they declared themselves ready to concede that cancellation might possibly apply only to exportations not yet effected thereby conforming to the view maintained in all the other observations which have been submitted to you. The reply to this point does not seem to me difficult. Once again it is the Commission which has provided the decisive arguments. Those arguments are based essentially on the notion that since it constitutes a retroactive measure the cancellation of advance fixings relating to exports already properly effected and which exhaust the quantities entered on the certificates, is of an exceptional nature. The Commission declares that if the Community legislature had intended to make provision for this power it would have done so clearly and expressly and the regulation would consequently have contained unambiguous provisions on the documents for regularization which would have been necessary in such a case. Since the regulation has no provision of this nature it is clear that we can only conclude that the legislature did not intend it to have so wide a scope. Furthermore (and this is another point which the Commission has noted) we must not lose sight of the fact that implementation of the obligation to export which is concomitant with obtaining the certificates constitutes an essential element in the common organizations of the markets. Respect for the rule alone will avoid disturbing the system the proper functioning of which requires that a comprehensive view must always be taken of the developments of the market. It then appears that, although exceptions to the rule (such as the cancellation of certificates) may be contemplated, this is so only if they are contained within the strictest possible bounds. In relation to the present case this principle precludes the retroactive application of the cancellation to exports already effected. Taking account of those considerations the reply to the fourth questions is likewise beyond all doubt. 5. Summary Here then are the replies called for by the questions which have been put to the Court by the College van Beroep voor het Bedrijfsleven: (a) The option to cancel provided for in the second paragraph of Article 7 of Regulation No 1134/68 does not necessarily relate to the entire quota still outstanding on 4 August 1968 to which a certificate of advance fixing relates; (b) Cancellation of the advance fixing may be obtained under the second paragraph of Article 7 of Regulation No 1134/68 amounts still outstanding at the date of lodging the application, whether such quantities were exported or imported on the basis of such fixing between 4 August 1968 and the day of lodging the application for cancellation; (c) On the other hand the advance fixing may not be cancelled with regard to import transactions effected between 4 August 1968 and the day of lodging the application for cancellation. As is normal, it is unnecessary for me to express an opinion as to costs since it is for the court making the request to give a ruling on this point. ( ) Translated from the French version.

Judgment of the Court (Third Chamber) of 10 September 2009 – Commission v Belgium (Case C‑100/08) Failure of a Member State to fulfil its obligations – Articles 28 EC and 30 EC –Protection of species of wild fauna and flora – Legislation on the keeping and marketing of birds born and bred in captivity legally placed on the market in other Member States 1. Free movement of goods – Quantitative restrictions – Measures having equivalent effect – Meaning (Art. 28 EC) (see paras 81-82) 2. Free movement of goods – Quantitative restrictions – Measures having equivalent effect (Arts 28 EC and 30 EC; Council Regulation No 338/97; Commission Regulation No 865/2006) (see paras 84-88, 91-93, 96-103, 110-113) 3. Environment – Conservation of wild birds – Directive 79/409 – Scope (Council Directive 79/409) (see para. 106) Re: Failure of a Member State to fulfil obligations – Infringement of Article 28 EC – Protection of species of wild fauna and flora – Prohibition of keeping certain birds legally placed on the market in other Member States. Operative part The Court: 1. Declares that, – by making the import, keeping and sale of specimens of birds born and bred in captivity legally placed on the market in other Member States subject to restrictive conditions that require the market participants concerned to alter the marking of the birds so as to satisfy the conditions specifically required by the Belgium legislation, and by failing to recognise the marking accepted in other Member States or certificates issued in accordance with Council Regulation (EC) No 338/97 of 9 December 1996 on the protection of species of wild fauna and flora by regulating trade therein; and – by denying traders the opportunity to obtain exemptions from the prohibition of keeping indigenous European birds legally placed on the market in other Member States, the Kingdom of Belgium has failed to fulfil its obligations under Article 28 EC 2. Orders the Kingdom of Belgium to pay the costs.

Mr. Justice Hart: This claim is brought by the personal representatives of the late David Strover ("the deceased") against the defendants, the deceased's brother John Strover ("J. Strover") and John Ironmonger ("Mr Ironmonger") in respect of the proceeds of a 10 year policy of assurance (issued on 8th May 1992 and expiring on 5th August 2002) issued by Friends Provident ("the FP Policy"). The deceased died on 20th September 2001, and thereupon the £100,000 guaranteed benefit became payable. The defendants have a counterclaim in respect of another policy ("the GA Policy") which was taken out by the deceased in 1992 assuring payment of £150,000 on his death within 10 years. The Claim From 1988 until about April 1999 the deceased had been a partner with the defendants in the firm of Strover Leader & Co. Chartered Accountants. A firm of that name had originally been founded in 1973 by J. Strover and a Mr Peter Leader. Mr Leader had gone his separate way in 1981 and shortly thereafter J. Strover had been joined by Mr Ironmonger. The deceased joined the practice as a partner in 1988, on the terms that his share in the partnership was 25%. There was no written agreement as to the terms of the partnership, which was at will. J. Strover and Mr Ironmonger had agreed, in 1986, to take out term policies on their respective lives written under trust to cover the eventuality of one of them dying and the other then being faced with the prospect of having to pay out the deceased partner's share and hire additional staff in order to carry on the practice. After the deceased joined it was agreed that he should take out a similar policy, and maintain it at his own expense. At the same time it was agreed that J Strover and Mr Ironmonger should re-write the trusts on which their existing policies were written so as to include the deceased within the ambit of their protection. The employee who dealt with such matters within the firm on behalf of the partners was David Critchfield. Apart from the policy documentation itself the only contemporary evidence of the deceased's intentions are to be found in a note written by him to Mr Critchfield on 14th January 1992 in the following terms: "David I need to take out a £100k life policy (new policy) quite apart from other policies. The objective is that the other two partners (before I joined) set up policies whereby say if JYRS died £100k was payable into the partnership to assist in the 'crippling' effect of 'buying'/paying out the deceased's family. My £100k policy would place my partners as beneficiaries rather than my antecedents to my estate. Pls can we discuss/consider/execute?" The FP Policy was written under trust. A schedule to it identified J. Strover and Mr Ironmonger as "Additional Trustees" and identified those two as "the Beneficiaries" in Box D. Clause 2 of the Trust Provisions gave the Trustees a power of appointment amongst a class consisting of the applicant (i.e. the deceased) his children and widow and any other person nominated by him, exercisable by deed executed before the 2nd anniversary of the deceased's death. There was a restriction on the trustees appointing to themselves beneficially, and a power to release the power of appointment. Subject thereto the Trust Fund (defined to include the policy and its proceeds) was to be held on trust for the Beneficiaries, i.e. J. Strover and Mr Ironmonger. At the same time as the FP Policy was issued, J. Strover and Mr Ironmonger appear to have effected changes to the trusts on which their respective existing policies were issued so as to mirror those provisions (thus the deceased and Mr Ironmonger became additional trustees of and default beneficiaries under J. Strover's policy, and the deceased and J. Strover became additional trustees of and default beneficiaries under Mr Ironmonger's policy). Mr Christensen, who appeared before me on behalf of the deceased, submitted that this was mere coincidence. Although there is no direct evidence that the parties at this point had agreed that each of their policies would mirror each other, it seems to me clear that it was no coincidence that they did. According to the unchallenged evidence of J. Strover, the deceased had dragged his feet over taking out his policy and had had to be pressed to do so. It seems inconceivable that the fact that the other two trusts were changed at the same time and in the same way was coincidence. The only sensible inference is that this was agreed to between the partners. The primary purpose for which the partners had effected and maintained those policies, namely death of the insured while he was a partner, never happened. What happened was that the deceased found, in early 1999 and aged only 55, that his health required him to cease practice. A meeting took place in about May 1999 at which it was agreed that he would be treated as having retired from the partnership with effect from 31st March 1999 (a convenient date, being one to which under a recent accounting change the annual partnership accounts were to be drawn). There appears to have been agreement in principle as to the basis upon which what was due to him from the partnership was to be calculated although much remained to be worked out and agreed as to the detail. The deceased and his wife had for some years been in very strained financial circumstances. The deceased's widow in her evidence attributes blame for this and much else to the defendants but I am not in a position (nor is it necessary) to make findings as to the truth of this. The tone of such correspondence as I have between the deceased and his former partners does not suggest that his relationship with them was at all strained on a personal level. What is clear is that following his retirement from the firm the deceased's circumstances became even more parlous. One of the matters discussed between himself and the defendants at meetings which took place in May 1999 (at his home) and February 2000 (in the office) was as to whether various payments which the partnership had made and was continuing to make on his behalf should continue. He was anxious to reduce them so far as possible. These included payment of the premiums in respect of various policies. One of those policies was a permanent health insurance policy (also with Friends Provident) under which the deceased hoped to claim. Another was the FP Policy. The historic practice within the firm was to pay the premiums of these from the partnership bank account and to debit the payments to the deceased's drawings. At that stage the deceased wished both policies to continue to be maintained, in the case of the FP Policy because, as he told his partners, he thought it was of value to him because he could not by then obtain life cover because of his state of health. The defendants were content for this to happen and continued thereafter to pay the premiums, in the case of the FP Policy until his death, and in the case of the permanent health policy until in July 2001 he asked for those payments to be stopped. In each case this was on the footing that the payments made would be debited to the sums owing by the firm to the deceased on his capital account. The state of discussions between the defendants and the deceased can be gauged from correspondence which took place between Mr Ironmonger and the deceased in July 2001. A letter to the deceased from Mr Ironmonger dated 4th July 2001 read in material part: "It will I am sure come as no surprise to you, that having continued to pay your standing orders, direct debits since 1 April 1999, we now think it is apparent from the various papers enclosed that your 'capital' has been fully repaid by you, and probably over repaid. We shall continue all standing orders, direct debits and cash payments on your account during July, but will pay only half the total payments in August and September with no further payments after 30 September. This provides us with a space to agree on final numbers with you. (Rather than us simply halving things please suggest which to stop and which to continue). I am enclosing various papers towards sorting the position out and suggest that as soon as convenient we all get together to sort out the details." Included in those papers was a statement of the state of the deceased's capital account as at 31st May 2001 after allowing, amongst other things, for drawings made since 31st March 1999. From an accompanying analysis of drawings as at 31st May 2001 it is clear that these comprised for the most part various direct debits and standing orders which had continued to be paid by the continuing partners after 31st March 1999, including premiums payable to Friends Provident both in relation to a permanent health policy and in respect of the FP Policy, there described as "Life Cover in Trust". The deceased replied on 7th July in a letter including the following passages: "As far I see it we three met in the office on 9th February 2000 (last year) to resolve as much as we could that was outstanding. Draft accounts made up to the date of my retirement – 31 March 1999 were presented, mainly for information and subject to refinement. The subject of work in progress was generally discussed and such matters as Osborne, Shayler and Maclean etc. were mentioned. We agreed that they should be taken out of the equation and put on a separate collection basis. No further progress was made or indeed mention made of these accounts until I wrote to you on 29th July last year on the subject of the unpaid tax on my profit share to 31st March 1999. I also mentioned that a formal system of repayment should be set up to recognise amounts due to me and also to finalise the 1999 accounts-No reply from you. In December last year John Strover wrote to me [via the weekly notelet system] warning me to stand by for some accounts imminently. Still nothing received. At this stage I am now personally involved with hospitals, doctors, specialists and the countdown for a major op. so SL&Co were bottom of my list of priorities. Now-5th July I receive a most comprehensive pack of schedules and other paperwork through the post with a bald statement that in less than a month repayments are to cease. I cannot accept that this course of action is reasonable or indeed that the firm have gone even halfway to repaying off all the amounts due to me. However to further my original request and take a positive and objective view on the current position I will comment in detail on the contents of your letter. … LIST OF DRAWINGS Thank you for keeping going certain payments on my behalf. Please make sure that no further payments to Friends Provident for sickness policies as you know that they are a load of Shisters, but I obviously need to keep the life policy going. As I may have mentioned nobody will now insure me for life -not even Allied Crow bar! I was not sure what PP Funding was about. This a fairly substantial amount do I Still need to keep it going?" Mr Ironmonger replied to this on 27th July: "I will tell friends Provident to cancel the sickness policy." but not commenting further. The deceased then died without there having been a final resolution of the position consequent upon his retirement. The defendants had evidently not cancelled the DDs in respect of the FP Policy, which accordingly remained in force at his death. The defendants thereafter sought to reach agreement with the widow on a variety of issues, including as to who was entitled to the benefit of the FP Policy proceeds. At one stage the suggestion seems to have been made by the defendants that the fair thing to do was to split the proceeds three ways but it is not clear that this was ever communicated to the widow. The defendants, as surviving trustees of the policy, seem to have given no thought as to whether they should appoint the proceeds under their power of appointment and if so to whom. They had only become conscious of the existence of that power of appointment and their interest in default of appointment when reviewing the position after the death of the deceased. At all events no appointment was made within the 2 year period. The consequence was that, on the plain terms of the express trust, the policy proceeds are held for the defendants in equal shares. The claimants seek to avoid that result by a variety of arguments. All those arguments are based on one or other of the following propositions: i) First, it is said that from the outset the sole purpose of the policy was to guard against the death of a partner while he was in partnership. Had that event happened the policy trusts would have served that purpose well. The surviving partners would have been able to use the policy proceeds for their own benefit in coping with the potentially crippling effects of the death, which would have included both the need to fund the payment out of the deceased partner's entitlements and to hire additional staff and so forth. The policy trusts were, however, inept to deal with a case where the insured partner retired. There would be no policy proceeds available in such a case to fund the continuing partners' new obligations and needs: the existence (or continued existence) of the policy trusts was simply irrelevant in that situation. It must therefore have been intended that, in those circumstances, the only beneficiary of the policy would be the insured himself. It would be a matter for him as to whether or not to continue to pay the premiums. ii) Secondly, it was said that whatever the true position the deceased must have believed that by continuing to allow the policy premiums to be debited to him as his drawings he was doing something for his own benefit rather than conferring a bounty on the defendants. Put the other way he would never have assented to their payment at his expense had he appreciated that on his death before 5th August 2002 the proceeds would all go to the defendants to the exclusion of his estate. So far as the facts are concerned, it seems to me that the second proposition and part of the first are sound. As to the first, the fact is that, on the evidence before me, the partners did not consider at the time at which the policy trusts were written, what the position would be in the event of a dissolution of the partnership during their joint lifetimes or an agreed retirement. It seems to me clear that the policy trusts were written without giving thought to this scenario. I would repeat that I do not accept Mr Christensen's contention that the re-writing of the defendants' policy trusts so as to mirror those of the FP Policy was coincidental. The only sensible inference is that there was an agreement that each would have a policy written on the same trusts, mutatis mutandis. The part of the first proposition with which I disagree is the contention as to what the parties actually intended or should be taken as having intended from the outset in the event of the retirement of an insured partner. Mr Christensen submitted that there was evidence that, from the outset, the partners had intended that in the event of a retirement the retiree would have the benefit of his policy if he chose to continue to pay the premiums. He was able in cross-examination to obtain an answer from J. Strover to the effect that, as I noted it: "We were trying to achieve a situation in which the retiring partner would be able to take the policy benefit for himself if he chose to maintain the policy." This answer was given in connection with questions he had been asked, first about the circumstances in which he and Peter Leader had dissolved their partnership (when similar policies, not written in trust, had been so dealt with) and, secondly, as to the background against which he and Mr Ironmonger had originally effected policies written under trust. However that does not, in my judgment, lead to the conclusion that when the three partners declared the trusts which they did in 1992 they had the specific intention contended for. Because those trusts included a power of appointment they were flexible enough to achieve the result which J. Strover in his evidence envisaged as and when the need arose to consider the position. The contemporary evidence does not justify the conclusion that those trusts did not reflect that intention if indeed it existed in 1992. I was not persuaded on the evidence that it did. I do not in fact think that any real consideration was given to the point at that time. As to the second proposition, it is clear that the deceased wanted to keep the FP Policy alive after his retirement because he thought it was of potential value to him, and because he was by that time uninsurable. The defendants were not in a position (and never claimed to be) to insist that, after he had ceased to be a partner, he continue to pay the premiums for their potential benefit. The whole post-retirement discussion between the deceased and his former partners is, in my judgment, consistent with that position. In their evidence the defendants went a considerable way to accepting this position. As already mentioned, neither in fact appreciated until after the death of the deceased that the combined effect of the trusts and of the fact that the deceased had kept the policy going was that, unless they appointed to the contrary, they would be able to scoop the whole of what they clearly then regarded as a windfall benefit. What they then persuaded themselves was that the true nature of the understanding between themselves and the deceased was, and had been right from the outset in 1992, that, on the deceased's retirement, the policy trusts would continue to apply unless and until all financial issues resulting from the retirement had been resolved between themselves and the deceased, whereupon (and I quote from Mr Ironmonger's evidence before me): "it would then have been the common assumption that the policy and its benefits were then his whatever the trusts actually said without anything further needing to be done." I confess to finding strange the idea of the deceased's beneficial entitlement to the policy being subject to a pre-condition that all financial issues be first resolved. As an abstract matter the existence of the policy had no connection with the retirement of a partner and the payment out of his entitlements. It was not suggested that this pre-condition to what was otherwise the common (albeit mistaken) assumption was ever the subject of any express communication between the defendants and the deceased. The proposition that the deceased shared such an assumption posits that the deceased was willing to maintain the policy at his own expense following his retirement out of the hope either that the consequences of his retirement would finally have been worked out before his death before August 2002, or that if he died before such a resolution the defendants would nevertheless make some appointment in favour of his estate or dependants. This is thoroughly implausible. There is no reason to suppose that the deceased had any better knowledge than the defendants of the content of the policy trusts when he asked them to continue debiting the premiums to his account rather than to allow the policy to lapse. I find that at that stage both the deceased and the defendants were proceeding on the assumption that if he continued so to maintain the policy it was on the footing that he had the benefit of the policy and that his having that benefit was not subject to any pre-condition that there should be final agreement as to every financial issue arising out of the retirement. I do not accept the evidence of J. Strover or Mr Ironmonger that they themselves believed at the time of the deceased's retirement that the deceased's entitlement was subject to any such pre-condition. That is not because they were other than sincere in their evidence. I did not find them to be untruthful witnesses. However I think that their evidence as to what they believed at the time has been coloured sub-consciously by what they now believe to be a correct analysis and a fair result. Indications of such a sub-conscious process at work was apparent in J. Strover's initial (but subsequently withdrawn) evidence as to the nature of his original agreement with Mr Leader. Mr Ironmonger in his evidence pointed out that in his letter of 7th July 2001 the deceased had not quarrelled with the description of the policy as being "in trust", but Mr Ironmonger did not at that point have a clear idea of what this meant, nor did he correct in his subsequent letter the assumption which the deceased was clearly making. The fact is that neither of them really knew, and nor did J. Strover, what was meant by the policy being "in trust", nor did any of them think that it mattered. What are the legal consequences of these findings of fact? The claimants' primary case is that the policy trusts should be rectified, it being submitted that Box D ought to be reformed by inserting the words: "if the settlor shall die whilst a partner in the firm of Strover Leader & Co. or otherwise for the settlor absolutely.." I do not think that this is a case for rectification at all. The fact of the matter is that the trusts on which each partner caused his policy to be written were precisely the trusts on which each intended to write them. The problem was that they, neither collectively nor individually, had directed their minds to what was to happen in the event of a retirement. Had they done so it is entirely possible, even probable, that they would have accepted the amendment which the proposed rectification seeks to contrive, and which neatly achieves a result which was otherwise achievable only by the relatively cumbersome (and non-compellable) route of an exercise of the power of appointment. That does not, however, in my judgment entitle the court to rectify the policy trusts, whether one views the document being rectified as the implementation of a tri-lateral agreement or (as Mr Christensen submitted it was) a purely unilateral instrument in relation to which the intention of the deceased alone had to be considered. In fact I consider the former to be the correct analysis since I have found that all the parties were agreed on the form which their respective policy trusts should take. The alternative case, introduced by amendment in the course of the trial, is that the policy proceeds in the hands of the defendants are subject to a constructive trust "for such partnership purposes as had been intended by the settlor" and that the partnership having been dissolved the purposes (to provide death in service protection) had come to an end. There is then a pleading that the trusts having failed there is a resulting trust to the deceased. That is not an approach which, expressed in that way, I am able to share. As I understood it, it depended on establishing a shared understanding from the outset as to what was to happen on retirement, and I have rejected the submission that there was such a shared understanding. The findings of fact which I have made in the course of considering the claimants' pleaded case do, however, expose the possibility of putting the claimants' case in a different way. This, unfortunately, did not occur to me until after the argument had concluded on 13th April 2005 and I had retired to consider my judgment to be delivered the following day. It having occurred to me, I invited the parties overnight to consider the point. The point as expressed by me in my note to counsel was: "If I were to find that the basis on which the deceased kept up the payments of premium (or consented to his being debited with their cost) following his retirement was, to the knowledge of the defendants, that the policy and its benefits were wholly for his benefit, a possible line of argument seems to me to be that the defendants should not be allowed to contend to the contrary following his death. The argument might be put on the basis of an estoppel by (implied) representation, an estoppel by convention, or constructive trust/proprietary estoppel (the latter doctrines having a considerable overlap in the light of Oxley v Hiscock [2004] EWCA Civ 546). The question upon which I wish to hear further argument is whether any of these arguments is, or can be, relied on by the claimant." In the light of that, when the court sat on the following day, Mr Christensen submitted that the correct analysis on those findings would be that there was an estoppel by convention, relying on the well-known passage in the judgment of Brandon LJ in Amalgamated Investment & Property Company Ltd v. Texas Commerce International Bank [1982] 1 QB 84 at p. 130G-131A which cites with approval the relevant passage in the 1977 edition of Spencer Bower & Turner, Estoppel by Representation. Alternatively, he submitted that the doctrine of proprietary estoppel applied: the deceased had expended money (or incurred a liability) in a mistaken belief as to his rights, while the defendants had stood by and encouraged that expenditure. That raised an equity in favour of the deceased, which the court should satisfy by fulfilling the common expectation, namely that the FP Policy proceeds should be treated as his. He referred me to the passage in the judgment of Browne-Wilkinson V-C in the Court of Appeal in Grant v. Edwards [1986] 1 Ch. 638 at 657G-H as containing the applicable statement of principle. He was not inclined to put forward any argument for a constructive trust. As to that he confined his constructive trust argument to the situation where a common intention had been established at the outset. He did not seek to argue that either of the estoppel arguments were open to him on his existing pleading (indeed he conceded that they were not). He did not seek permission to amend his pleading. Mr Dumont, while pointing out that the concession that the arguments were not open to the claimants on their pleading meant that strictly he did not need to deal with those arguments, took a number of points which he had very helpfully reduced to written form overnight. In summary they were: i) that the evidence did not justify the findings hypothesised in my note; ii) that there had been no detriment to, or change of position on the part of, the deceased; iii) that any equity raised in the deceased's favour should be proportionate to the detriment suffered which was, at its highest, the premiums mistakenly debited to his capital account. The further observations on the facts which Mr Dumont made were, first, that it was wrong to say that the deceased had kept up the payment of the premiums: they had in fact been kept up by the defendants. That submission is correct. However, as I find, the defendants owed no obligation to him, and he owed none to them, to keep up those payments. It is clear that they did so as the result of the discussions which had taken place in May 1999 and February 2000 as to which payments "the partnership" would continue to make at the deceased's expense. It is clear that the continued payment was on the basis that they would be debited to the deceased in the final accounts. Secondly it was submitted that the accounting, post retirement, for these premiums was exactly the same as it always had been, namely as drawings on capital account: the continuing partners did not need the consent of the deceased to continue that accounting practice. I do not accept this submission. While the partnership continued the deceased was bound, by agreement with his partners, to maintain the policy at his own expense. This was reflected (and secured) by the practice of paying them out of partnership funds and treating them as drawings by the individual partners. Following the deceased's retirement his obligation to pay them ceased. The defendants would not in my judgment have been justified in continuing to pay them at his expense without his consent. In fact all the evidence was that it was the deceased who asked the defendants to keep up the payments on his behalf because he could not now get life cover. It was accepted by J. Strover in his oral evidence that words to that effect had been used by the deceased at one or other of the May 1999 or February 2000 meetings, and were what was being referred to by him in the conversation alluded to by Mr Fairbrass in a letter he wrote to Mr Ironmonger in March 2002. Thirdly, he relied on the deceased not having demurred at the description of the policy as "Life Cover in Trust" in Mr Ironmonger's letter to him of 4th July 2001. However, as I have found, neither Mr Ironmonger nor he in fact appreciated what this meant. Fourthly, he pointed out that the payments of premiums after July 2001 amounted at most to £134.76. To my riposte that the date to look at was either May 1999 or February 2000 (when the continued maintenance of the policy was discussed) Mr Dumont replied (and I agree) that even on that basis the amounts paid were relatively small (the premium was some £40.00 per month). Finally he submitted that, the point not having been pleaded, relevant facts had not been canvassed with the witnesses. I return to this point below. In support of the submission that there had been no detriment to, or change of position on the part of the deceased sufficient to raise an estoppel, Mr Dumont submitted that the deceased had not been prejudiced in any way. He had not himself paid anything. All that had happened was that book entries had been made for the purposes of settling a final partnership account. No such account had ever been settled and he had been, and his estate was, free to withdraw his consent to the debiting which had taken place. Moreover, it was submitted, there had been no change of position on the deceased's part since, by 7th July 2001, his capital account was already overdrawn yet the defendants confirmed thereafter, notwithstanding their earlier threat, to make the payments. There is much force in those submissions. However, I do not think it possible to say that there was no detriment to the deceased. One has in my judgment to consider what the position would have been had the parties in fact appreciated what the true position was. Had they appreciated it, it would not have affected the deceased's wish that the policy be maintained as his expense for his benefit. Except as a negotiating tool, there was no obvious reason why his former partners should not have acceded to that wish without more ado. Since, as I find, they assumed that the policy was already for his benefit, I think that this is what they would have done. As a negotiating tool it would have been a double pointed dagger. As matters in fact stood, the defendants' own mirror policies suffered from the mirror vice that their benefits were in each case payable, as to half, to the deceased, unless (as a trustee) he could be prevailed on to join in an exercise of the power of appointment to alter that destination. I do not think that in reality the parties to the imaginary negotiation would have spent much time in arguing over who was the better life. I think that they would quite quickly have agreed to re-organise all the policies so that the "correct" default beneficiaries were put in place. Accordingly the deceased's mistaken assumption (which as I have found was shared) did cause him detriment. Mr Dumont's third proposition assumed that I was against him in relation to the principle of an application in those circumstances of the doctrine of proprietary estoppel. This proposition was that that doctrine gave rise to the "minimum equity to do justice": Crabbe v. Arun D.C. [1976] Ch 179, per Scarman LJ at 198, approved in Gillett v. Holt [2001] Ch 210. Mr Dumont took me to the recent decision of the Court of Appeal in Jennings v. Rice [2003] 1 P&CR 100 where the judgments of Aldous LJ and Robert Walker LJ (with both of which Mantell LJ agreed) stress the need for proportionality between the expectation and the detriment in fashioning the remedy to be given. Mr Dumont submitted that the minimum equity, which would do justice in the present case, was the re-crediting of the payments. Those submissions did not in terms deal with an analysis based on estoppel by convention. As it seems to me an estoppel by convention might have a different effect so far as remedy is concerned from a proprietary estoppel. The submissions did however accept that, subject to the point about detriment, if I made the findings contemplated by my note to counsel, there would prima facie be a proprietary estoppel. In my judgment this is, if anything a case of proprietary estoppel rather than estoppel by convention. The latter doctrine applies in the context of a transaction between the parties made on a common assumption. Here it is difficult to identify that transaction. On the findings I have made I conclude, therefore, that there was a proprietary estoppel, and that that is the only route by which the claimants can in theory succeed in their claim to any relief in respect of the policy or the premiums paid to maintain it. The question which has given me real anxiety is whether the court should grant such relief in the light of the concession that the relief was not available on the basis of the pleadings. With much doubt I have concluded that it can and should for the following reasons. To have raised the point, a pleading would have had to assert that it was the common belief of the parties following the retirement that the benefit of the policy would be the deceased's if he chose to maintain the premiums. It would also have had to plead that he had paid the premiums following the retirement on the basis of that assumption. Neither of those allegations was pleaded. However both allegations formed central planks in the evidence relied on by the claimants in support of their original plea that "it was implicit in the [oral agreement made in 1992] that any policy of assurance taken out for [the] purpose [of providing financial protection for the continuation of a Partner in practice]" (see paragraph 3 of the Amended Particulars of Claim) and their plea (in paragraph 7) that it had not been the deceased's intention to gift the proceeds to the defendants. The only evidence upon which the claimants could and did rely to support these pleas was, apart from the nature of the policy itself, the inference to be drawn from the conduct of the deceased in paying the premiums. The answer given by J. Strover in his witness statement in relation to this was: "It was our understanding and still is that in the event of one or other of us retiring from the partnership for whatever reason the policies would remain in force until both the terms on which either of us were to retire had been agreed and any monies due had been paid." Accordingly, on the rectification claim one of the central issues was as to the basis on which the premiums had continued to be paid following the retirement. This was fully canvassed in the oral evidence. I am not persuaded that Mr Dumont would have conducted his re-examination of his witnesses in any different manner had he appreciated that this argument would be made. So far as detriment and/or change of position is concerned, it can I think fairly be said that the failure to plead the point meant that the defendants were never proofed, or otherwise given the opportunity to give evidence either in chief or in re-examination, on what would have happened had the common assumption not been made. Such evidence, necessarily of a counter-factual nature, would however in reality have been of more of an argumentative than truly evidential character. Given my finding, on the evidence which they did give and which I was not able to accept in its totality, that their assumption was that the policy and its proceeds belonged to the deceased if he chose to continue the payments, I do not think that they have been deprived of anything of substance in not having the opportunity to argue about what would have happened had the incorrect assumption not been made. Following the conclusion of that further argument, and after I had once more reserved my judgment, Mr Christensen wrote to me supplying a form of amendment with further written submissions in favour of its being allowed. Mr Dumont responded (at my invitation) with some further short written submissions of his own. This further passage of submissions did not cause me to alter the view at which I had by then provisionally arrived and which is expressed in paragraphs 37 to 39 above. I have accordingly considered it appropriate to go on to consider what the consequences of the proprietary estoppel should be in terms of remedy. I do not think that the just solution is obvious. In his discussion of the question in Jennings v. Rice [2003] 1 P&CR 100, Robert Walker LJ said at paragraph 44: "The need to search for the right principles cannot be avoided. But it is unlikely to be a short or simple search, because (as appears from both the English and Australian authorities) proprietary estoppel can apply in a wide variety of factual situations, and any summary formula is likely to prove to be an over-simplification. The cases show a wide range of variation in both of the main elements, that is the quality of the assurances which give rise to the claimant's expectations and the extent of the claimant's detrimental reliance on the assurances. The doctrine applies only if these elements, in combination, make it unconscionable for the person giving the assurances (whom I will call the benefactor, although that may not always be an appropriate label) to go back on them." and, after a review of the authorities and discussion of the issues, summarised the position at paragraph 50 in the following words: "To recapitulate: there is a category of case in which the benefactor and the claimant have reached a mutual understanding which is in reasonably clear terms but does not amount to a contract. I have already referred to the typical case of a carer who has the expectation of coming into the benefactor's house, either outright or for life. In such a case the court's natural response is to fulfil the claimant's expectations. But if the claimant's expectations are uncertain, or extravagant, or out of all proportion to the detriment which the claimant has suffered, the court can and should recognise that the claimant's equity should be satisfied in another (and generally more limited) way." This is not really a case involving an "assurance" at all, except to the extent that the common assumption implied one. The mistake, which was made, was not one which could be blamed more on the defendants than on the deceased himself. They were all three trustees of the policy and ought to have known what the policy trusts provided. It is probable that the defendants were in a better position to know since they had the documentation and the deceased did not (an inference I draw from the correspondence between Mr Ironmonger and Mr Fairbrass after the death). That fact by itself is not, however, what makes it unconscionable for the defendants now to assert their strict rights under the policy trusts. What in my judgment makes it unconscionable for them to do so is my conviction that, but for the mistake having been made, they would not have insisted on those strict rights during the period while the deceased's entitlements were under review following his retirement. The common mistake deprived the deceased of the opportunity to invite the defendants to take the corrective action which was necessary to be taken if the consequences of that mistake were to be avoided. My conclusion is that the equity in these circumstances is best valued by assessing the probabilities of the defendants, had they been so invited, of taking those corrective steps. For the reasons given above, those seem to me to have been very high. Although the deceased's health was poor, he was aged only 55 when he retired. J. Strover told me that the possibility that he might return to work in the practice as a consultant was actively contemplated in the post-retirement period. There was no evidence that anyone contemplated that he would actually die during the remaining term of the policy. The most obvious use for the policy in the intervening period would have been if such a policy had been required to support some short term borrowing during that period. In the nature of things that would only have been a borrowing by the deceased himself. The beneficial ownership of the policy would therefore not have likely to have been a matter of much controversy between the parties. On the defendant's case as to their beliefs as to its purpose, their only interest in retaining their beneficial interest was as a carrot to encourage the deceased to agree the final terms of the dissolution but, for the reasons given in paragraph 32 above, this would not have been a very powerful tool. Although a very high one, the probabilities of the corrective steps being taken were not 100%. In order to allow for the possibility that they would not have been taken, either at all or in time, some discount must be allowed. I would assess it as 20%. That result is certainly disproportionate to the amount of premiums debited to the deceased's account. That however is simply the result of the nature of the property in which respect of which estoppel arises, namely a term assurance yielding a relatively substantial sum for a relatively modest monthly premium. The Counter-Claim This concerns a policy (the GA Policy) taken out by the deceased in 1992 assuring payment of £150,000 on his death within 10 years. Each of the partners took out a similar policy at the time. These policies were required in connection with a loan raised by the partners from a commercial financier, NWS Trust Limited ("NWS"), for partnership purposes. It had originally been envisaged that the loan would be for £150,000 but the loan in fact made was for £120,000 and was structured by NWS as a loan to each partner of £40,000. In applying for the policies each of the partners had asked that the policies be written "in Partnership Trust" (see J. Strover's letter dated 13th September 1991) and had accordingly been supplied with and had completed forms of declaration of trust. The trusts contemplated by these forms were different from those contained in the FP Policy trusts: in this case the default beneficiaries (the partners other than the insured) were given shares corresponding to their relative interests in the partnership assets. In the case of the deceased's policy this meant that J. Strover took 57% and Mr Ironmonger 43%, and the class of appointees under the discretionary power of appointment was limited to any partner for the time being in the firm of Strover Leader & Co. NWS wanted the policies to be charged in support of the borrowing. It did not want the policies to be written in trust. In the case of J. Strover and Mr Ironmonger this meant that steps had to be taken to nullify the effect of the trusts (this involved all three partners executing documentation making appropriate appointments and assignments). No such documentation exists in the case of the deceased's policy, but a letter exists on the firm's file from the broker to Mr Critchfield returning "the trust form" in relation to the deceased's policy and saying, "be advised that this policy is no longer in trust". J. Strover's recollection was that there had been some delay in getting the deceased's policy issued because of the need for a medical. The likely explanation for the absence of documentation taking the deceased's policy out of trust is, I think, that all the partners had filled in appropriate declaration of trust forms when they originally applied for the policies. The first two policies had been processed and issued on that basis before NWS had insisted on the "removal" of the trusts. Because of the delay in issuing the deceased's policy it was possible to remove his "trust form" from the final application made to the insurer. That will explain why the insurer has no record on file of any application for his policy to be written in trust. It was, nevertheless, the understanding of the defendants (as they told me and I find) that, although at the request of NWS not written under express trusts, each policy was nevertheless regarded as a partnership asset at all times. That corresponds with the way in which the partners over the ensuing 9 years or so dealt both with the loans and the policies in their agreed partnership accounts. The loans, although made individually to each partner by NWS, were shown as a liability of the partnership. The premiums, although payable individually vis-à-vis the insurer, were treated as deductions in arriving at the profits of the partnership. The loans were in fact paid off early, in September 1999, and the policies then re-assigned by NWS to the respective policy holders. Their continued existence (and in particular the continued existence of the deceased's policy) seems not to have been the subject of any discussion with the deceased following his retirement: the continuing partners continued to pay the premiums on all three policies at their own expense as an outgoing of the business of the firm of which they were the only two partners. Following the deceased's death his widow sought the assistance of a trusted friend and advisor, Mr Fairbrass, to help her with problems in connection with the estate and its entitlement vis-à-vis the firm or its continuing members. J. Strover, by a letter dated 8th February 2002 wrote: "…As you are aware, at 20 September 2001 we had not finally agreed and settled matters arising from David's retirement. Taken together with the lack of a Will and the absence of a written Partnership Agreement we now together have to agree how to deal with the "Windfall" monies arising from these two policies." He proposed that, although there was an argument "that all the proceeds belong to Strover Leader & Co", both the FP Policy and the GA Policy proceeds should be split between the three partners in their profit-sharing ratios. Mr Fairbrass replied, rejecting the suggestion in the case of the FP Policy but saying in reference to the GA Policy: "The position here is not quite so clear cut in that, as you say, premiums on this policy have always been fully paid by the partnership and at no direct cost to David. There still exists the moral issue, however, of the practice profiting from the death of an ex-partner long after his "retirement". You have obviously taken this aspect on board in the final paragraph of item 3 of your letter by suggesting that the proceeds of "Partnership policies" should be split in profit sharing ratios. I can confirm that Dee [the widow] will accept that approach." The defendants' position before me was that the strict position was that this represented a contract by the widow which they would have honoured had not the widow subsequently claimed that the whole of the proceeds belonged to the estate. But for that contract, they submitted that the strict position was that they were entitled to the whole of the proceeds. In the defence to the counter-claim any such contract was denied. One of the points taken was that Mr Fairbrass did not have the authority of the claimants, and in particular the second claimant (the widow's co-administrator), to make such a contract, and in the case of the second claimant did not purport to be making it on his behalf. This point was not the subject of any argument before me, but seems to me in principle a good one. Such offer as was made was to the widow rather than to the estate. It seems to me, however, that I need not decide whether or not there was a contract or, if so, whom it bound. Neither of the parties to this litigation relies on the contract to found its claim for positive relief. The defendants' case rests primarily on the assertion of the express written trust which they believe was originally declared in relation to the deceased's GA policy. However, for the reasons I have given, I think it unlikely that the policy ever became subject to those written trusts. If it did, it was nevertheless treated as having come out of those trusts in the same way as the other two policies. This way of putting the defendants' case therefore fails. The alternative basis was that there was a constructive trust arising from the common intention of the parties when the policy was taken out that all the policies should be held as partnership assets, and/or a resulting trust arising from the payment of the premiums "out of Partnership funds as a Partnership expense". It was submitted that as continuing partners they were therefore entitled to the entire proceeds, although prepared to allow the deceased's estate 25% to avoid any dispute. It seems to me that there is a hiatus in the reasoning of this claim. If the policies were all assets of the partnership, they have in some way to be brought into account on the dissolution of the partnership with the deceased: they would not, without more, become assets of the new partnership constituted between J Strover and Mr Ironmonger following that dissolution. I think that this was accepted by Mr Dumont in his closing speech and that he further accepted that the policy monies had to be so accounted for even though the policy monies had only become payable after the retirement and as a result of the continuing partners having kept up the premiums at their own expense. The claimants by contrast deny that the policies were ever partnership assets. They submitted that the whole structure of the arrangement with NWS showed that the parties were undertaking individual liabilities against which the policies were designed for their individual protection. Once, therefore, the question of an express written trust was out of the way, all one was left with was a policy taken out by the deceased for his own benefit. The fact that the premiums had been charged to profit and loss account rather than to drawings had simply been the wrong way in which to draw the accounts and did not justify the inference that the parties had agreed, between themselves, to treat the policies as a partnership asset. I do not agree with those submissions. In my judgment they confuse the way in which NWS agreed to make the loans with the way in which the partners, as between themselves, agreed to treat the loans as partnership rather than individual liabilities, and the premiums on the policies likewise. Given the partners' different profit shares the accounting treatment cannot have been anything other than a deliberate and agreed treatment. There was, in my judgment, agreement between the parties that all three policies should be maintained at partnership expense for the benefit of the partnership with the contemplation that, if monies became payable thereunder, they should enure to the partnership. I would accordingly hold that the policy monies are so held by the deceased's estate, the partnership being that between the deceased and the defendants the affairs of which have not yet been fully wound up.

OPINION OF MR ADVOCATE GENERAL WARNER DELIVERED ON 22 FEBRUARY 1978 Contents Introductory The law The facts in general The facts — first period The facts — second period Conclusions as to the second period The facts — third period Conclusions as to the third period. The facts — fourth period Conclusions as to the fourth period Final conclusions My Lords, Introductory It is somewhat ironic that, in this case, in which I shall have to criticize the Commission for excessive delays, I am myself delivering my opinion only today though the hearing took place as long ago as 13 October 1977. Your Lordships know well, however, the pressures that have led to that situation. It may be, indeed, that it would be fair to lay that delay also at the door of the Commission, tor, on 26 November 1974, the Council invited the Commission to formulate proposals for the establishment of a tribunal of first instance to adjudicate upon disputes between the Community Institutions and members of their staffs, with a view to relieving this Court of just such pressures. Yet no such proposal has yet been laid before the Council. The applicant in this case is Mr Leonardo Leonardini, a nuclear engineer and a former Euratom official. On 25 April 1966 he was injured in a road accident whilst on his way from Brussels to the Centrale Nucleaire des Ardennes at Chooz. It is not disputed that that accident occurred in the course of his employment, nor is it disputed that as a result of his injuries he suffers partial permanent invalidity. On 16 September 1976, more than 10 years later, a letter was sent to him by the Commission's Director General of Personnel and Administration (Annex 1 to the Application), informing him that his partial permanent invalidity had been assessed at 16 %, and that a lump sum of 382361 Belgian francs would be paid to him in respect of such invalidity. That sum was calculated under Article 73 of the Staff Regulations, which provides: ‘1. An official is insured, from the date of his entering the service, against the risk of occupational disease and of accident subject to rules drawn up by agreement between the Institutions of the Communities after consulting the Staff Regulations Committee. He shall contribute to the cost of insuring against non-occupational risks up to 0.1 % of his basic salary. Such rules shall specify which risks are not covered. 2. The benefits payable shall be as follows: (a) In the event of death: Payment …; of a lump sum equal to five times the deceased's annual basic salary calculated by reference to the amounts of salary received during the twelve months before the accident… to the deceased official's spouse (b) In the event of total permanent invalidity: Payment to the official of a lump sum equal to eight times his annual basic salary calculated on the basis of the amounts of salary received during the twelve months before the accident. (c) In the event of partial permanent invalidity: Payment to the official of a proportion of the sum provided for in subparagraph (b), calculated by reference to the scale laid down in the rules referred to in paragraph 1. …’ Hence the sum received by the applicant represented 16 % of eight times his basic salary in 1965-1966. The applicant's claim in the present action is for interest on that sum from the date of the accident or, in the alternative, from the end of September 1969, that being, the applicant submits, the date by which the Commission could reasonably be expected to have assessed his degree of invalidity. The law Before I turn to the facts relevant to that claim, I should I think make these observations about the law. First, at the time of the applicant's accident the rules envisaged by Article 73 had not in fact been drawn up. So much indeed transpired in Case 18/70 Duraffour v Council [1971] 2 ECR 515, where it was also found that, pending the adoption of such rules, the Council had effected with a consortium of private insurance companies a group accident policy covering its officials. That was still the situation when Case 101/74 Kurrer v Council [1976] ECR 259 came before the Court. In the Duraffour case, the Court held that, notwithstanding that situation, the Council was directly liable under Article 73 to the widow of one of its officials and that she was not bound by the terms of the policy. In the Kurrer case the Court similarly held that the provisions of the Staff Regulations prevailed over the terms of the policy, which could not derogate from the rights that an official derived directly from those Regulations; the absence of rules drawn up by agreement between the Institutions could not adversely affect an official. Secondly, there is a strong argument for saying that a claim for invalidity benefit under Article 73 ought, as a normal rule, to carry interest from the date of the accident, because entitlement to such benefit arises by virtue of the accident and the amount of the benefit is calculated by reference to the official's salary during the year before the accident, yet in the nature of things the benefit cannot be paid until the degree of invalidity has been assessed, which in turn can only be done once the final extent of the injuries has become known, which may well take a long time. If no such interest is payable, then the longer it takes to assess the extent of the injuries the less, in real terms, the benefit will amount to. As the Court pointed out, however, in the Kurrer case — albeit obiter, because no claim for interest had been made in that case — such interest could only be awarded if the Staff Regulations expressly provided for it. (The Court suggested that, alternatively, such interest might be awarded if the policy provided for it. But I doubt if that can be right. Given that the rights of an official, or of his dependants, are governed by the Staff Regulations to the exclusion of the terms of any contract of insurance entered into by his employing Institution, it must, I think, also be accepted that he, or they, cannot benefit from any provision for interest contained in that policy.) Thirdly, the Court, in the same Judgment, intimated that wrongful delay on the part of an Institution in the payment to an official of a benefit due to him under Article 73 could found a claim on his part for damages. I do not doubt that that is right. The ‘unlimited jurisdiction’ conferred on the Court by the last sentence of Article 91 (1) of the Staff Regulations in ‘disputes of a financial character’ is very wide. It seems to me, moreover, reasonable that the Court should use, in the assessment of such damages, a measure that consists in applying to the amount of the relevant benefit an appropriate rate of interest for the period for which the Court judges that payment of the benefit in question was wrongfully denied to the official in question. So far as the appropriate rate of interen is concerned, the applicant here has suggested 8 %. The Commission has not quarrelled with that suggestion. That is in fact the rate at which the Court awarded interen in Case 58/75 Sergy v Commission [1976] ECR 1139. It is however, in my opinion, important not to confuse the Court's jurisdiction to award damages for wrongful delay, which may be measured by means of the application of a rate of interen, and its jurisdiction, where it makes a pecuniary award, whether of a specific sum (as in Case 11/63 Lepape v High Authority [1964] ECR 61, Rec. 1964 p. 121) or of a sum by way of damages (as in Sergy v Commission), to award also interen on that sum from a specified date. It was to my mind of such confusion that the Commission was guilty when it submitted, in reliance on the Lepape and Sergy cases, that the applicant here could not claim interen for any period before the date of his Application to the Court or, at the earliest, the date of his complaint under Article 90 (2) of the Staff Regulations on which that Application was founded. Lastly as regards the law, the Commission submitted, in reliance on Cases 27 & 39/59 Campolongo v High Authority (Rec. 1960, p. 795), that a person could not claim interest in respect of wrongful delay unless he had given some kind of formal notice that he would do so. In fact there was in Campolongo v High Authority no allegation of wrongful delay. The relevant claim there was for ordinary interen on specific sums that the Court had held the High Authority liable to pay to the applicant, namely, the amount standing to his credit in the Staff Provident Fund of the ECSC and the amount of his pan pension contributions with, in each case, compound interen thereon at a rate specified in Article 91 of the then General Regulations of the ECSC. The decision of the Court was simply that, in the circumstances, an award of interen on that sum itself was not warranted. But, in reaching that decision, the Court said obiter, among other things, that interest in respect of wrongful delay could not be awarded in the absence of prior notice and that, moreover, there was no provision in Community law for the award of it. The General Regulations of the ECSC, which were there relevant contained however no provision, like that in Article 91 (1) of the present Staff Regulations, giving the Court unlimited jurisdiction in disputes of a financial character. I do not therefore think that the dicta of the Court in the Campolongo case can be regarded as affording reliable guidance here. Thus there are, in my opinion, in this case three questions: (1) Was the Commission guilty of wrongful delay? (2) If so, at what sum should the damages for that delay be assessed? (3) Should such damages carry interest and, if so, at what rate and as from what date? The facts in general To answer the first question necessitates a close examination of the facts. The story of what happened between the date of the applicant's accident and that of the payment to him of the sum of 382361 francs was, at the suggestion of the Commission and with the concurrence of the applicant, divided for the purposes of the argument into four periods, as follows: (1) the period from the date of the accident to 11 January 1969, when the Commission informed the applicant of an offer by its insurers to settle the claim on the footing that his degree of permanent invalidity was to be assessed at 6 % and inviting him to say whether he agreed to that proposal; (2) the period from 11 January 1969 to 7 June 1972, when the Commission informed the applicant that it had decided to assess his degree of invalidity for the purposes of Article 73 at 6 % and had given instructions that day for the sum of 143386 francs to be, accordingly, paid into his bank account; (3) the period from 7 June 1972 to 2 July 1974, when the applicant was medically examined by Professor Parrini of Milan, following a decision of the Commission revoking its decision of 7 June 1972; (4) the period from 2 July 1974 to 16 September 1976. Much light was thrown on the deuils of that story by the contents of a file put in by the Commission as the result of a request made by the Court at the close of pleadings. That file conutains the bulk of the Commission's correspondence relating to the matter, numbered consecutively. (I shall refer to documents in it that are not annexed to any pleading by their number, preceded by the word ‘File’.) The facts — first period There is no real dispute as regards the firn period. The applicant does not allege any wrongful conduct on the pan of the Commission during that period. In brief, the day after the accident, the applicant produced a medical certificate signed by Dr Lorthioir, who had treated him (Annex 27 to the Application). A year later he produced a certificate (dated 12 April 1967) from the same doctor estimating the partial permanent invalidity suffered by the applicant as a result of the accident at 20 % (Annex 26 to the Application). Those certificates showed that the applicant had suffered a number of injuries, including dental injuries. Like the Council, the Commission had taken out an insurance policy to cover its naff against the risk of accident. Hence, in May 1967, the applicant was examined by a doctor acting on behalf of the Commission's insurers, Dr De Roover. On 16 January 1968, the applicant handed to the Commission a report dated 22 November 1967 made by Dr Colwaert, the dentist then treating him for the dental injuries he had received in his accident, assessing his partial permanent invalidity in respect of those injuries alone at 25 % (Annexes 24 and 25 to the Application). In that report Dr Colwaert expressed the opinion that the applicant would require treatment for those injuries, off and on, for many years to come, in particular by way of dental prosthetics. It seems that Dr Colwaert was a consultant to the Commission's Medical Service. His report and the applicant's covering note were forwarded by the Commission to its insurers. On 9 May 1968, the insurers wrote to the Commission asking to be informed when the applicant's treatment, particularly his dental treatment, had finished and adding that a certificate as to the applicant's degree of invalidity could then be furnished (Annex I to the Defence). On 18 September 1968, the Commission forwarded to the insurers a certificate dated 15 September 1968 drawn up by Dr Rosau, a dental surgeon in Livorno who had treated the applicant, stating that his dental treatment had been completed, and that the degree of his permanent invalidity was in the range 35 % to 38 % (File Nos 17 and 18). Dr De Roover, however, had taken a distinctly unsympathetic attitude towards the applicant (see File No 12) and the insurers informed the Commission on 30 December 1968 that they considered the applicant's degree of invalidity to be 6 % (File No 19). It appears that, in so doing, they based themselves on official Belgian scales. On 11 January 1969 the Commission wrote to the applicant informing him of this fact and inviting his agreement (Annex 23 to the application). That was the end of the first period. The reason why, according to the applicant, a line can be drawn at that point is that by that date it was possible to make a definitive assessment of his degree of invalidity, notwithstanding the fact that his injuries would require treatment for a long time thenceforward, and perhaps for the rest of his life. Drawing on Belgian legal text-books, Counsel for the applicant labelled that situation ‘consolidation’. As against that, the Commission points to the fact that the applicant subsequently produced a certificate dated 15 February 1969 prepared by Professor Zaffaroni of Milan, assessing his degree of invalidity at 55 % (File No 24) and certificates dated 25 January 1971 and 16 January 1971 prepared by Professor Zaffaroni and Dr Curci respectively, assessing the degree of his invalidity at 38 % (Annex XXI to the Rejoinder). The Commission accepts, however, that it is difficult to determine how far these different figures were the result of a worsening of the applicant's injuries and how far they represented subjective differences in assessment. It is fair also to say that those last two certificates were obtained by the applicant and sent by him to the Commission as the result of an inquiry addressed to him on behalf of the Commission late in 1970. The facts — second period To return to the story, on 18 January 1969 the Applicant wrote a note to the Commission by which he declined to accept the insurers' offer (Annex 22 to the Application). In that note he vigorously criticized Dr De Roover and pointed to the discrepancy between Dr De Roover's assessment of his injuries and the figures put forward by the doctors and dentins who had treated him. Also, by what seems to have been a stroke of legal insight, the applicant anticipated this Court's decision in the Duraffour case and drew the Commission's attention to its own obligations to himself under Article 73 of the Staff Regulations. This seems to have left the officials of the Commission responsible for handling the case nonplussed. Their difficulty was due to the absence of the rules envisaged by Article 73. On 14 February 1969 a note was addressed to the Legal Service of the Commission asking it to advise (File No 22). That advice was not however forthcoming unul 7 May 1969. In the meantime, in internal memoranda dated 21 February 1969 and 18 April 1969 it was suggested that the applicant should be invited to avail himself of the arbitration procedure provided for by the insurance policy (File Nos 23 and 32). This however was not done. The applicant's note of 18 January 1969 was left unacknowledged. Irritated by that silence, as well he might be, the applicant on 3 March 1969 wrote a note to the official directly concerned warning him that he (the applicant) was about to approach the Director General of Personnel and Administration in person about the matter (Annex XX to the Rejoinder). That drew a reply, dated 6 March 1969, to the effect that his case was under consideration (Annex 21 to the Application). On 12 March 1969 the applicant did write to the Director General, then Mr Lambert, asking for a prompt decision (Annex 20 to the Application). On 7 May 1969 the Legal Service gave its written advice, which was addressed to Mr Lambert (File No 32). It too anticipated the decision in the Duraffour case. The Legal Service advised that the rights of officials to invalidity benefit flowed directly from Article 73 of the Staff Regulations and not from the insurance contraa entered into by the Commission. The advice continued with a passage which is worthy of quotation: ‘on peut par consequent en conclure que lorsqu'un fonctionnaire se pretend victime d'un accident, l'Administration a le pouvoir et le devoir de reconnaître s'il s'agit effectivement d'un accident correspondant aux risques couverts par l'article 73 du Statut, d'évaluer et de fixer, le cas échéant, le taux d'invalidité en s'entourant des avis de médecins compétents, tels ses médecins contrôleurs ou conseils, et de verser au fonctionnaire l'indemnité prévue par l'article 73. Si le fonctionnaire n'est pas d'accord sur l'interprétation de l'article 73, sur la notion d'accident adoptée par l'Administration ou sur la constatation des faits de la cause ou sur le taux d'invalidité et celui de l'indemnité accordée il peut au titre de l'article 90 du Sutut présenter une réclamation à l'autorité investie du pouvoir de nomination et déposer au titre de l'article 91 un recours devant la Cour de Justice en demandant l'annulation de la décision prise par l'Institution. Dans ces conditions, on ne voit pas très bien comment pourrait s'insérer une procédure d'arbitrage dans l'application de l'article 73 du Statut et quelle pourrait être son utilité. ’ That advice was of course correa. It was the Commission's duty to make its own assessment, under Article 73 of the Staff Regulations, of the degree of invalidity afflicting the applicant. If he disagreed with that assessment he was entitled to challenge it under Articles 90 and 91 of the Staff Regulations. Arbitration under the policy could only be between the Commission and the insurers; it was irrelevant so far as the applicant was concerned. On 2 June 1969 the applicant wrote again to Mr Lambert protesting about the delays to which his case had been subjected and seeking an interview with him (Annex 19 to the Application). A month later, on 2 July 1969, the applicant had an interview with Mr Lambert, which was also attended by Mr Blenkers, the Head of the Individual Rights and Privileges Division. According to a contemporaneous note of that interview signed by Mr Blenkers, Mr Lambert, on the basis of the advice of the Legal Service, and in accordance with the applicant's wish, gave instructions for the degree of his invalidity to be assessed by the Commission's Medical Service, if necessary in collaboration with an appropriate specialin (Annex VII to the Defence). On behalf of the applicant it was pleaded that what in fact was agreed was that the assessment should be made by an independent doctor to be chosen by agreement between the Head of the Commission's Medical Service and the applicant's own doctor. This however does not accord with what the applicant himself wrote in a note dated 9 July 1969 to Dr Semiller, the Head of the Commission's Medical Service (File No 36). With that note the applicant sent to Dr Semiller copies of all the medical reports in his possession and, in it, told him that the Directorate General of Personnel and Administration would be asking him for an opinion. It does not however seem to me to matter what precisely was agreed, because whatever it was, virtually nothing was done to give effect to it during the next 18 months. On 6 February 1970 Mr Blenkers, in response to an inquiry by Mr Lamben about the state of affairs in the applicant's case, wrote that nothing appeared to have been done to give effect to the instructions give by Mr Lamben on 2 July 1969 (File No 38). No explanation of that inaction has ever been given by anyone on behalf of the Commission. It appears that during 1970 officials of the Commission were busy negotiating at a leisurely pace with the insurers over a method of arbitration between the Commission and the insurers without the participation of the applicant (File Nos 39 to 46). On 16 November 1970 Mr Blenkers wrote to the Medical Service (File No 47) stating that the insurers had agreed to such an arbitration procedure, asking the Medical Service to nominate a doctor to represent the Commission in the arbitration, and stating that the applicant should only be informed of such parts of the proceedings as might appear to be an application of Article 73. On 27 November 1970, and by reminders dated 22 December 1970 and 27 January 1971 Dr Semiller asked the applicant whether the medical treatment of the consequences of his accident had ended, and for the name of the doctor treating him (Annexes II, III and IV to the Defence). The applicant replied to those notes on 28 January 1971 pointing out that he would always require treatment as a result of the injuries he had received in the accident and explaining why. It was submitted on his behalf — and I agree — that this was not the same as admitting that the extent of his permanent invalidity could not be established. In response to the request for the name of his doctor, the applicant stated that the names of the doctors who had treated him were already apparent from the documents in the Commission's possession but that, in the circumstances, he had thought it right to seek up-to-date medical reports. He explained that, owing to the exigencies of his work, he had not been able to see the doctors concerned until the Christmas holiday and that this was why he had not replied sooner to Dr Semiller's notes (Annex 1 to the Reply). A few days later (on 1 February 1971) the applicant did forward to Dr Semiller the certificates drawn up by Professor Zaffaroni and Dr Curci to which I have already referred. Shortly afterwards, on 16 February 1971, a note was written to Mr Lamben by Mr Reichert, the Director of Financial Service, concerning a claim under Article 73 by another official of the Commission (File No 53). Basing himself on the advice given by the Legal Service in May 1969, Mr Reichen suggested that the official concerned should be informed of the degree of invalidity assessed by the Commission in accordance with the opinion of its Medical Service, leaving him free to avail himself of Articles 90 and 91 of the Staff Reguladons if he wished to challenge that assessment, and that arbitration and setdement with the insurers could follow afterwards. Mr Reichert also suggested that that procedure should be applied in all similar cases. In the context of the present action, it is interesting to observe that Mr Reichert suggested that, by doing this, a liability for interest on the lump sum could be avoided. On 23 February 1971 Mr Lambert agreed to the adoption of that procedure, and on 14 April 1971 Mr Blenkers wrote to Dr Semiller asking him to apply it in (among others) the applicant's case (File No 54). Dr Semiller's only reaction appears to have been to send to the applicant, on 22 July 1971, a note asking him to furnish a certificate from Dr Rosati stating when the treatment he had administered to the applicant had ended (Annex V to the Defence). To that note the applicant never replied in writing. At first sight it might be thought that he had already met its requirement when he had furnished Dr Rosati's certificate in September 1968. The next document on the file (Annex 18 to the Application) evinces however that, at that time, the applicant was still being treated by Dr Rosati. That document is another note, dated 23 September 1971, addressed by the applicant to Mr Lamben asking, in the mon polite terms, that a decision should be made on his claim. To that note the applicant annexed a summary of the medical reports he had already furnished and of the reasons why he would continue to need treatment at lean annually for the foreseeable future. Quite what had happened between 22 July 1971 and 23 September 1971 is not clear from the papen, nor was it much clarified in the pleadings. All that is certain is that the applicant was on sick leave from 19 to 30 July of that year. It seems reasonable to suppose that he had a period of ordinary leave after that. It also seems reasonable to suppose that, as was suggested on his behalf, he had some oral communication with Dr Semiller on his return from leave. At all events, the applicant's note caused Mr Lambert, on 11 October 1971, to ask Mr Reichen to inform him (Mr Lamben) of the state of affairs in the applicant's case (File No 58). In his note to Mr Reichert, Mr Lamben added that it appeared to him ‘indispensable’ that a decision should be reached in the applicant's case ‘dans des délais normaux’. Mr Reichen replied to Mr Lambert's note on 15 October 1971 (File No 59). In so doing he recited the (by then) well-known facts of the case and concluded that, essentially, the Medical Service of the Commission had let the Commission down in that it had neither appointed a doctor for the arbitration with the insurers nor proceeded with its own assessment of the applicant's invalidity. On 21 October 1971 Dr Semiller wrote again to the applicant asking whether his treatment had ended and, if not, what was the name of the doctor treating him (Annex VI to the Defence). On 4 November 1971, the applicant was examined by a Dr Ellens on behalf of the Commission's Medical Service. In the light of that examination, Dr Semiller gave it as his opinion, in a note dated 22 December 1971, that the applicant's degree of invalidity was 6 % (Annex VIII to the Defence). This appears to have enabled the Commission to settle fairly promptly with its insurers. On or about 4 February 1972 it was agreed that the insurers should pay a sum of 143386 Belgian francs on the footing that the applicant's degree of invalidity was 6o/o (File Nos 66, 66 bis and 66 ter). On 3 January 1972 an order for payment of the same sum had been drawn up in favour of the applicant (File No 69 bis). It was not however unul six months later, on 7 June 1972, that the applicant was notified of the decision that his degree of invalidity should be fixed at 6 % (Annex 12 to the Application, Annex IX to the Defence) and that the sum of 143386 Belgian francs was accordingly paid to him. Part of that six months seems to have been taken up in desultory discussion between officials of the Commission as to the scales to be applied, a problem that Mr Lambert had asked them to consider as early as November 1971 and which he had found it necessary to remind them of in January 1972 (see File Nos 62, 65 and 67). The rest of the delay has remained unexplained. That brings me to the end of the second period. Conclusions as to the second period As I have already indicated the applicant contends that the Commission ought to have reached a decision as to the degree of his permanent invalidity by the end of September 1969. I have come to the conclusion that that contention is well founded. I make full allowance for the difficulties with which the Commission was confronted owing to the non-existence of the rules envisaged by Article 73. But by May 1969 it had been told by its own Legal Service what should be done, and in early July 1969 Mr Lamben had taken the trouble to give, personally, instructions that it should be done. A period of three months after that should have been sufficient to enable the Medical Service to give its opinion and for the Commission to reach a decision on the basis of that opinion. Instead of that, the inaction and procrastination which resulted in the decision of the Commission not being reached until 7 June 1972. I would accordingly hold that, as regards the second period, the Commission was liable for wrongful delay amounting to two yean and eight months (i.e. the whole of the years 1970 and 1971 plus three months in 1969 and five in 1972). It was contended on behalf of the Commission that the applicant was to some extent himself to blame for that delay, in that on several occasions he had failed to answer, or failed promptly to answer, inquiries addressed to him by Dr Semiller. It does not however appear to me that those failures on the applicant's pan caused any substantial delay. Moreover, if I am right in thinking that the Commission ought to have reached its decision by the end of September 1969, Dr Semiller's inquiries addressed to the applicant in 1970 and 1971 were irrelevant. It would in my opinion be reasonable for Your Lordships to assess the damages payable by the Commission to the applicant in respect of that wrongful delay by applying to the sum of 382361 francs which he finally received an interen rate of 8 % for two years and eight months. This, if my arithmetic is correct, would result in a figure of 81570 francs. The facts — third period The applicant's reaction to the award to him of the sum of 143386 francs was twofold. Firn he returned that sum to the Commission. His motives in so doing are understandable enough, but it should be emphasized that he need not have done it. The payment of that sum to him had not been made in any way conditional on his accepting it in full setdement of his claim. As a matter both of fact and of law he could have kept the 143386 francs and pursued the balance of his claim. Secondly the applicant, on 19 June 1972, submitted a complaint under Article 90 (2) of the Staff Regulations challenging the assessment made by the Commission of his degree of invalidity (Annex 11 to the Application). As a result, the Commission decided to have the degree of the applicant's invalidity determined by an independent doctor appointed by mutual agreement between the Commission's medical adviser and the applicant's doctor. That decision was notified to the applicant on 25 September 1972 (Annex 10 to the Application). By the penultimate paragraph of the decision, the Directorate General of Personnel and Administration was entrusted with its implementation in conjunction with the applicant. In reply to a note written by the applicant on 18 December 1972 Mr Lambert confirmed to him on 29 January 1973 that the effect of the decision was to revoke that of 7 June 1972 (Annexes 8 and 9 to the Application). Nothing was, however, then said about the implementation of the new decision. Dr Semiller was told of the procedure to be adopted under the decision by a note dated 24 January 1973 from the Head of the ‘Sickness, Insurance, Accidents and Occupational Diseases’ Service in the Directorate-General of Personnel and Administration (File No 76). On 28 June 1973, the applicant wrote to Mr Baichère, the new Director General of Personnel and Administration, complaining, amongst other things, about the lack of attention being given to his case by the Medical Service and asking that it should be handled by someone other than Dr Semiller (Annex 7 to the Application). The applicant was at that time about to leave the Commission's service under the provisions of Council Regulation No 2350/72. He did so with effect from 1 July 1973. In that note he gave Mr Baichère the address at which it would be possible to reach him in Italy. By a note dated 6 July 1973, enlarged upon, it seems, in a telephone conversation on 9 July, Dr Semiller informed the Directorate General of Personnel and Administration that despite repeated inquiries in March, May and June the Medical Service had failed to obtain from the applicant the name of the doctor chosen by him to act jointly with Dr Semiller in appointing the independent doctor envisaged in the Commission's decision of 25 September 1972. The inquiries were said to have been oral (Annex X to the Defence and File No 80). Dr Semiller was instructed to write to the applicant in Italy, by express registered mail, to ask him to nominate the doctor who was to act for him for that purpose. Such a letter was sent by Dr Semiller to the applicant on 12 July 1973 (Annex XI to the Defence). It requested a reply by 31 August 1973. No reply thereto having been received from the applicant, a reminder was sent to him on 19 September 1973, again by express registered mail (Annex XII to the Defence). In a note dated 16 October 1973, Dr Semiller recorded that he had at that date still received no reply from the applicant (File No 88), but on 29 October 1973 Mr Baichère was able to address to Dr Semiller a note saying that the applicant had just ‘confirmed’ that Professor Zaffaroni was the doctor who would an on his behalf (File No 90). In that note Mr Baichère asked Dr Semiller now to accelerate ‘la conclusion de ce dossier’. For some reason Dr Semiller left it till 12 December 1973 before he wrote to Professor Zaffaroni asking for his suggestions as to how they should proceed (Annex XIII to the Defence). On 21 January 1974 he sent him a reminder (Annex XV to the Defence). The reminder crossed Professor Zaffaroni's reply which was also dated 21 January 1974 and in which he explained that the delay had been due to his absence from Milan for the Christmas holidays (Annex XIV to the Defence). Professor Zaffaroni put forward three names of specialists in Milan from among whom an umpire might be chosen and suggested that the umpire might either examine the applicant in the presence of the doctors representing the parties with a view to the three making a joint assessment, or that he might make his assessment alone after receiving written opinions from the other two. On 5 March 1974 Dr Semiller replied accepting the first name on Professor Zaffaroni's list, that of Professor Pariini, but saying nothing as to the procedure to be followed (Annex XVI to the Defence). By a letter dated 18 March 1974 Professor Zaffaroni agreed to that nomination and also asked Dr Semiller either to nominate a doctor to represent him or to give his assent to Professor Parrini acting alone (Annex XVII to the Defence). On 22 May 1974 the applicant wrote again to Mr Baichère asking that the matter should be expedited (File No 99). On 27 May 1974, Dr Semiller wrote to Professor Parrini informing him that he had been appointed to act as umpire, enclosing the Commission's scales for calculating degrees of invalidity, but saying nothing about the actual procedure to be followed other than that Professor Parrini should send his opinion and his fee note to the Commission at its address in Brussels (Annex XVIII to the Defence). On 2 July 1974, the applicant was examined by Professor Parrini in Milan in circumstances which have given rise to controversy. There has been placed before us a letter dated 2 May 1977 from Professor Parrini to the Applicant's Counsel (Annex 3 to the Reply) in which Professor Parrini states that his secretary telephoned the Commission's Medical Service twice to inform it of the date of the examination; that she was assured that a representative of that Service would attend; and that, on the day, he and Dr. Zaffaroni waited an hour for that representa uve to tum up, after which he (Professor Parrini) proceeded with the examination. On behalf of the Commission on the other hand it was stated that Dr Semiller never received notice of the date of the examination; and he was profferred as a witness to that effect. The Court did not however summon him or Professor Parrini's secretary as witnesses because the material question here is not why what happened happened, but whether the Commission dealt with it with reasonable promptitude. Very possibly the Medical Service of the Commission was informed of the date of the examination but the message failed to get through to Dr Semiller. Conclusions as to the third period So ended the third period. It would in my opinion be far from just to the Commission to hold, as the applicant in effect invited us to do, that the whole of it constituted a period of wrongful delay on its part. There was no undue delay on the Commission's part in formulating on 25 September 1972 its decision on his complaint of 19 June 1972. Moreover the nature of that decision was such that its implementation must necessarily take a certain amount of time. Nor does it seem to me that the applicant himself was wholly free from blame for delays. Whatever the reasons, it was not till October 1973 that he nominated a doctor to take part on his behalf in the procedure envisaged by that decision. It is, in my opinion, no answer to that to say, as was said on his behalf, that the Commission knew well who his doctor was. In fan he had consulted a number of doctors and dentists. Anyone in possession only of the facts appearing from the papers available to the Commission might well have guessed that the person currently treating him was Dr Rosau. But that guess would, as it turned out, have been wrong; and, in any case, the Commission was under no obligation to make a guess. On the other hand there can be no doubt that, during this period too, certain officials of the Commission were guilty of unexplained and excessive delays, which go part of the way to explain why the Commission's decision of 25 September 1972 was not implemented until July 1974. Thus it has not been explained why it took from 25 September 1972 to 24 January 1973 for Dr Semiller to be instructed to implement the decision, nor why it then took Dr Semiller until March 1973 before he first asked the applicant to nominate a doctor. There is there a period of six months that seems to have been wholly wasted. Nor has it been explained why, after Dr Semiller had received Mr Baichère's note of 29 October 1973, it took him until 12 December 1973 to write to Professor Zaffaroni, nor why after he had received Professor Zaffaroni's letter of 21 January 1974, it took him until 5 March 1974 to reply to it, and then incompletely. There was a further such gap between Professor Zaffaroni's letter to Dr Semiller of 18 March 1974 and the tatter's reply of 27 May 1974. All in all it would in my opinion be fair to hold that the Commission was responsible during the third period for wrongful delays amounting to nine months. It would not however, in my opinion, be fair to assess the damages in respect of those delays by applying a rate of interen to the whole sum of 382361 francs. The applicant had, at the beginning of the period, received the sum of 143386 francs and the circumstance that he had returned it ought not, in my opinion, to result in an increase in the Commission's liability. I would therefore assess the damages for this period by applying the 8 % interest rate to the balance of 238975 francs. This would mean, according to my arithmetic, an award of 14338 francs. The faca — fourth period On 23 July 1974, Professor Parrini sent his repon to Dr Semiller (Annex XIX to the Defence), mentioning that Professor Zaffaroni had been present at the examination, and fixing the applicant's degree of invalidity at 17 %. There is no record of any reaction to this by Dr Semiller until 3 December 1974 when he sent a note to Mr Rogalla, the Head of the Staff Regulations Division of the Commission, informing him of Professor Parrini's opinion, complaining about the circumstances of the examination, and stating that in the opinion of the Commission's Medical Service, ‘after fresh examination and on the basis of the scales now applicable at the Commission’, the applicant's degree of invalidity was 5.5 % (Annex XXVI to the Rejoinder). To that note there appears to have been no reply until 16 May 1975. In the meantime, on 15 April 1975, the applicant wrote to a Member of the Commission asking him if he would intercede with the Directorate General of Personnel and Administration with a view to its reaching some decision following his examination by Professor Parrini (Annex 6 to the Application). To that the Member of the Commission in question replied promising an early decision (Annex 5 to the Application). On 16 May 1975 Mr Rogalla addressed a note to Dr Semiller saying that Professor Parrini should not have afforded Dr Zaffaroni the opportunity of being present at the examination and of subsequently discussing the case without according the same facilities to Dr Semiller's Service. He advised that a meeting be arranged as soon as possible between that Service and Professor Parrini ‘thus ensuring to the Commission the opportunity of a discussion with Professor Parrini as to a just percentage of disability’ (File No 105). Eventually such a meeting took place on 22 September 1975, but not until after Dr Semiller had, seemingly, against Mr Rogalla's advice, explored the possibility of having Professor Parrini replaced by another umpire (File Nos 106 and 108). The meeting was apparently followed by an exchange of medical correspondence. In the midst of this, on 21 October 1975 the applicant submitted a request under Article 90 (1) of the Staff Regulations for a decision as to his degree of invalidity. He also asked that, in view of the delay for which the Commission had been responsible, the sum that would be due to him as a result of such decision should be paid to him with interest (Annex 3 to the Application). On 28 October 1975 Mr Rogalla wrote to Dr Semiller informing him of that request and asking him to press Professor Parrini for some observations that he had promised so that, as soon as they were received, the case could be disposed of. Having (on a date that does not appear from the papers) received those observations, whereby Professor Parrini adhered to his assessment of 17 %, Dr Semiller, on 20 January 1976, wrote a long note to Mr Rogalla explaining why he could not agree with that assessment and considered that the maximum should be 6 % (File No 114). To that Mr Rogalla replied on 23 January 1976 that, whilst he did not question Dr Semiller's medical judgment, the fact was that the Commission had decided on 25 September 1975 that the degree of the applicant's invalidity should be assessed by an independent doctor appointed by mutual agreement and that his assessment could not be made subject to the approval of the Commission's Medical Service. The sole reason why Professor Parrini's opinion had been questionable was because he had examined the applicant in the presence of his own doctor but in the absence of any representative of the Commission's Medical Service. That flaw had since been remedied, Dr Semiller having had an opportunity of putting his views to Professor Parrini. It must follow that, if Professor Parrini's opinion had been given objectively and honestly (and it would be extremely difficult to prove that it was not) it must be accepted (File No 116). It has of course at no time been suggested that Professor Parrini's opinion was anything other than honest and objective. Consistently with Mr Rogalla's view, which was in my opinion indubitably correct, a letter to be addressed to the applicant was on the same day (23 January 1976) prepared for Mr Baichère's signature. By that letter the applicant was to be informed that, following Professor Parrini's opinion, his degree of invalidity had been assessed at 17 %. The letter was signed by Mr Baichère on 28 January 1976 but was never sent. It was stopped because on the same day (28 January 1976) Dr Semiller addressed a strongly worded note to Mr Rogalla disputing his view (File No 117). As a result of that, a meeting was held on 4 February 1976 at which it was agreed that Dr Semiller should seek further clarification of his opinion from Professor Parrini (see File No 118). The outcome was a long letter from Professor Parrini dated 28 April 1976 in which he refuted Dr Semiller's criticisms of his opinion and pointed out that the method of computation he had used was such that his assessment could easily be converted to fit any scales of degrees of invalidity used by the Commission (File No 121). On 19 May 1976 the applicant submitted a complaint under Article 90 (2) of the Staff Regulations against the implied decision rejecting his request of 21 October 1975 (Annex 2 to the Application). On 12 July 1976 a note was written to Dr Semiller on behalf of the ‘Accidents and Occupational Diseases’ Section of the Directorate of Personnel and Administration urgently pressing him to effect the mathematical conversion from the scales used by Professor Parrini to the scales used by the Commission; Dr Semiller was asked to reply to that note by 15 August at the latest (File No 123). He did not do so. On 23 August 1976 a further note was sent to him by the same Section emphasizing the urgency of the matter (File No 124). On 29 August 1976 an eloquent memorandum was written to Mr Baichère by the Head of the responsible Division in the Directorate of Personnel and Administration, recounting all the difficulties that that Division had had over the case with Dr Semiller. A copy of that note was sent to, inter alios, Dr Semiller (File No 125). On 6 September 1976, following a telephone conversation between someone in the ‘Accidents and Occupational Diseases’ Section and someone in the Medical Service, Dr Semiller produced a series of tables that can hardly be described as a mathematical conversion (File No 126). They were rather a tabulation of the respects in which his opinion differed from Professor Parrini's. On 16 September 1976 Mr Baichère wrote to the applicant to say that his degree of invalidity had been assessed at 16 % and that he would accordingly be paid 382361 francs (Annex 1 to the Application). Conclusions as to the fourth period Manifestly, again during the fourth period there were unconscionable delays for which the Commission must be held liable. The difficulty is to assess their extent. There was first a delay of over four months between the date of Professor Parrini's original repon (23 July 1974) and Dr Semiller's first reaction to it (3 December 1974). There was then a delay of over five months before Mr Rogalla replied to Dr Semiller's note of 3 December 1974 on 16 May 1975. We were pressed on behalf of the applicant to hold the Commission liable also for the delay that then followed, while Dr Semiller was exploring the possibility of having Professor Parrini replaced by another umpire. I do not for my pan think that it was unreasonable, in the circumstances, for Dr Semiller to do that, particularly as he soon gave up the attempt. Nor do I think that the Commission can be held liable in damages for the delay that occurred between 22 September 1975, when Dr Semiller first saw Professor Parrini, and 28 April 1976, when Professor Parrini wrote his letter finally refuting Dr Semiller's views. No doubt, with hindsight, one can say that it would have been better if Dr Semiller had accepted the views expressed by Mr Rogalla in his note of 23 January 1976. But Dr Semiller seems to have been trying to do his best in what he conceived to be the Commission's interests. The course he then took was in my opinion ill-judged rather than wrongful. There is on the other hand to my mind no excuse for Dr Semiller's procrastination after he had received Professor Parrini's letter of 28 April 1976. It would not in my opinion be unfair to estimate the delay thereby wrongly caused at three months. I would accordingly hold the Commission liable for wrongful delays during the fourth period amounting in all to twelve months. The appropriate measure of the damages being in my opinion 8 % of 238975 francs, I would award the applicant 19118 francs in respect of them. Final conclusions My total award would therefore be: In respect of the second period 81 570 francs In respect of the third period 14 338 francs In respect of the fourth period 19 118 francs Total 115 026 francs or, say, 115000 francs. The question remains whether that sum itself should carry interest and, if so, at what rate and from what date. In my opinion it would be right to follow the precedents set by the Lepape and Sergy cases and to award interest on the damages. The Campolongo case is distinguishable because the sum awarded there itself contained an element of compound interest. As to the rate of interest, I see no reason to suggest any other than 8 %. As to the date from which interest should run, it seems to me that the date fixed in the Sergy case, i.e. the date of the complaint under Article 90 (2), would here be too early since it fell in a period in respect of which the damages themselves are in pan payable, whilst the date fixed in the Lepape case, i.e. that of the application to the Court, would perhaps here be a little late. Your Lordships have, I apprehend, a wide discretion in the matter and I think that, probably, justice would be done if Your Lordships ordered interest on the damages to run from the date of the Commission's decision finally assessing the lump sum payable to the Applicant, i.e. from 16 September 1976. Lastly, the applicant is in my opinion entitled to an order for costs.

The Honourable Mr Justice Flaux: Introduction and background The Appellant sellers appeal (with the permission of Hamblen J) a question of law arising out of the Final Award of the arbitrators, Simon Crookenden QC, Michael Baker-Harber and Simon Gault ("the tribunal") dated 8 May 2012 whereby the tribunal decided that the Respondent buyers' claim for damages for breach by the sellers of a contract for the sale of the vessel CALAFURIA now renamed UNION POWER succeeded in full. The essential facts as found by the tribunal which are relevant for the purposes of this appeal are as follows. By a Memorandum of Agreement ("the MOA") on the Norwegian Saleform 1993 ("Saleform 93") dated 4 September 2009, the sellers agreed to sell and the buyers agreed to buy the vessel, a 1994 built motor tanker, for US$7 million. The relevant terms of the MOA were as follows: Clause 4. Inspections a) The Buyers have inspected and accepted the Vessel and the Vessel's classification records. The Buyers have also inspected the Vessel in Piraeus, Greece on August 18, 2009 and have accepted the Vessel following this inspection and the sale is outright and definite subject only to the terms and conditions of this Agreement. ... Clause 6. Drydocking/Divers Inspections b) The Vessel is to be delivered without drydocking… Clause 11. Condition on delivery The Vessel shall be delivered and taken over as she was at the time of inspection, fair wear and tear excepted. However, the Vessel shall be delivered with her class maintained extended to 30 September 2009 without condition/recommendation, free of average damage affecting the Vessels class. The Vessel's continuous survey cycles of machinery are to be as per current machinery continuous status attached hereto (attached "A"). Her International, National, Class and Trading Certificates clean, valid until 30 September 2009, except ISSC and SMC to be valid at time of delivery only, …" The buyers inspected the vessel at Piraeus on 18 August 2009. The vessel was classed by RINA and was due her third special survey as the buyers knew. They had carried out an underwater survey which revealed no bottom damage affecting class. Also, through their agents CS Associates, they inspected the class records (as was their right under the MOA). They found nothing of significance and reported that she could be characterised as "a quite good vessel". Unfortunately they failed to pick up a reference in the class records to an incident in October 2002 referring to damage to the no.1 crankpin of the main engine. The vessel was delivered to the buyers at Tuzla, Turkey on 1 October 2009. She was immediately drydocked there, repairs were carried out and the special survey was undertaken by ABS, since the vessel changed class upon the transfer of ownership. During that survey, the crankpin bearings of nos. 2 and 4 units were opened up and found in a satisfactory condition, on the basis of which ABS credited all the crankpin bearings for the purposes of the special survey. Following the repairs and special survey, the vessel undertook a sea trial during which, apart from a minor oil leak, the main engine operated satisfactorily. On 5 November 2009, the vessel departed from Tuzla on a ballast voyage to Malta to load a cargo of diesel. At about 19.00 hours on 6 November 2009, only some 30 hours after she had departed from Tuzla, the main engine broke down. On opening the crankcase, it was found that the no.1 crankpin bearing had failed. The vessel was towed to Greece for investigation and repairs. The crankpin was found to be significantly undersize and oval. Having heard factual and expert evidence, the tribunal concluded that the ovality of the no.1 crankpin was the cause of the main engine breakdown. The tribunal also found that the ovality had developed to such a state at the time of delivery that the crankpin bearing was likely to fail within a short period of normal operation of the main engine after delivery of the vessel. The buyers contended in those circumstances that the sellers were in breach of the MOA either because the ovality was "average damage affecting class" within clause 11 (a contention which the tribunal rejected) or because there was a breach of the implied term as to satisfactory quality implied into the MOA by virtue of section 14(2) of the Sale of Goods Act 1979 ("SOGA") as amended. The sellers denied that any SOGA terms were to be implied into the MOA and argued that the terms of clause 11 were inconsistent with the SOGA implied terms in that the vessel was sold "as she was". The tribunal rejected that argument, holding that the implied term as to satisfactory quality was to be implied into the MOA, the sellers were in breach of that term and the buyers' claim succeeded in full. The question of law On 21 August Hamblen J gave permission to appeal on the following question of law: "Whether a term as to satisfactory quality is implied into the Contract/MOA by Section 14 of the Sale of Goods Act 1979?" Hamblen J considered the question of law to be one of general public importance and the decision of the tribunal to be open to serious doubt. As the tribunal itself recorded in [45] of the Award, the issue whether the SOGA implied terms as to quality and fitness for purpose are implied into Saleform MOAs is one which has arisen many times in London arbitrations but surprisingly is an issue which has never been addressed directly by the English courts. The relevant provisions of SOGA The provisions of SOGA (as amended by the Sale and Supply of Goods Act 1994) which fall to be considered in this case are as follows: "14. Implied terms about quality or fitness. (1) Except as provided by this section and section 15 below and subject to any other enactment, there is no implied term about the quality or fitness for any particular purpose of goods supplied under a contract of sale. (2) Where the seller sells goods in the course of a business, there is an implied term that the goods supplied under the contract are of satisfactory quality. (2A) For the purposes of this Act, goods are of satisfactory quality if they meet the standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all the other relevant circumstances. (2B) For the purposes of this Act, the quality of goods includes their state and condition and the following (among others) are in appropriate cases aspects of the quality of goods— (a) fitness for all the purposes for which goods of the kind in question are commonly supplied, (b) appearance and finish, (c) freedom from minor defects, (d) safety, and (e) durability. (2C) The term implied by subsection (2) above does not extend to any matter making the quality of goods unsatisfactory— (a) which is specifically drawn to the buyer's attention before the contract is made, (b) where the buyer examines the goods before the contract is made, which that examination ought to reveal, or (c) in the case of a contract for sale by sample, which would have been apparent on a reasonable examination of the sample. 55. Exclusion of implied terms. (1) Where a right, duty or liability would arise under a contract of sale of goods by implication of law, it may (subject to the Unfair Contract Terms Act 1977) be negatived or varied by express agreement, or by the course of dealing between the parties, or by such usage as binds both parties to the contract. (2) An express term does not negative a term implied by this Act unless inconsistent with it." The reasoning in the Award Before considering the parties' submissions in more detail, I propose to set out the relevant part of the Award where the tribunal deals with the issue as to whether the terms in section 14 of SOGA are to be implied into the MOA. This is at [53] to [61]: "53. In considering whether the SoGA terms are to be implied, the starting point must be s.55(2) of the SoGA as amended… 54. In the Tribunal's view, s.55(2) provides a statutory test for whether the SoGA terms are negated by the other terms of the contract. The normal rules for the construction of a contract by which a court or tribunal seeks to ascertain the presumed intentions of the parties from words they have used do not, therefore, apply. 55. The above cases of "The Morning Watch" and "The Brave Challenger" indicate an accepted and understood meaning to the phrase "as is, where is" as meaning that the purchaser takes a vessel as he finds it. It may be that a contract that states simply that a sale is "as is, where is" and little more would have that meaning. It does not follow that the words "as she was" in Saleform 93 have the same meaning. 56. The phrase "as she was" forms a necessary part of the contractual arrangement under Saleform 93 under which a vessel is inspected by a prospective purchaser on a particular date but remains in the possession of the seller who is free to continue to trade the vessel until delivery. Clause 11 of Saleform 93 provides for any changes that occur in the state of the vessel between inspection and delivery by providing that the vessel remains at the sellers' risk but shall be taken over by buyers on delivery "as she was at the time of inspection, fair wear and tear excepted". The phrase "as she was" is a necessary part of the above phrase to record that, save for fair wear and tear, the buyers are entitled to receive a vessel in the same state as when inspected. It cannot be said, therefore, that the phrase must have some further meaning if it is to have any meaning at all. The phrase "as is, where is", on the other hand is simply a truism (clearly any vessel must be as it is and where it is on delivery) if some other meaning is not to be imputed to the phrase. 57. The phrase "as she was" appears in clause 11 of the Contract and must be construed in that context. Clause 11 also requires the Vessel to be delivered "with her class maintained.., without condition/recommendation" and "free of average damage affecting the Vessel's class". The sale is not, therefore, simply a sale of the vessel as she was at the date of inspection. If the vessel is subject to a class condition or recommendation as at the time of inspection, the Seller is under an obligation to repair the vessel so as to delete that condition or recommendation prior to delivery. Similarly, if the vessel does in fact have average damage affecting class at the time of inspection then the Seller is obliged to repair that damage prior to delivery. The phrase "as she was" can be read consistently with the other requirements of clause 11 despite the fact that those provisions can require the Seller to deliver a vessel in a better condition than when inspected. 58. If the express requirements of clause 11 considered above are not inconsistent with the phrase "as she was", it is difficult to see how the SoGA terms can be inconsistent with that phrase. Like the express requirements of clause 11, the SoGA terms if implied can require the Seller to deliver a vessel in a better condition than she was when inspected. 59. The Tribunal concludes, therefore, that the SoGA terms are not inconsistent with the words "as she was" in clause 11 of the Contract. It was not suggested that there was any other clause of the Contract with which the SoGA terms were inconsistent. 60. The Seller submitted that to imply the SoGA terms in the Contract would re-write the contract between the parties so as to impose on the Seller some of the commercial risk taken by the Buyers in purchasing a second hand vessel that was due for its special survey immediately following delivery. While these matters may be relevant to what amounts to "satisfactory quality" in relation to the sale of a second hand ship, they can not be relevant to whether the SoGA terms are inconsistent with the Contract. Implication of a term does not re-write a contract, it is a determination of what the contract provides in accordance with applicable statutes and rules of law. 61. The Tribunal concludes, therefore, that the SoGA term as to satisfactory quality is implied into the Contract. Summary of parties' submissions The primary submission of Mr Timothy Hill QC on behalf of the sellers was that the tribunal's analysis was wrong because it had failed to recognise that the words "as she was" in the first sentence of clause 11 had the same meaning as the words "as is" or "as is, where is" or similar phrases in other cases (both of sale of ships and other goods). Whilst he did not rely upon any trade custom or usage (and could not have done so, since there was no evidence of custom or usage called before the tribunal), he submitted that it was well settled that such phrases meant that the buyer takes the goods as he finds them, "warts and all" with no warranty or condition as to quality or fitness for purpose. Therefore such phrases, including "as she is" in Saleform 87 and "as she was" in Saleform 93, were inconsistent with the SOGA implied terms and excluded their application. In support of that submission, Mr Hill relied upon a series of ship sale cases from Lloyd del Pacifico v Board of Trade (1929) 35 Ll. L.R. 217 to Polestar v YHM ("The Rewa")[2012] EWCA Civ 153, together with various passages from the two ship sale textbooks, Goldrein on Ship Sale and Purchase (the 5th 2008 edition of which is edited by two partners of Clyde & Co LLP, the buyers' solicitors) and Strong & Herring on Sale of Ships (Mr Herring of Ince & Co LLP being Mr Hill's own instructing solicitor). Mr Hill also relied upon certain additional authorities to which I drew attention, some Canadian cases on the use of the phrase "as is" in contracts for the sale of second hand cars and the decision of the Court of Queen's Bench in Covas v Bingham (1853) 2 El & Bl 836; 23 LJQB 27. Mr Hill submitted that the tribunal's reasoning at [56]-[58] was false and had too narrow a focus. The tribunal simply assumed that "as she was" did not mean any more than that the vessel was to be in the same condition on the date of delivery as she had been on the earlier date of inspection, but overlooked that the words: "as she was at the time of inspection" were equivalent to "as is". It made no difference that the words were in the middle of a sentence. He submitted that clause 11 was, as he put it "redolent of a pure caveat emptor contract". If the buyer wanted additional protection, there had to be express provision. Hence the second sentence begins with the word: "However", indicating that what follows (which is the obligations to deliver with class maintained, without condition or recommendation and free of average damage affecting class) is a qualification to what would otherwise be a simple obligation to deliver the vessel "as she was". He submitted that clauses 4 and 11 were to be read together, which made it clear that, upon inspection the sale was outright and definite, that it was a sale of the vessel as inspected. The fact that the only exceptions to the "as is" nature of the sale dealt with class reflected the fact, so Mr Hill contended, that vessels were built to class standard and when second hand vessels are sold on Saleform MOAs, it is invariably to that class standard reflected in that second sentence of clause 11. In other words, vessels were sold to the class standard not to the standard of satisfactory quality, which he submitted would be a nebulous and uncertain standard to apply in relation to second hand vessels. Mr Simon Rainey QC submitted on behalf of the buyers that the MOA was a contract for the sale of goods expressly governed by English law and, like any other such contract, the default position was that the Section 14 implied terms applied unless the parties had contracted out which they could do either by expressly contracting out, as in the case of the detailed clause considered by Cooke J in Air Transworld Ltd v Bombardier Inc [2012] EWHC 243 (Comm); [2012] 1 Lloyd's Rep 349 or by a clear and unequivocal statement of an alternative regime as to quality which was wholly inconsistent with the section 14(2) implied term as to satisfactory quality, such as an entire agreement clause. Both routes to contracting out were commonly used by sellers under MOAs on Saleform, for example by express exclusions or by entire agreement clauses or by an express statement that the contract is "as is, where is" which, Mr Rainey submitted, might or might not be effective to exclude the statutory implied terms. However, Mr Rainey took issue with Mr Hill's submission that it was well-settled that "as is" in the MOA would exclude the implied terms. He pointed out that the buyers had not sought to adduce evidence at the arbitration hearing that "as is" had some customary meaning. Rather, people in the market recognised that that phrase did not definitely exclude the implied terms, which was why they often sought to supplement that phrase by some express exclusion of SOGA or by an entire agreement clause. He referred in this regard to a passage at [6.9.3] of Goldrein 5th edition. Mr Rainey submitted that the question of law in this appeal in fact raised two separate questions, one narrower and the other wider. The narrower first question was whether clause 11 in this MOA was equivalent to an "as is, where is" basis of contract, assuming that phrase has the effect of excluding the SOGA implied terms. The wider second question was, if it is equivalent, does "as is, where is" exclude section 14(2) in the light of section 55. If the tribunal was right in its analysis, then clause 11 was not equivalent to "as is, where is", whatever effect that phrase had on the statutory implied terms and the appeal must fail, in which case the court would not, strictly speaking, have to decide the second wider question. In other words, although Mr Rainey did submit that "as is, where is" was not in fact apt to exclude the implied terms, whatever various judges may have said over the years on an obiter basis, even if that submission was wrong, if he was right in his submission that on the first, narrower question, the tribunal was correct, then the appeal would fail. In relation to the first, narrower question Mr Rainey submitted that the court should approach the question whether there was an express term in the contract, here clause 11, which excluded the implied terms set out in section 14, having in mind the principle that these are basic rights arising by operation of law, which are valuable to the buyers and which it should not be assumed would be lightly given up. He relied upon the most recent statement of this principle by Cooke J in Air Transworld at [26], which Mr Hill did not challenge. Applying that principle in the present case, Mr Rainey submitted that, unless the buyers could show that the only possible meaning to be attributed to "as she was" in clause 11 was that those words were equivalent to "as is", they must lose. The tribunal had found that, reading those words in the context of the sentence as a whole, they meant that the buyers were entitled to delivery of the vessel in the same condition as when inspected. In those circumstances, as the tribunal also found, it was not appropriate to attribute some further meaning to the phrase as the buyers contended: see [56] of the Award. Mr Rainey submitted that the words "as she was" in the first sentence of clause 11 were not equivalent to "as is" or similar words in the cases relied upon by Mr Hill, as those cases were ones where the phrase was essentially a stand-alone provision. Mr Rainey had a fall-back position that "as she was" in clause 11 should be read down in accordance with the principle that clauses which purport to exclude the buyer's statutory rights to claim damages under SOGA should be interpreted strictly. In those circumstances, the phrase in context: "the vessel shall be delivered and taken over as she was at the time of inspection" [underlining to emphasise the words relied on by Mr Rainey] should be restricted to exclusion of the right to reject the vessel, not exclusion of the right to claim damages for breach of the obligation of satisfactory quality in section 14(2) of SOGA: see per Davies LJ in the Ashington Piggeries case in the Court of Appeal [1969] 2 Lloyd's Rep 425 at 468. That approach had been endorsed in the House of Lords by all their Lordships. So far as concerns Mr Hill's reliance on the second sentence of clause 11 beginning "However" as constituting exceptions to the buyer having to accept the vessel as she is, warts and all, Mr Rainey submitted that these obligations lay perfectly happily alongside the section 14(2) implied term and that it was well established that the statutory implied terms could not be excluded by the sellers providing some limited warranty such as "free of average damage affecting class". As for the suggestion that second hand vessels were sold by reference to a class standard, not a standard of satisfactory quality, Mr Rainey pointed out the limitations of class, as discussed by Goldrein at p.42 where it is stated: "Classification does not constitute a guarantee that proper technical standards are maintained at all times, or that the ship in question is seaworthy, or even that the ship is free of significant defects." In other words, class does not tell you the quality of the vessel, which is why the independent implied term as to satisfactory quality is required. Mr Rainey drew the analogy with time charters which frequently provide that the vessel is "in class and in a thoroughly efficient state", recognising that class and quality are two different things. "Satisfactory quality" was not a nebulous or uncertain standard. It was all a question of fact in each case and section 14(2A) to (2C) provided extensive guidance on how to assess whether quality was satisfactory. The tribunal applied that guidance in this case at [90] to [93] of the Award. In relation to the wider second question, Mr Rainey relied upon the line of authorities in appellate courts from Wallis, Son & Wells v Pratt & Haynes [1911] AC 394 to Bominflot v Petroplus Marketing ("The Mercini Lady") [2010] EWCA Civ 1145; [2011] 1 Lloyd's Rep 442 which establish that the implied terms under sections 13 and 14 of SOGA are conditions of a contract for the sale of goods which cannot be excluded by reference to guarantees or warranties. Mr Rainey submitted that for "as is" to have the effect of excluding the implied conditions as Mr Hill contended, that short phrase had to mean "with all faults and errors of description and with no warranties or conditions being given", but as a matter of construction, the words "as is" could simply not be interpreted as having that meaning and, despite Mr Hill's assertion to the contrary, the words were not a term of art. If Mr Hill's submission that the mere use of the words "as is" in a contract of sale excluded the implied terms, it would drive a coach and horses through the cases on how the implied terms could be excluded. The correct approach to section 14(2) I agree with Mr Rainey that the correct starting point is that the section 14 implied terms will apply to this English law contract of sale as to any other, unless the parties have contracted out of section 14 by one or other of the two routes he identified. This is not an example of adopting the fossilised approach to the application of SOGA which Lord Diplock deprecated in Ashington Piggeries v Christopher Hill Ltd [1972] AC 441 at 501, as Mr Hill suggested. It is simply well-established law. The suggestion that SOGA somehow does not apply to contracts for the sale of second hand ships which are governed by English law is contrary to the terms of the statute. Ships are "goods" within the statute like any other piece of machinery or equipment: see Goldrein at [4.5.1] and the decision of Wright J in Behnke v Bede Shipping [1927] 1 KB 649 at pp659-660 cited there. If commercial parties do not want to be subject to the implied terms as to satisfactory quality and fitness for purpose, they can contract out of those implied terms, as provided for by section 55(1) of SOGA. Since this is not a case where the sellers contended that the statutory implied terms were negatived by the course of dealing between the parties or by some binding custom or usage, they could only be negatived by express agreement. It follows that, in my judgment, the tribunal was entirely correct in taking section 55(2) of SOGA as its starting point at [53] of the Award. Before considering in more detail the various authorities upon which Mr Hill relies, it is instructive to consider the principle reiterated most recently by Rix LJ in The Mercini Lady and Cooke J in Air Transworld that clear language must be used in the contract, if the statutory implied terms which are conditions of the contract of sale, not mere warranties (see section 14(6) of SOGA as amended) are to be excluded. It is clear from all the cases that that principle is strictly applied, which it is fair to say sits somewhat uneasily with some of Mr Hill's submissions. The Mercini Lady was a case of a contract for the sale of a cargo of gasoil which included at clause 18 an exclusion in these terms: "There are no guarantees, warranties or misrepresentations, express or implied [of] merchantability, fitness or suitability of the oil for any particular purpose or otherwise which extend beyond the description of the oil set forth in this agreement." One of the issues before the court was whether that exclusion clause excluded the section 14(2) implied term. At [48] to [53] of his judgment, Rix LJ considered the authorities on exclusion of the implied conditions from Wallis, Son & Wells v Pratt & Haynes [1911] AC 394 to Henry Kendall & Sons v William Lillico & Sons Ltd (The Hardwick Game Farm Case) [1969] 2 AC 31. It was submitted by the sellers that the approach of these cases was too strict and dated and should be revisited in the light of the approach to exclusion clauses adopted in Photo Production Ltd v Securicor [1980] AC 827, a submission which found some support from academic commentary. The buyers submitted that the jurisprudence was long standing, of the highest authority and formulated as a matter of principle. In determining that the court was bound by the principle established by the authorities, Rix LJ said at [59] to [61]: "59. It is not easy to choose between these submissions. On the one hand a principle has been established, on the highest authority, that Sale of Goods Act implied conditions cannot be excluded by reference to guarantees or warranties and require clearer language extending to "conditions" themselves. Those authorities go beyond the relatively simple clause and stark facts of Wallis v. Pratt itself, where there was a breach of an express clause as to the product to be supplied, or the case of Cammell Laird, where there was no exclusion at all, and extend to Baldry v. Marshall, where the clause spoke expressly of the exclusion of "any other guarantee or warranty, statutory or otherwise", and above all to Kendall v. Lillico, where the clause was similar to ours in dealing expressly with the concept of merchantability and went on to refer expressly to "any statute or rule of law to the contrary notwithstanding" (emphasis added). 60. On the other hand, it is extremely difficult to read our exclusion clause as not being intended to cover the exclusion of the statutory implications of satisfactory quality (the new merchantable quality) and fitness for purpose. Mr Edey's reference to the little known or exemplified section 14(4) cannot realistically be considered as the exclusive subject matter of the clause's language about "merchantability, fitness or suitability of the oil for any particular purpose or otherwise". Moreover, what other implied terms about quality or fitness for purpose, other than the statutory implications are permitted in the light of section 14(1)? If an implied warranty of quality or fitness of purpose is excluded, why not an implied condition, since only the statute can supply any such term and the statute refers to such terms as conditions? This may be thought to be especially the case in an international sale of goods contract where quality is defined by reference to an express specification and that specification has to be determined once and for all on shipment by a final and binding inspection certificate. The clause 18 exception says "no guarantees…which extend beyond the description of the oil set forth in this agreement". What is that "description"? The word is not used (as far as has been brought to our attention) elsewhere in the contract. Strictly speaking the description may be thought to be found in clause 3, headed "Product". However, it is unrealistic and uncommercial to think that for the purpose of this contract "description" does not also embrace clause 4, albeit it is headed "Quality", especially since clause 18 refers to merchantability, an aspect of quality. 61. If therefore I were construing this clause untrammelled by past authority, or if such authority was plainly limited, in the way that so many decisions on the construction of individual clauses are limited, by considerations of the precise language and context of those particular clauses, I would feel it open, in the modern world, to give to clause 18 the construction which I believe that it realistically bears: that is to say, that "guarantees" and "warranties" are intended to cover all terms, both those which entitle the innocent party in the case of breach to treat the contract as repudiated and those which sound only in damages. As section 11(3) of the 1979 Act itself records, "a stipulation may be a condition, though called a warranty in the contract": and clause 18 itself demonstrates that buyer's warranties there set out are treated by the contract as conditions. It might be said that what is good enough for Lord Diplock (see at para 55 above) is good enough for commercial traders. However, I am not so free. The jurisprudence extends beyond individual decisions and has become expressive of a principle, and what is more the principle also encompasses clauses very similar to clause 18. I must consider that the parties to this English law contract, foreign as both of them are and quite possibly ignorant of the consequences of their choice of language, intended to contract by reference to what English law had to say about the language which they have adopted." It seems to me that that last point is apt to address the generalised submissions Mr Hill made about how application of an implied term as to satisfactory quality would be contrary to the expectations and intentions of parties to MOAs on Saleform and of "the market". In the absence of some market custom or usage to exclude the implied terms, as Rix LJ says, the parties to this English law contract are to be taken to have intended to contract by reference to what English law has to say about the language used. Even if Mr Hill were right that the expectation of "the market" was that no term as to satisfactory quality was to be implied into a Saleform MOA, no market custom or usage was pleaded, let alone established and, as Mr Rainey pointed out, the discussion of this issue in the textbooks suggests "the market" does not speak with one voice. The short answer to the expectation of the market point is that if the language used in the contract has consequences as a matter of English law which "the market" did not intend, then the language used should be changed to accord with that expectation. As the arbitrators noted at [45] of the Award, the latest 2012 Saleform includes wording designed to make it clear the statutory implied terms are excluded. I should add in parenthesis that the argument of the unsuccessful sellers in The Mercini Lady that the strict approach of the older cases should no longer be followed receives an echo in the discussion in Strong & Herring [2B-19], written before The Mercini Lady was decided, citing the approach to construction of exemption clauses of Lord Diplock in Photo Production and suggesting that the historical basis for the strict construction was a policy of consumer protection no longer needed in the light of the Unfair Contracts Terms Act 1977. That analysis and discussion is not correct as a matter of law in the light of Rix LJ's judgment. Air Transworld v Bombadier was a case of the sale of an aircraft. the contract of sale included a detailed and far ranging exclusion clause in these terms: "4.1 THE WARRANTY, OBLIGATIONS AND LIABILITIES OF SELLER AND THE RIGHTS AND REMEDIES OF BUYER SET FORTH IN THE AGREEMENT ARE EXCLUSIVE AND ARE IN LIEU OF AND BUYER HEREBY WAIVES AND RELEASES ALL OTHER WARRANTIES, OBLIGATIONS, REPRESENTATIONS OR LIABILITIES, EXPRESS OR IMPLIED, ARISING BY LAW, IN CONTRACT, CIVIL LIABILITY OR IN TORT, OR OTHERWISE, INCLUDING BUT NOT LIMITED TO A) ANY IMPLIED WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE, AND B) ANY OTHER OBLIGATION OR LIABILITY ON THE PART OF SELLER TO ANYONE OF ANY NATURE WHATSOEVER BY REASON OF THE DESIGN, MANUFACTURE, SALE, REPAIR, LEASE OR USE OF THE AIRCRAFT OR RELATED PRODUCTS AND SERVICES DELIVERED OR RENDERED HEREUNDER OR OTHERWISE." One of the issues which arose was whether that clause had the effect of negating the conditions implied by sections 13 and 14 of SOGA. At [12] to [21] of his judgment, Cooke J went through the earlier authorities, culminating in the judgment of Rix LJ in The Mercini Lady. Then, at [26] he referred to Lewison: The Interpretation of Contracts 5th edition at [12-03] which cites the judgments of Moore-Bick LJ in Whitecap Leisure Ltd v John H Rundle Ltd [2008] 2 Lloyd's Rep 216 and Stocznia Gdynia SA v Gearbulk Holdings Ltd [2009] 1 Lloyd's Rep 461. Cooke J continued in [26]: "In these cases the Court refused to accept that there were two competing approaches to construction, struggling for supremacy, one of which required clear express words whilst the other favoured the natural meaning of the words used. He said that it was important to remember that any clause in a contract had to be construed in the context in which it was found, meaning both the immediate context of the other terms and the wider context of the transaction as a whole. The court was unlikely to be satisfied that a party to a contract had abandoned valuable rights arising by operation of law, unless the terms of the contract made it sufficiently clear that this was intended. The more valuable the right the clearer the language would need to be. Similarly, the more significant the departure from obligations implied by the law or ordinarily assumed under contracts of the kind in question, the more difficult it would be to persuade the court that the parties intended that result." Cooke J then considered the wording of Article 4.1 of the contract and concluded at [29]: "No person reading this Article could be in any doubt that every promise implied by law is excluded, in favour of the contractual promises set out in the APA. It is right that there is no term which purports to exclude the buyer's right to reject the goods and recover the price, nor to the specific sections of the Sale of Goods Act, but the words "all other… obligations… or liabilities express or implied arising by law", which the purchaser expressly waives, necessarily include the conditions implied by the Sale of Goods Act. In my judgment these are apt and precise words which are sufficiently clear to exclude those implied conditions and the Article, by necessary inference does negative the application of those implied conditions. The parties' language is in my judgment fairly susceptible of only one meaning (to employ the expression used by Lord Diplock in Photo Production and Rix LJ in The Mercini Lady.) There is no express reference to the word "condition" but the language must necessarily be taken to refer to the implied conditions of the Sale of Goods Act, because they are obligations and liabilities "implied, arising by law". Moreover, the illustration of the application of this general provision in Article 4.1(B) covers any other obligation or liability devolving on the seller, "of any nature whatsoever", resulting from the design, manufacture and sale of the aircraft. No buyer could be in any doubt as to the extent of the rights he was getting and the limitation on the seller's obligations. What the buyer was to get was the Warranty found in the APA and its Appendix in place of the terms implied by the Sale of Goods Act, whether conditions or warranties." The cases on "as is" and similar phrases It is against the background of the application of the principle reiterated by those cases that the various cases relied upon by Mr Hill are to be considered. It is also worth stressing at the outset that, upon a proper analysis of the cases, it is not strictly part of the ratio of the decision in any of them that the words "as is" or similar exclude the statutory implied terms in sections 13 and 14 of SOGA. Rather, as Mr Hill fairly accepts, the statements made are obiter. Mr Hill's starting point is the decision of the Court of Appeal in Lloyd del Pacifico v Board of Trade (1929) 35 LL.L.R. 217. In that case, the British Government had contracted with the Italian Government in 1919, at a time when freight rates were extraordinarily high, to dispose of surplus merchant shipping tonnage built during the First World War. The structure of the agreement was that the Italian Government would put forward approved buyers, of whom the appellants were one. They agreed to buy the vessel War Column built in the United States with turbine engines which it transpired were extremely expensive to operate and which meant their trading of the vessel was unprofitable when freight rates plummeted during the 1920s. The contract of sale contained this clause 5: "The steamer with her broached stores spare gear and outfit shall be taken with all faults and errors of description without any allowance or abatement." The buyers had claims under both section 14(1) and (2) of the Sale of Goods Act 1893 (fitness for purpose where that purpose was made known by the buyer and merchantable quality). The members of the Court of Appeal were all agreed that the claims failed, although their reasoning differed somewhat. Scrutton LJ considered the claim under section 14(1) failed because the buyers had not made their purpose known to the sellers and the clause stating that the vessel was to be taken with all faults and errors of description shut out any inference that the buyers had relied on the sellers' skill and judgment. He considered that the claim for breach of section 14(2) failed because the vessel was of merchantable quality. Although he said it was not necessary to decide the point, he would also have decided that any claim was excluded by clause 5, stating (at p.222): "I think that the cases cited show that the reading of that clause is not 'faults of description and errors of description' but 'faults and errors of description'; there are no errors of description that I can see. The unsuitability of the engines to the hull is a fault in the ship, and appears to me to be excluded as a cause of action by the provisions of clause 5." Lawrence LJ also considered the authorities on the expression "all faults and errors of description" and reached the same conclusion on the meaning of "all faults" so he decided that if the fact that the vessel had turbine engines was a fault, there was no breach of contract (at p.223). He also agreed with Scrutton LJ that the claim under section 14(1) failed because there was no evidence that the buyers made their purpose known to the sellers or that they relied on the sellers' skill and judgment. He also considered that on the facts, the vessel was clearly of merchantable quality. Greer LJ also held (at p.224) that the words "all faults" encompassed any fault in the engines and (at p.225) that, on the facts, the vessel was clearly of merchantable quality. Mr Hill relied in particular on the passage at the end of Greer LJ's judgment, where he said: "…for the very purpose of excluding all questions of warranties they used the term 'with all faults' which in business has been long understood to mean 'as she stands, with all faults that she has and any errors of description'". Mr Hill placed considerable reliance on that case and on the fact that the Court of Appeal, at least obiter, would have decided if necessary that the phrase: "the [vessel]… shall be taken with all faults and errors of description" (for which he contended "as is" was a modern shorthand) excluded the implied terms in section 14(1) and (2) of the Sale of Goods Act 1893. In my judgment those obiter statements have to be viewed with some circumspection. So far as I can tell the judgments were ex tempore, since the Lloyd's List Reports would state when judgment was reserved and the decision of the House of Lords in Wallis, Son & Wells v Pratt & Haynes [1911] AC 394 and of a different Court of Appeal (Bankes, Atkin & Sargant LJJ) in Baldry v Marshall [1925] 1 KB 260 which followed Wallis, do not seem to have been cited to the Court of Appeal in Lloyd del Pacifico, so specific consideration does not seem to have been given to whether the phrase "the [vessel]… shall be taken with all faults and errors of description" really was apt to exclude conditions of the contract, which the statutory implied terms are. Furthermore, there is considerable similarity between the phrase under consideration in Lloyd del Pacifico and the clause in Christopher Hill Limited v Ashington Piggeries Ltd [1969] 2 Lloyd's Rep 425: "the goods to be taken with all faults and defects", which Davies LJ held at 468 was to be read down as excluding only the right to reject the goods not the right to claim damages for breach of a statutory implied term, an approach approved by their Lordships in the House of Lords in that case. It follows that, in my judgment, Lloyd del Pacifico may be of doubtful assistance in the modern law. In the context of Lloyd del Pacifico, Mr Hill also placed some reliance on an earlier sale of goods case to which I drew attention, Covas v Bingham (1853) 2 El & Bl 836; 23 LJQB 27, a decision of the Court of Queen's Bench in relation to a cargo of corn from a particular vessel: "now at Queenstown, as it stands, consisting of about thirteen hundred quarters of…corn…the quantity to be taken from the bill of lading". The dispute in that case concerned the quantity and the court held that the basis of sale was one under which the buyers took the chance that the actual quantity might exceed or fall short of that specified in the bill of lading, a point on which a different conclusion would clearly be reached in the modern law. However, a majority of the court did consider the effect of the contract not just on quantity but quality. Lord Campbell CJ said: "I think the intention of the parties to be gathered from the contract itself was, that the cargo should be taken by the purchaser, for better for worse, for less or more. Both parties put faith in the correctness of the bill of lading." Coleridge J, at least as reported by Ellis & Blackburn, said: "The sale is of a cargo afloat. There are therefore two important points not ascertained, its quality and its quantity. As to the quality, they agree to take it 'as it stands' and, as there is a mode by which the quantity may be roughly ascertained by reference to the bill of lading, they agree to the quantity as it appears on that". In the Law Journal Report, he is reported as having said: "[the cargo] was to be taken whatever the actual quantity or quality should turn out to be." Erle J, as I read his judgment, had nothing to say of any relevance to the question of the impact of the words "as it stands" on quality. Mr Hill pointed out that the words "as it stands" were used in the body of the contract, not as typed additions or rider clauses and yet still meant that the goods were delivered for better or worse or whatever the quality turned out to be. However, I am far from convinced that that case assists Mr Hill in establishing some general principle that words such as "as is" or "as it was" negative any implied term as to quality. As Mr Rainey pointed out, all three members of the court decided the case on the basis of the construction of the contract in question, which was a sale of a cargo afloat where the parties put their faith in the correctness of the bill of lading. I agree with Mr Rainey that the case is of little assistance as to the meaning of "as is" or "as she was" in a modern contract of sale. Mariola Marine Corporation v Lloyd's Register of Shipping ("The Morning Watch") [1990] 1 Lloyd's Rep 547 was a case where the plaintiff had purchased a twenty three year old yacht. The contract of sale was short and informal, consisting of an exchange of telexes whereby the principal of the buyers telexed the sellers' brokers offering £185,000 for the yacht "as is, where is" and the brokers accepted that offer by return telex. Having discovered defects in the vessel after purchase, the buyers claimed against the vessel's classification society for alleged breach of a duty of care owed to them. The claim failed, as Phillips J held no duty of care was owed. Part of Lloyd's case was that no claim could be founded on events after the exchange of telexes, because by then the buyers were legally committed to complete the purchase of the vessel. The buyers sought to counter that argument by submitting that "as is" meant "as reported to be" so that the sale was conditional upon the vessel being properly classed 100A1 at Lloyd's. Phillips J gave that argument pretty short shrift, saying at 555-6: "This argument is untenable. The term 'as is' has a clearly recognised meaning in a contract of sale. The purchaser takes the object sold as he finds it without any warranty as to quality or condition. It was not open to Mariola having agreed to purchase the Morning Watch 'as is where is' to complain that her condition did not justify a classification 100A1 at Lloyd's". As Mr Rainey correctly points out, that was an informal ad hoc contract, the only term of which apart from price seems to have been "as is, where is", which was in fact offered by the buyers, so in one sense it is perhaps not surprising that the learned judge considered that the buyers were agreeing to take the vessel without any warranty as to quality. There was no discussion in terms of whether the phrase "as is" was an express exclusion of the implied terms as required by section 55 of SOGA, nor any citation of authority on that issue. Nonetheless, the case is of obvious assistance (together with the Canadian cases to which I refer below) to the sellers here, at least as regards the second, wider question. The next case on which the sellers rely is the decision of David Steel J in The Brave Challenger [2003] EWHC 3154 (Admlty). In that case the vessel was a one-off luxury yacht capable of 60 knots, built in 1962 but extensively refurbished. The MOA for her sale was not on Saleform 87 or 93 but was another ad hoc contract, as is apparent from the terms set out in [57] of the judgment. The relevant clause was clause 6, headed "Passing of risk" which provided: "The vessel with everything belonging to her shall be at the seller's risk and expense until she is delivered to the buyer but subject to the conditions of this contract she shall be delivered and taken over as she is at Hasler Marina Portsmouth." In that case where the trial lasted 17 days, Mr Haydon-Baillie acted in person on behalf of the buying company of which he was sole director, with the permission of the judge, but as the judge recorded, it was complex litigation and "the nature of the representation made the task of the court in ensuring a fair trial for both parties and resolving the issues between them immeasurably more difficult" [99]. The buyers' primary claim was for damages for misrepresentation. The learned judge, who concluded that clause 6 was an "as is, where is" clause, rejected the sellers' argument that the clause demonstrated a lack of reliance on any misrepresentations, saying at [170]: "I reject the submission that the "as is where is" clause in the contract demonstrates a lack of reliance on any contractual representations. If anything that clause (and the absence of any survey) manifest total reliance on the sellers." His conclusion that the buyers were entitled to damages under the Misrepresentation Act 1967 made it unnecessary to consider the buyers' alternative claim for breach of the implied terms under section 14 of SOGA but at [177] the learned judge concluded: "In any event, the short answer to those claims is that the express term with regard acceptance of the vessel "as is where is" negatives the implication." As Mr Rainey points out, that was another case where there was no discussion of section 55 of SOGA, perhaps unsurprisingly since Mr Haydon-Baillie was a litigant in person. Mr Hill submitted that clause 6 of that contract was almost identical to clause 11 of Saleform 87 which provided for the vessel "to be delivered and taken over as she is at the time of inspection" and that the only difference between the first sentence of clause 11 in Saleform 87 and the first sentence of clause 11 in Saleform 93 was the change of tense from "is" to "was", which is more grammatically correct. Mr Hill relied upon the dictum of David Steel J in The Brave Challenger in support of the proposition that clause 11 in both forms is an "as is, where is" clause with the same meaning as in The Morning Watch. The recent decision of the Court of Appeal in Polestar Maritime Limited v YHM Shipping Co Ltd ("The Rewa")[2012] EWCA Civ 153 was a case considering an MOA on Saleform 93. The question at issue was whether the vessel as delivered had to have on board only such trading and other international certificates as she had at the time of inspection or, as contended by the buyers, was required to have on board additional certificates, specifically an international sewage pollution prevention certificate, the requirement for which came into effect after inspection and three days before delivery. That issue was determined against the buyers by both Field J and the Court of Appeal on the basis that the wording of lines 222-223 in clause 11 of the Saleform (in fact deleted from clause 11 in the present case) only required the vessel to have on board the same certificates as she had at the time of inspection. Mr Hill relied upon [27] of the judgment of Aikens LJ: "In my view the judge's construction of this wording is the correct one. Clause 11 deals with the condition of the Vessel upon her delivery. The basic agreement between the parties is that the Vessel is to be delivered and taken over "…as she was at the time of inspection". In short, this is an "as was" sale and purchase contract. The basic obligation on the Sellers with regard to documentation is set out in clause 8, which stipulates what documents are to be delivered to the Buyers at the time of closing. At the stage of closing the Sellers have to deliver the originals of all "trading/class, national and international certificates in accordance with the MOA" as stipulated in paragraph (12) of Addendum No 1. That same paragraph notes that copies of all such certificates will already have been passed to the Buyers. The MOA therefore contemplates that the Buyers will already have been given the national and international certificates existing at the time of the vessel's inspection and that they will get the originals of those certificates at the closing." Mr Hill submitted that when Aikens LJ described this as an "as was" contract he was saying that the contract was an "as is" contract in the sense that there were no warranties as to quality. With respect to Mr Hill, I consider this is a false point. There was no issue in that case as to the quality of the vessel either upon inspection or delivery, the only issue was as to the documents, so that by definition there was no discussion of whether the SOGA implied terms were excluded by clause 11 of Saleform 93. I suspect that when Aikens LJ referred to the contract as an "as was" one, he was picking up on the point made by Field J which he referred to at [19] of his own judgment and with which he agreed: "The judge rejected the arbitrator's construction of clause 11 for three reasons…Secondly, at [16], he considered that the arbitrator's construction was "unjustifiably inconsistent" with the emphasis placed by the NSF terms on the "as was" nature of the sale, ie. that the Vessel was being sold in the condition (and with the certificates) as she was at the time of her inspection." That is simply making the point that the obligation under clause 11 is to deliver the vessel in the same condition as upon inspection, but is saying nothing about what the obligation of the sellers is as to the quality of the vessel upon inspection (and therefore upon delivery). In other words, nothing in that case is inconsistent with the arbitrators' reasoning and conclusion in the present case. In written submissions served after the hearing dealing with Covas v Bingham and the Canadian cases to which I refer below, Mr Rainey also drew my attention to the decision of Christopher Clarke J in Choil Trading SA v Sahara Energy Resources Ltd [2010] EWHC 374 (Comm). That case involved a contract for the sale of naphtha where one of the issues was the meaning of the term "as is" in various refined crude oil product trades. The learned judge heard expert evidence of trade custom and apparently no authorities were cited (evidently in view of what was common ground as to the customary meaning of "as is" in particular trades, because cases like The Morning Watch would have been of no assistance). He concluded as follows in relation to the term in the contract as to quality at [104]-[106]: "104. In my judgment, the combined effect of the 17th July exchange and the 18th July e-mail was that the contract was to be on terms that the naphtha sold was to be of PHRC naphtha quality, i.e. having characteristics within the range for naphtha normally produced by PHRC. The expression "as is" was sufficient to indicate that the naphtha to be received would have whatever characteristics (within that range) the cargo supplied to Choil ex PHRC happened to have. But, whatever might have been the position if the words "as is" had stood alone, they cannot in context be taken to signify that the sellers could provide cargo which was not of normal PHRC quality for naphtha because of its very high MTBE content. 105. Sahara's evidence is that it is usual to sell Nigerian naphtha (at a heavy discount in price) without any warranty as to quality because its quality is variable and the means to determine important aspects of quality relevant to European , US and Far East buyers do not exist locally. Naphtha is purchased FOB without warranty, and, when the quality of the cargo on board ship has been accurately determined, is sold CIF with an appropriate warranty of quality. It submits that, in that context, "PHRC naphtha quality" (or "Naphtha of normal running production as produced by Port Harcourt Refining Company") should be interpreted as meaning a sale without any warranty as to quality at all. 106. I accept that sales of Nigerian naphtha are often made "as is" or without warranty and at a heavy discount for the reasons set out in the previous paragraph. But I do not accept that the term "Quality: PHRC naphtha quality" can or should be interpreted as if it said or meant that there was literally no term as to quality of any kind. The inclusion of a "Quality" term is inconsistent with this. If the parties had intended that all that was warranted about the product sold was that it could be called "naphtha" they would have expressed themselves differently. Choil was, bound to accept naphtha, whatever its characteristics, provided it was "PHRC naphtha quality". But it was not that obliged to accept a cargo which was heavily contaminated by a substance which was not the result of naphtha production and which is not normally present in naphtha produced by PHRC. I note that Ms Annesley, the expert called by Sahara, accepted that the term "as is" would not be understood as going "as far as to permit MTBE content"; and that, in the subsequent communications between the parties, no suggestion is made that the reference to "as is" meant that there was no warranty whatever as to the quality of the product. Mr Rainey very fairly accepted that these passages could be construed as the learned judge accepting, by implication, that the words "as is" at least if standing alone, were capable of meaning "without warranty". However, the case is really of no assistance to the issues I have to decide. It simply illustrates that in certain trades, the words "as is" may come to have a customary meaning that is shorthand for an exclusion of any warranty as to quality. The learned judge was careful to confine his decision to the particular specific trade he was considering. Mr Hill in particular relied on various passages in the two textbooks to which I have already referred, Goldrein on Ship Sale and Purchase and Strong & Herring: Sale of Ships. Although I have considered carefully the views expressed by the editors and authors respectively of those two books, all of whom are practising solicitors in the field of commercial law, ultimately, since the issue I have to decide is one on which there is no decision of the courts directly on the point, the textbooks assist in identifying and refining the relevant arguments on both sides, but not in determining the issue. Also, Mr Hill cited a number of passages from previous editions of Goldrein dealing with Saleform 87. This smacked of an exercise in the "archaeology of the forms" which Aikens LJ discouraged at [30] of his judgment in The Rewa and was not helpful. The meaning of the phrase "as is" has also been considered in a series of Canadian cases concerned with the sale of second hand cars. The actual decision of the Saskatchewan Court of Appeal in MacLeod v Ens (1983) 135 DLR 3d 365 (referred to by Strong & Herring at [2B-19]), where the buyer agreed in writing to take a car "as is", was that the provision was rendered null and void by the Canadian Consumer Products Warranties Act because it purported to exclude the statutory warranties provided by that Act, including those of "acceptable quality" and "durability". Cameron JA, giving the judgment of the Court, described the effect of the "as is" provision if the statute had not applied, in these terms: "When used with reference to a sale, people generally take the term 'as is' to mean that the product is bought and sold in the condition in which it then exists, for better or for worse, with altogether no warranties in relation to quality, durability, or fitness, and with the entire risk in those respects to be borne by the buyer. I agree with the trial judge that the parties intended to buy and sell this vehicle on that basis and that it seems only fair to hold Mrs MacLeod to the bargain; after all, she agreed to take the car 'as is' only after she had driven it and had it checked by her husband and another; why should she not be bound? In my view, she should, unless the statute otherwise provides, which in short, is the issue." Statements to similar effect are to be found in other cases. Thus, in Smith v Lasko [1987] 5 WWR 412, a decision of the Manitoba Court of Appeal, Philp JA stated the general effect of the words "as is" in these terms at pp.424-5: "Generally the use of the expression 'as is' in a contract for the sale of goods implies that the purchaser relies on his or her own inspection of the goods and that the express and implied warranties as to merchantable quality and fitness are excluded. But that is not always the case. For example, in Radul v Daudrich [1983] 6 WWR 278, this court found that, in circumstances where the purchaser of a used car was entitled to expect the vehicle to be reasonably fit for her personal use, the expression 'as is condition' in the sale agreement did not exclude the implied condition of merchantable quality under s. 58(1)(e) of the Consumer Protection Act." The first two sentences in that passage are cited with approval by Halsbury's Laws of Canada: Sale of Goods [HSG-21]. In Smith v Lasko itself, the receipt for the car said it was "taken on an as is basis" but the Court of Appeal found that the contract was partly oral and partly in writing and that the buyer had been repeatedly told that the car was in an excellent condition, which statement was incorporated in the contract. Philp JA concluded that it was a condition of the contract that the vehicle was in excellent condition and the vehicle did not answer that condition, so the seller was in breach. What that case and Radul v Daudrich (where the main judgment was also delivered by Philp JA) demonstrate is that use of the expression "as is" will not always exclude express or implied warranties as to merchantable quality or fitness for purpose. It will depend upon the circumstances and upon the other terms of the contract. However, I accept that the Canadian cases decide that, as a general rule, a statement that the contract is "as is" will exclude the statutory implied terms as to merchantability and fitness for purpose, save where consumer protection legislation renders such a statement of no effect or there are other inconsistent terms of the contract. There is no justification for limiting the Canadian cases on "as is" to exclusion of the implied term as to fitness for purpose, but not that as to merchantable quality, as Mr Rainey suggested in his additional written submissions put in after the hearing. In my judgment, the difficulty with the Canadian cases on "as is" provisions is that they do not appear to recognise that the implied terms are conditions and that (whilst it may not be necessary in a modern context to exclude conditions expressly) clear words are needed to exclude the statutory implied conditions (see for example Air Transworld). It may be that the law in Canada has changed and the implied terms as to merchantability and fitness for purpose are no longer conditions, but certainly those implied terms as contained in section 16 of the original Canadian Sale of Goods Act 1909 were regarded as conditions. In the decision of the Saskatchewan Court of Appeal in Marshall v Ryan Motors Ltd [1922] 65 DLR 742 (also cited by Halsbury at [HSG-21]), the majority of the court held that the words of an exclusion (albeit not an "as is" provision) were not sufficient to exclude the implied condition as to fitness for purpose in section 16(1) (in essentially the same terms as what was section 14(1) of the English 1893 Act), applying the decision of the House of Lords in Wallis, Son & Wells v Pratt & Haynes. The narrower question In my judgment, the tribunal was clearly right to conclude that the words "as she was" in the first sentence of clause 11 are a necessary part of a sentence which is recording the obligation to deliver the vessel in the same condition as she was when inspected. In other words, they are part of a temporal obligation which arises because, usually, there will be a period of time of weeks or even months between inspection and delivery. However, those words tell one nothing about what the sellers' obligations are, either on inspection or delivery, as regards the quality of the vessel. Hence they do not and cannot exclude the implied term as to satisfactory quality under section 14(2) of SOGA. I agree with Mr Rainey that, in one sense, the cases on "as is" provisions, such as The Morning Watch or The Brave Challenger, do pose a real difficulty for the sellers' case, since they demonstrate that sellers who wish to put themselves into an "as is" regime, with the intention of excluding the statutory implied terms, use those specific words either on their own (as in The Morning Watch) or by way of addition to the contract terms, for example by adding "as is, where is" after the reference to the sale being "outright and definite" in clause 4 of Saleform 93. This was a point made by the tribunal at [55] of the Award. The same point was also made by the arbitrators in another arbitration when faced with the same argument about the words "as she was at the time of inspection" or "as she is at the time of inspection" in clause 11 of Saleform 87 or 93, as in the present case. Their reaction to the sellers' argument set out in their Award is cited by Mr Crookenden QC (one of the present tribunal) in a paper entitled "Norwegian Saleform Contracts: Implied terms of satisfactory quality and fitness for purpose and right to reject delivery" updated to December 2008, which Mr Herring exhibited to his witness statement in support of the sellers' application for permission to appeal. Those arbitrators said this: "We also mention that the sellers' "as is" argument has no appeal to us. Many sale and purchase contracts are on this basis but this is made clear by use of the well-known words "as is" used by those involved in the ship sale and purchase market. No such words were in our contract." I agree with that reasoning and with the reasoning of the tribunal in the present case at [55] to [59] which I regard as impeccable. In my judgment, the words "as she was", in the context of the first sentence of clause 11, are incapable of bearing the same meaning as the free-standing words "as is, where is" in a sale contract, assuming for the purposes of the argument that those words do exclude the statutory implied terms. Even if the sellers were right that a possible meaning of the words "as she was" was to exclude the implied terms, it remains the case that the sellers cannot establish that that was the only meaning the words were intended to have, since plainly the context indicates the temporal purpose of the words, to make it clear that the vessel is to be delivered in the same condition as when inspected. Given the strict approach to construction of terms alleged to exclude the statutory implied terms consistently adopted by the courts, up to and including the decision of Cooke J in Air Transworld, the fact that even on the sellers' best case the words must have more than one meaning is fatal to the sellers' case that these words exclude the statutory implied terms. Furthermore, given that an obvious sensible meaning of the words is as part of the temporal obligation to which I have referred, section 55(2) defeats the sellers' argument, since it cannot be said that the first sentence of clause 11 is inconsistent with the implied term in section 14(2). I also agree with Mr Rainey that the second sentence of clause 11 is not inconsistent with the implied term as to satisfactory quality and sits quite happily alongside it. The obligations as regards class in that second sentence simply do not impinge on the obligation to deliver the vessel in a satisfactory quality imposed by section 14(2). As the tribunal pointed out at [57], the obligation to deliver the vessel "with her class maintained…without condition/recommendation" and "free of average damage affecting class" may well impose obligations on the seller to deliver the vessel in a better condition than on inspection. For example, if at the time of inspection, the vessel is subject to a class condition or recommendation, the seller will be obliged to repair the vessel so as to remove the condition or recommendation or, if the vessel has average damage (i.e. damage normally covered by hull insurance) at the time of inspection or suffers such damage between inspection and delivery, the seller will be obliged to repair that damage before delivery. Thus, the obligations in the second sentence complement or supplement the obligation to deliver the vessel in a satisfactory condition rather than being inconsistent with it. This analysis that the obligations imposed by the second sentence of clause 11 supplement the implied term as to satisfactory quality is consistent with the principle stated in Benjamin: Sale of Goods 8th edition [11-068]: "express conditions or warranties will normally be construed as additional to the implied terms." Benjamin cites the old pre-1893 Act case of Bigge v Parkinson (1862) 7 H & N 955, where a contractor agreed to supply troop stores "guaranteed to pass survey of the East India Company's officers". In that case, Cockburn CJ giving the judgment of the Court of Exchequer Chamber said that that express warranty did not exclude the implied warranty as to fitness for purpose, "not qualifying the [implied condition] but inserted for the benefit of the buyer" (at p.961). In my judgment, the same can be said of the obligations as to class in the second sentence of clause 11 in the present case. I was unimpressed by Mr Hill's argument that second hand vessels sold pursuant to MOAs on Saleform were simply sold to a class standard, not to a standard of satisfactory quality under the SOGA. In the absence of cogent evidence of market custom to that effect, this is no more than an assertion and an unconvincing one at that, given the obvious limitations of class recognised by Goldrein at p.42 and given that a vessel may be fully classed without any condition and yet not be of satisfactory quality because, for whatever reason, the classification society have not picked up a particular defect in the vessel or it has not been drawn to their attention, either deliberately or inadvertently. In my judgment, it is precisely such potential limitations in Mr Hill's "class standard" that highlight the need for the protection of the buyers by the implied term and that the buyers will not be taken to have abandoned the valuable rights given to them by operation of law without sufficiently clear wording in the contract that that was intended: see per Cooke J in Air Transworld at [26]. For the reasons I have given, there was no such sufficiently clear exclusion in this case. Mr Hill sought to make much of the fact that, if there is an implied term of satisfactory quality, the sellers could be liable for a latent defect in the vessel of which they were unaware. However, as I see it, there is nothing surprising or unjust in that. The same could be said of a seller of any second hand goods such as a car or a piece of machinery and yet it is well established that the implied terms under section 14 of SOGA apply to second hand goods: see Benjamin at [11-048]. The answer to Mr Hill's suggestion that a test of satisfactory quality applied to second hand ships is nebulous or uncertain is the one Mr Rainey gave, that it all depends on the facts of each case and the section as amended gives extensive guidance as to the criteria to be borne in mind. The exercise may be a difficult one, as the tribunal in this case recognised, but by no means impossible. In the circumstances, it is not strictly necessary to consider Mr Rainey's fall-back position that the first sentence of clause 11 should be read down as excluding the right to reject the vessel whilst not precluding the buyers from claiming damages for breach of the implied term as to satisfactory quality. The argument relied upon the principle enunciated by Davies LJ giving the judgment of the Court of Appeal in Christopher Hill Limited v Ashington Piggeries Limited [1969] 2 Lloyd's Rep 425 at 468. The clause under consideration in that case provided as follows: "3. The goods to be taken with all faults and defects, damaged or inferior, if any, at valuation to be arranged mutually or by arbitration." Davies LJ held at 468 as follows: "The third answer put forward by the third party to the allegation of breach of Sect. 13 in respect of "fair average quality" was based on General Condition 3. This clause, though sometimes with different punctuation, is hallowed by antiquity, if by nothing else. Its words are obscure, and its interpretation gave rise to prolonged arguments. In our judgment, the clause would not have availed the third party here, if there had been a failure to supply goods of fair average quality of the season. A clause of this nature must be read strictly, when it is put forward by one party as limiting or restricting what would otherwise be the ordinary legal right of the opposite party: as here, the plaintiffs' right to recover for failure to supply goods corresponding with the contractual description. No authority need be cited for that well-established principle. The words of the clause are capable of being read, and should be read, as purporting (whether effectively or not, we need not stay to consider) to exclude the buyer's right to reject the goods for faults and defects; but not as purporting to exclude the buyer's right to recover from the seller compensation for any consequential damage which he may sustain by reason of the voluntary or enforced acceptance of goods which thereafter turn out to be defective and which cause loss or damage by reason of that defect." This approach of reading down the clause so that it only excluded the right to reject the goods, not the buyers' right to claim damages for breach of the implied term was approved by the House of Lords: see per Lord Hodson at p.471B-C; Lord Guest at p.475H; Viscount Dilhorne at p.488D; Lord Wilberforce at p.495G and Lord Diplock at p.514F. I note in passing that Lloyd del Pacifico and one of the earlier "all faults" provision cases to which Lawrence LJ referred, Ward v Hobbs (1878) 4 App Cas 13, were cited to the House of Lords in argument, although not referred to in any of the speeches. If the point had arisen for decision, I would have been prepared to read down the first sentence of clause 11 in accordance with that approach, so that at most the words: "the vessel shall be…taken over as she was at the time of inspection.." would exclude the right to reject the vessel as not being of satisfactory quality but would not preclude the buyers from claiming damages for breach of the section 14(2) implied term as to satisfactory quality. The wider question In the light of the conclusion I have reached on the narrower question that the tribunal was right to conclude that the first sentence of clause 11 is not an "as is" provision, it is not strictly necessary to decide the wider question whether the words "as is" are apt to exclude the statutory implied terms as to satisfactory quality and fitness for purpose. However, since the point was fully argued, I will deal with it if only to express a provisional view. It seems to me that, for a number of reasons, there is considerable force in Mr Rainey's submissions that the words "as is" do not amount to an express provision which is inconsistent with the statutory implied terms so as to negative them pursuant to section 55 of SOGA. First, Mr Hill's assertion that "as is" in cases such as The Morning Watch is modern shorthand for "the [vessel] shall be taken with all faults and errors of description", the clause in Lloyd del Pacifico v Board of Trade, is just that, an assertion. No evidence has been put before the court about the genesis of "as is" or as to whether it is, as Mr Hill asserted, some modern shorthand for "all faults" provisions found in the older cases and if so, how this shorthand came about. Furthermore, for the reasons given in [41-42] above, Lloyd del Pacifico must be of doubtful assistance in a modern context. As Davies LJ said in Ashington Piggeries: "[the 'all faults' clause] is hallowed by antiquity, if by nothing else. Its words are obscure, and its interpretation gave rise to prolonged arguments", hardly a promising start for a provision whose modern 'shorthand' is said to exclude the statutory implied terms. Second, the exclusion, if it operates, is not all encompassing in the sense that even Strong & Herring (exponents of Saleform as a contract which excludes the implied terms in section 14 of SOGA) accept at [14-10] that the words "as is" or "as she is" are only concerned with the condition of the vessel not with her description, so the words would not exclude the implication of a condition as to compliance with description under section 13 of SOGA. That may well be right, but does not explain how (absent some customary meaning) the words "as is" are sufficiently clear to exclude conditions as to quality and fitness for purpose implied by section 14 of SOGA. What the debate in the textbooks does demonstrate is that, contrary to Mr Hill's submissions, the words "as is" are not a term of art. Third, if the sellers are right that the two short words "as is" have the effect of excluding all the implied terms under SOGA, even though those implied terms are conditions, notwithstanding that the words do not have a customary meaning and are not a term of art, then I agree with Mr Rainey that that conclusion rather drives a coach and horses through the authorities on the need for clear words to be used to exclude statutory implied conditions. If the implied terms can be excluded by the simple expedient of inserting a provision that the contract is to be on an "as is" basis, then generations of commercial men have missed a trick in not adopting that two short word approach rather than devising detailed and supposedly all-encompassing exclusions in their contracts (some of which have successfully excluded the implied conditions as in Air Transworld, others of which have not as in The Mercini Lady). That suggests that the words "as is" do not upon proper and detailed analysis have the meaning for which the sellers contend. Having said all of that, the problem with the buyers' argument that the words "as is" do not exclude the implied terms at all is that it deprives the words of any real meaning and reduces them to the truism identified by the tribunal at [56] of the Award. In those circumstances, there is considerable attraction in the reading down approach of the Court of Appeal in the Ashington Piggeries case which says that all the words "as is" do is exclude the right to reject the vessel, but leave unaffected the right to claim damages for breach of the implied condition as to satisfactory quality. Certainly, that is the context of the statement by Phillips J in The Morning Watch, since the issue was whether the buyers were contractually bound, in other words whether they could reject the vessel, not whether they could claim damages from the sellers. None of the English cases considers in terms whether the phrase "as is" is inconsistent with the statutory implied term so that the test in section 55(2) of SOGA is satisfied and, as Strong & Herring recognise at [2B-20] the issue of the meaning of "as is" was not fully argued in either The Morning Watch or The Brave Challenger and the Ashington Piggeries case was not drawn to the attention of the Court in either case. Nonetheless, the Canadian cases certainly suggest that the term "as is" does normally exclude the statutory implied terms completely, but as I identified above the problem with the Canadian cases is the same one as with The Morning Watch and The Brave Challenger, that they do not analyse how, in the absence of some customary meaning, the words "as is" can be said to be sufficiently clear and unequivocal to exclude the statutory implied terms. It follows that, my provisional view is that, if I had to decide this point, I would conclude that the correct approach is to read down "as is" provisions as excluding the right to reject the vessel, whilst leaving the right to claim damages for breach of the implied terms as to description, satisfactory quality and fitness for purpose unaffected. However, since I have concluded that the first sentence of clause 11 is not an "as is" provision, it is not necessary to reach a definitive conclusion on this wider second question and it seems to me better not to do so, particularly since the parties in some subsequent dispute in what might be described as a "pure as is" situation might wish to call evidence as to custom or market meaning which might impact on the interpretation the court would place on such an "as is" provision. Conclusion In all the circumstances, I have concluded that the tribunal's decision that the first sentence of clause 11 of the MOA does not exclude the implied term as to satisfactory quality and that the sellers were in breach of that implied term was correct and that the appeal should be dismissed.

CIVIL APPELLATE JURISDICTION Civil Appeal Nos. 931/77 200/78. Appeals by Certificate from the Judgment and Decree dated 1.4.76 and from the Judgment and Decree dated 19.6.1975 of the Andhra Pradesh High Court in A.S. NO. 71/73 and Appeal No. 259 of 1972. Kanta Rao for the Appellants. Sitaramiah, and B. Parthasarthi for the Respondents. The Judgment of the Court was delivered by RAMASWAMY, J. Civil Appeal Nos. 931 of 1977 and 200 of 1978 relate to the same dispute though arose from two suits and separate judgements. The Bench that heard Civil appeal No. 931 of 1977 directed on January 24, 1991 to list Civil Appeal No. 200 of 1978 for companymon disposal. Civil Appeal No. 200 of 1978 arose out of O.S. No 118 of 1968 on the file of the Court of Add. Subordinate Judge. Guntur and Appeal No. 259 at 1972 dated June 19, 1975 of the A.P. High Court. The suit for possession and mesne profits was laid by the descendants of Nori Lakshmipathi Somayaajulu of Vatticherukuru, Guntur Taluq and District, for short L.S The dispute relates to the tank known as Nori Lakshmipathi Somayajulus Western Tank Vooracheruva Village Tank . It companysists of 100 acres of which roughly 30 acres is companyered by water spread area marked A Schedule B Schedule companysists of 70 acres silted up area . The tank was dug in Fasli 1190 1700 A.D. Zamindar, Raja Mainikya Rao made a grant of the land for digging the tank and its preservation, maintenance and repairs. It is the descendants case that it is a private tank enjoyed by the grantee, N.L.S. as owner and thereafter the descendants and perfected the title by prescription. It was found as a fact by the High Court and the descendants are unable to persuade us from the evidence to differ from the findings that the tank is a public tank dug by the village. The descendants plea and evidence adduced in support thereof that it is their private tank, was negated by both the companyrts. The Trial Court found that the tank is a public trust, the appellants would be hereditary trustees and companyld be removed only by taking action under s. 77 of the A.P. Hindu Charitable and Religious Institutions and Endowments Act, 1966 for short the Endowments Act. It also held that the descendants acquired title by adverse possession. Accordingly the suit for possession was decreed relegating to file a separate application for meesne profits. On appeal the High Court reversed the decree and held that the tank is a public tank and the tank and the lands stood vested in the Gram Panchayat under A.P. Gram Panchayat Act 2 of 1964 for short the Act. Since the Gram panchayat was in possession from July 7, 1965, though dispossessed the descendants forcibly and as the suit is number under s. 6 of the Specific Relief Act, 1963 but one based on title, it called for numberinterference. It dismissed the suit. This Court granted leave to appeal under Article 136. Civil Appeal No. 931 of 1977 arose out of the suit for possession in O.S. No. 57 of 1966 on the file of the companyrt of Subordinate Judge at Guntur filed by the Gram Panchayat against the descendants. The suit was dismissed by the Trial Court and was companyfirmed by the High Court in A.S. No. 71 of 1973 and the High Court granted leave under Art. 133 on Dec. 10. 1976. The pleadings are the same as in the other suit. In addition the descendants further pleaded in the written statement that the Gram Panchayat unlawfully took possession of the tank on July 7, 1965. They also acquired title by grant of ryotwari patta under s. 3 of the A.P. Inams Abolition and Conversion into Ryotwari Act Act XXXVII of 1956 , for short the Inams Act. The Gram Panchayat had numbermanner of right to interfere with their possession and enjoyment. They also pleaded and adduced evidence that they were leasing out the fishery rights and grass and trees grown on the land. The income was being utilized for the repairs of tank. The Trial Court and the High Court found that the lands were endowed to N.L.S. for the maintenance of the tank and the descendants obtained ryotwari patta under Inams Act and are entitled to remain in possession and enjoyment as owners subject to maintain the tank. Accordingly the suit was dismissed. On appeal in A.S. No. 71 of 1973 by judgment dated April 1, 1976 the High Court companyfirmed the decree on further finding that by operation of s. 14 of the Inams Act, Civil Suit was barred. Thus both the appeals are before this Court. In Civil Appeal No. 200 of 1978, Shri Seetharamaiah learned Senior Counsel for the descendants L.S. have numberexclusive personal right title or interest in the tank and the appurtenant total land of 100 acres. In view of the entries of the Inams Fair Register for short F.R., it is a public trust and number a public tank. Unless recourse is had to remove them from trusteeship under s. 77 of the Endowments Act, the appellants cannot be dispossessed. Since admittedly N.L.S. and the descendants were enjoying the property till date of dispossession, presumption of the companytinuance of the enjoyment anterior thereto as owners companyld be drawn. The High Court thereby companymitted error of law in holding that the lands stood vested in the Gram Panchayat under the Act and that it is a public tank. In Civil Appeal No. 931 of 1977, it was further companytended that since the grant of Ryotwari patta under the Inams Act had became final s. 14 thereof bars the jurisdiction of the Civil Court to entertain the suit. Shri Kanta Rao, learned companynsel for the Gram Panchayat companytended that the finding of the High Court that the tank and the appurtenant land, namely, the plaint schedule property, as public tank, is based on evidence that the tank was dug by the villagers and that they have been using for their drinking purposes and the cattle is a finding of fact. By operation of ss. 85 and 64 of the Act, the land and the tank stood vested in the Gram Panchayat. Entries in the F.R. establishes that the grant of the land was for preservation, maintenance and repairs of the tank. Therefore, the grant should be in favour of the institution, namely, the tank. The pattas obtained by the descendants should be for the benefit of the tank, though granted in individual names. By operation of s. 85 of the Act, the descendants acquired numberpersonal title to the property. Ryotwari patta is only for the purpose of land revenue. The Gram Panchayat acquired absolute right title and interest in the land. The Civil Suit is number a bar on the facts in this case. Before appreciating the diverse companytentions, the facts emerged from the findings in both the appeals companyld be gathered thus. Admittedly the Zamindar. Raja Manikya Rao granted 100 acres of land in Inam village to dig the tank and the grant was for its preservation and maintenance, the grant was in favour of N.L.S. In 1700 A.P., i.e. 1190 Fasli, the tank was dug by the villagers and ever since the villagers have been using the fresh water tank for their drinking purposes and of the cattle and perfected their right by prescription. In companyrse of time the tank was silted up and in and around 30 acres the water spread area, fresh water is existing. No. repairs were effected by the descendants. The rest of the land was silted up. Grass and trees have been grown thereon and was being enjoyed. On July 7, 1965, the Gram Panchayat took unilateral possession of the tank and ever since was exercising possession, supervision and companytrol over it. After expiry of three years from the date of dispossession, the descendants filed O.S. No.57 of 1966 for possession based on title. Earlier thereto the Gram Panchayat field the suit for possession. Under the Inams Act, Ryotwari patta under s. 3 was granted to the descendants in individual capacity and on appeal the Revenue Divisional Officer, Guntur companyfirmed the same. It became final as it was number challenged by filing any writ petition. Both the suits number stood dismissed. The companynsel on other side have taken us through the evidence and we have carefully scanned the evidence. From these facts the first question emerges is whether the tank and the appurtenant land stood vested in Gram panchayat. Section 64 of the Act reads thus Vesting of companymon property or income in Gram Panchayat-Any property or income which by custom belongs to or has been administered for the benefit of the villagers is companymon, or the holders in companymon of village land generally or of land of a particular description or of lands under a particular source of irrigation, shall vest in the Gram Panchayat and be administered by it for the benefit of the villagers or holders aforesaid. Section 85 reads thus Vesting of water works in Gram Panchayat- 1 All public water-courses, springs, reservoirs, tanks, cisterns, fountains, wells, ponds an other water works including those used by the public to such an extent as to give a prescriptive right to their use whether existing at the companymencement of this Act or afterwards made, laid or erected and whether made, laid or erected at the companyt of the Gram Panchayat or otherwise for the use or benefit of the public, and also any adjacent land, number being private property, appertaining thereto shall vest in the Gram Panchayat and be subject to its companytrol. Provided that numberhing in this sub-section shall apply to any work which is, or is companynected with, a work of irrigation or to any adjacent land appertaining to any such work. Subject to such restrictions and companytrol as may be prescribed, the Gram Panchayat shall have the fishery rights in any water work vested in it under sub-section 1 , the right to supply water from any such work for raising seed beds on payment of the prescribed fee, and the right to use the adjacent land appertaining thereto for planting of trees and enjoying the usufruct thereof or for like purpose. The Government may, by numberification in the Andhra Pradesh Gazettee, define or limit such companytrol or may assume the administration of any public source of water-supply and public land adjacent and appertaining thereto after companysulting the Gram Panchayat and giving due regard to its objections, if any. emphasis supplied A birds eye view of the provisions brings out vividly that any property or income which belongs to or has been administered for the benefit of the villagers in companymon or the holders in any of the village land generally or of land of a particular description or of lands under particular source of irrigation shall vest in the Gram Panchayat and be administered by it for the benefit of the villagers or holders aforesaid. The lands or income use for companymunal purpose shall either belong to the GRam Panchayat or has been administered by the Gram Panchayat. It is number the case of the Gram Panchayat number any finding recorded by the companyrts below to the effect. So s. 64 is number attracted, though the villagers acquired prescriptive right to use the water from the tank for their use and of their cattle. All public water-courses, springs, reservoirs, tanks cisterns, etc. and other water works either existing on the date of the Act or made thereafter by the Gram Panchayat, or otherwise including those use by the public ripened into prescriptive right for the use and benefit of the public and also adjacent or any appurtenant land number being private property shall vest in the gram Panchayat under s. 85 1 and be subject to its companytrol. The proviso is number relevant for the purpose of this case. Under sub-s 2 , the Gram Panchayat shall have fishery rights therein subject to any restriction or companytrol prescribed by the Govt. by rules. The Gram Panchayat also shall have the right to use the adjacent land appertaining thereto for planting trees and enjoying the usufruct thereof or for like purposes. Sub-section 3 gives over-riding power to the Govt., by a numberification published in the A.P. Gazettee to define or limit the companytrol or supervision by the Gram Panchayat or the Govt. may assume administration of any public source of water supply and public land adjacent and appertaining thereto. The only companydition precedent thereto is prior companysultation of the Gram Panchayat and to have due regard to any objections. If raised, by the Gram Panchayat and issue numberification published in the Gazette resuming the water sources or the land etc. The word vest clothes varied companyours from the companytext and situation in which the word came to be used in a statute or rule. In Chambers Mid-Century Dictionary at p. 1230 defined vesting in the legal sense to settle, secure, or put in fixed right of possession to endow, to descend, devolve or to take effect, as a right. In Blacks Law Dictionary, 5th Edition at p. 1401, the word, vest, to give an immediate, fixed right of present or future enjoyment, to accure to, to be fixed, to take effect, to clothe with possession, to deliver full possession of land or of an estate, to give seisin to enfeoff. In Strouds Judicial Dictionary, 4th Edition, Vol. 5 at p. 2938, the word vested was defined in several senses. At p. 2940 in item 12 it is stated thus as to the interest acquired by public bodies, created for a particular purpose, in works such as embankments which are vested in them by statue, see Port of London Authority v. Canvey Island Commissioners, 1932 1 Ch. 446 in which it was held that the statutory vesting was to companystruct the sea wall against inundation or damages etc. and did number acquire fee simple. Item 4 at p. 2939, the word vest, in the absence of a companytext, is usually taken to mean vest in interest rather than vest in possession. In item 8 to vest,. generally means to give the property in. Thus the word vest bears variable companyour taking its companytent from the companytext in which it came to be used. Take for instance, the land acquired under the Land Acquisition Act. By operation of ss. 16 17 thereof, the property so acquired shall vest absolutely in the Government free from all encumbrances. Thereby, absolute right, title and interest is vested in the Government without any limitation divesting the pre-existing rights of its owner. Similarly, under s. 56 of the Provincial Insolvency Act, 1920, the estate of the insolvent vests in the receiver only for the purpose of its administration and to pay off the debts to the creditors. The receiver acquired numberpersonal interest of his own in the property. The receiver appointed by the companyrt takes possession of the properties in the suit on behalf of the companyrt and administer the property on behalf of the ultimate successful party as an officer of the companyrt and he has numberpersonal interest in the property vested thereunder. In Fruit and Vegetable Merchants Union v. Delhi Improvement Trust, 1957 SCR p. 1 the question was whether the Delhi Improvement Trust was vested of the Nazul land belonging to the Government with absolute right, when the property was entrusted under the scheme for companystruction of the markets etc. It was held by this companyrt that placing the property at the disposal of the trust did number signify that the Government had divested itself of its title to the property and transferred the same to the trust. The clauses in the agreement show that the Government had created the Trust as its agent number on permanent basis but as a companyvenient mode of having the scheme of improvement implemented by the Trust subject to the companytrol of the Government. The word vesting in s. 85 would signify that the water companyrses and tanks, lands etc. used by the public to such an extent as to give a prescriptive right to their use, are vested in the Gram Panchayat, and placed them under the companytrol and supervision of the Gram Panchayat. It companyfers numberabsolute or full title. It was open to the Government, even after vesting, to place restrictions upon the Gram Panchayat in the matter or enjoyment and use of such tanks, and appurtenant lands etc. Sub-section 3 of s. 85 expressly makes the matter clear. It empowers the Government to assume the administration of any such tank or lands or to define or limit the companytrol which is vested in the Gram Panchayat. Gram Panchayat being a statutory body is bound by the restrictions imposed by sub-S3 3 The assumption of management by the Govt. would be subject to the prescriptive right of the villagers if any. The Division Bench in Gram Panchayat, mandapaka Ors. V. Distt. Collector Eluru Ors., AIR 1981 AP 15 companysidered the meaning of the word vesting and companyrectly laid the law in its interpreting s. 85 of the Act. Anna Narasimha Rao Ors. V. Kurra Venkata Narasayya Ors., 1981 1 AWR p. 325 relied on by Shri Kanta Rao, though supports his companytention that the vesting of the tanks etc. in the Gram panchayat was with absolute eights and the village companymunity rights would over-ride against rights of the Government, in our view the law was number companyrectly laid down. Under A.P. Land Encroachment Act, 1905 Talengana Area Land Revenue Act, relevant Abolition Act like A.P. Estates Abolition and Conversion into Ryotwari Act, 1948, Inams Abolition Act etc. give absolute rights of vesting in the State over the forest land, tanks, rivers, mines, poramboke, land, etc. free from all encumbrances and the pre-existing rights in the other land stood abolished and will be subject to the grant of Ryotwari patta etc. It is also settled law that grant of Ryotwari patta is number a title but a right companypled with possession to remain in occupation and enjoyment subject to payment of the land revenue to the State. Therefore, we agree with the High Court that the tank is public tank and number a public trust and that under s. 85 1 and s. 64, the vesting of the tanks, the appurtenant land and the companymon land is only for the purpose of possession, supervision, companytrol and use thereof for the villagers for companymon use subject to the over-riding title by the Government and its assumption of management should be in terms of sub-s. 3 of s. 85 of the Act and subject to the prescriptive right in the water water spread tank for companymon use. Admittedly, N.S.L. or the descendants used the plaint schedule property till July 7, 1965. The question then is what rights the descendants acquired therein. Admittedly within six months from the date of dispossession numbersuit under s. 6 of the Specific Relief Act was laid. Therefore, though the Gram Panchayat was number justified to take law into its own hand to take unilateral possession without due companyrse of law, since the suit filed by the descendants was based on title the descendants in Civil Appeal No.200 of 1978 have to establish their better title. Their claim was based on the Ryotwari patta granted under s. 3 of the Inams Act. Therefore, entries in I.F.R. bear great evidenciary value to ascertain their rights. In Arunachalam Chetty v. Venkatachalpathi Garu Swamigal, AIR 1919 PC. p. 62 at 65 the Judicial Committee of the Privy Council companysidered the effect of the companyumns in the I.F.R. and held thus It is true that the making of this Register was for the ultimate purpose of determining whether or number the lands were tax-free. But it must number be forgotten that the preparation of this Register was a great act of State, and its preparation and companytents were the subject of much companysideration under elaborately detailed reports and minutes. It is to be remembered that the Inam Commissioners through officials made enquiry on the spot, heard evidence and examined documents, and with regard to each individual property, the government was put in possession number only of the companyclusion companye to as to whether the land was tax-free, but of a statement of the history and tenure of the property itself. While their Lordships do number doubt that such a report would number displace actual and authentic evidence in individual cases, yet the board, when such is number available, cannot fail to attach the utmost importance, as part of the history of the property, to the information set forth in the Inam Register. Construction of the relevant entries in the I.F.R. is a question of law. Col. 2, the general class to which the land belongs, described as Dharmadayam endowment for a charitable institution, Col. 7, description of tenure for the preservation and repairs of Nori Lakshmipathi Somayajulu Western Tanks at Vatticherkuru, Col. 9 tax-free, Col. 10, nature of the tenure, permanent, Col. 11, guarantor of the land Raja Manikya Rao in 1190 Fasli 1700 A.D. , Col 13, name of the original grantee Nori Lakshmipathi Somayajulu, Col. 21 to be companyfirmed under usual companyditions of service and Col. 22, companyfirmed. In the survey and settlement record of the year 1906 of the same companyumns have been repeated. The land in the tank were classified as Village Poramboke and the tank as village tank. In the village map also the same remarks were reiterated. Therefore, the entries in the I.F.R. are great acts of the State and companypled with the entries in the survey and settlement record furnishes unimpeachable evidence. On companystruction of these documents, it would clearly emerge that the original grant was made for the preservation and maintenance of the tank and tax-free Inam land was granted for that purpose through it was in the name of the individual granted. We are of the view that the grant was for the preservation and maintenance of the tank. In K.V. Krishna Rao v. Sub Collector, Ongole, 1969 1 SCR 624 this companyrt held under the Inam Act that the tank is a charitable institution. Thereby we companyclude that the grant was for the institution. Under s. 3 of the Inams Act, the enquiry should be whether 1 a particular land is Inam land 2 Inam land in a Ryotwari, Zamindar or Inam Village and 3 is held by any institution. In view of the finding that the grant was for the preservation and maintenance of tank, the Inam, land in an inam village was held by the institution, namely, the tank. Ryotwari patta shall, therefore, be in favour of the institution. Undoubtedly the ryotwari patta was granted in favour of the descendants. In Nori Venkatarama Dikshitulu Ors. v. Ravi Venkatappayya Ors., 1959 2 A.W.R.357 in respect of the tope dedicated to the public benefits in the same village, namely Vatticherukuru, one of the question that arose was whether the patta granted in the individuals names, would be their individual property or for the endowment. The Division Bench held that though the pattas were obtained in the individuals name, the trustees of an institution cannot derive personal advantage from the administration of the trust property. It was held that the grant of patta was for the maintenance of the trust. We approve that the law was companyrectly laid down. In Krishan Nair Boppudi Punniah Ors. v. Sri Lakshmi Narasimhaswamy Varu, by its trustees Ors., 1963 1 A.W.R. relied on by Shri Sitaramaiah, on the basis of the entries in I.F.R., the finding was that the grant was in favour of the individual burdened with service and number to an institution. Therefore, the ratio therein does number assist us to the facts in this case. Moreover, in view of the stand taken by Shri Sitaramaiah that the lands are number the private property of N.L.S. or his descendants but held by them as trustees, the grant of Ryotwari patta to the individuals by necessary implication, as a companyollary, is of numberconsequence. The question then is whether the enjoyment of the usufruct by the descendants would clothe them with any right as owners of the land. In view of the companycurrent finding that descendants did number acquire title by prescription, the passage in Tagore Law Lecture, Hindu Religious Endowment and Institutions at p. 6 relied on by Shri Sitaramaiah to the effect dedication of tanks and trees as private property also renders numberassistance to the descendants. Undoubtedly, a presumption of an origin in lawful title companyld be drawn, as held in Syed Md. Mazaffaralmusavi v. Bibi Jabeda Ors., AIR 1930 P.C. 1031 that the companyrt has so often readily made presumption in order to support possessory rights, long and quietly enjoyed, where numberactual proof of title is forth companying. It is number a mere branch of the law of evidence. It was resorted to because of the failure of actual evidence. The matter is one of presumption based upon the policy of law. It was also further held that it is number a presumption to be capriciously made number is it one which a certain class of possessor is entitled to, de jure. In a case such as the one in question where it was necessary to indicate what particular kind of lawful title was being presumed, the Court must be satisfied that such a title was in its nature practicable and reasonably capable of being presumed without doing violence to the probabilities of the case. It is the companypletion of a right to which circumstances clearly point where time had obliterated any record of the original companymencement. The longer the period within which and the remoter the time when first a grant might be reasonably supposed to have occurred the less force there is an objection that the grant companyld number have been lawful. In Bhojraj v. Sita Ram Ors., AIR 1936 P.C. 60 it was further held that the presumption, number to supplement but to companytradict the evidence would be out of place. A presumption should be allowed to fill in gaps disclosed in the evidence. But the documentary evidence in the I.F.R. and the survey and settlement records furnish the unerring evidence. Though the original grant was number produced, the grant was for the institution and number to the individuals. Therefore, the companyour of title though enabled them to enjoy the usufruct for personal use, once the tank and the appurtenant land was found to be public tank, the descendants acquired numberpersonal right over it. The decision in Bhupathiraju Venkatapathiraju Ors. v. The President, Taluq Board, Naraspur Ors., 191319.I.C.727 Mad. D.B. relied by Shri Sitaramaiah the finding was that the grant was to the plaintiffs family subject to companyditions of service. Their right to take the usufruct of the trees therein was held to be for the benefit of the grantee. In that view its ratio cannot be applied to the facts in this case. In M. Srinivasacharyulu Ors. v. Dinawahi Pratyanga Rao Ors., AIR 1921 Madras 467 one of the companytentions raised was that since the produce was being enjoyed by the trustees for over many years for personal use, it must be companystrued that the trust was for personal benefit of archakas. It was repelled holding that it would be a dangerous proposition to lay down that if the trustees of the religious trusts have for many years being applying the income to their own personal use, the trust-deed must be companystrued in the light of such companyduct. The decree of the trial companyrt that the enjoyment was for the institution was upheld. The finding in Civil Appeal No. 931 of 1977, that since the endowment was the dashabandam the descendants are entitled to the Ryotwari patta cannot be upheld. Dashabandam grant of land burdened with the service of a public nature was made at a time when maintenance of water sources and water companyrses to the benefits of the villagers was left to the villagers. In Ravipati Kotayya Anr.v. Ramansami Subbaraydu Ors., 1956 2 A.W.R. 739 it was held that in the case of dashabandam inams situated in Ryotwari villages, the government has the right of resumption on default of service. The lands burdened with dashabandam service which is service of public nature, are inclinable as being against public policy. We, therefore, hold that the descendants, though enjoyed the income from the properties, did number effect the repairs and neglected the maintenance and upkeep of the tank. They rendered the tank disused and abandoned. By operation of s.85 of the Act the lands and tank stood vested in the Gram Panchayat for companytrol, management and supervision. Undoubtedly, a hereditary trustee is entitled to be the Chairman of a Board of Trustees, if any, companystituted under the Endowment Act or else be in exclusive possession and management of the public trust registered thereunder until he is removed as per the procedure provided therein. Since the tank always remained a public tank and number being a public trust, the Endowment Act does number apply. therefore, the question of initiating action under s. 77 of the Endowment Act for removal of the descendants as trustees does number arise. In the suit of the descendants the High Court did number companysider the effect of grant of ryotwari patta under Inams Act and in the suit of the Gram Village Panchayat the effect of vesting under s.85 of the Act on the grant of ryotwari patta was number companysidered. Only s. 14 i.e. the bar of civil suit was focussed. Consequently both the suits were dismissed by different division benches. The question is whether the suit is maintainable. All companymunal lands, porambokes, tanks, etc., in inam villages shall vest in the government under s.2A of Inams Act free from all encumbrances. Section 3 determines the inam lands whether held by the individual or the institution, provides procedure for determination and s.3 4 gives right of appeal. Section 4 companyverts those lands into ryotwari lands and accords entitlement to grant of ryotwari patta. Section 5 gives power to restitute the lands to the tenants in occupation though were ejected between specified dates. Section 7 gives power to grant ryotwari patta to the tenants to the extent of two thirds share in the land and one third to the land-holder. If it was held by the institution, two third share would be to the institution and one third to the tenants. Section 3 grants right of permanent occupancy to the tenants in inam lands held by institutions. Section 9 prescribes procedure for eviction of the tenants having right of permanent occupancy. Section 10- A provides right to ryotwari patta to tenants in Ryotwari or Zamindari village with the right of permanent occupancy, even in the lands, held under customary right etc. Section 12 fastens liability on the ryotwari pattadars to pay land assessment. Section 13 gives exclusive power of jurisdiction to Tehsildar, the Revenue companyrt and the companylector to try the suit as per the procedure as of a Civil Court under the Code of Civil Procedure. Section 14 of the Inams Act reads thus Bar of jurisdiction of Civil Courts No suit or other proceedings shall be instituted in any Civil Court to set aside or modify any decision of the Tahsildar, the Revenue Court, or the Collector under this Act, except where such decision is obtained by misrepresentation, fraud or companylusion of parties Section 14-A and Section 15 provides that 14-A Revision 1 Notwithstanding anything companytained in this Act, the Board of Revenue may, at any time either suo moto or on application made to it, call for and examine the records relating to any proceedings taken by the Tahsildar, the Revenue Court or the Collector under this act for the purpose of satisfying itself as to the regularity of such proceeding or the companyrectness, legality or propriety of any decision made or order passed therein and if, in any case, it appears to the Board of revenue that any such decision or order should be modified, annulled, reserved or remitted for companysideration, it may pass order accordingly. No order prejudicial to any person shall be passed under sub-section 1 unless such person has been given an opportunity of making his representation. Act to override other laws Unless otherwise expressly provided in this Act the provision of this act and of any orders and Rules made thereunder shall have effect numberwithstanding anything inconsistent therewith companytained in any other law for the time being in force or any instrument having effect by virtue of any such law. The Constitution intends to herald an egalitarian social order by implementing the goals of socioeconomic justice set down in the Preamble of the Constitution. In that regard the Constitution created positive duties on the State in Part IV towards individuals. The Parliament and the State legislatures made diverse laws to restructure the social order created rights in favour of the citizens companyferred power and jurisdiction on the hierarchy of Tribunals or the authorities companystituted thereunder and given finality to their orders or decisions and divested the jurisdiction of the established civil companyrts expressly or by necessary implication. The Inam Act is a step in that direction as part of Estate Abolition Act. Therefore, departure in the allocation of the judicial functions would number be viewed with disfavour for creating the new forums and entrusting the duties under the statutes to implement socio-economic and fiscal laws. We have to companysider, when questioned, why the legislature made this departure. The reason is obvious. The tradition bound civil Courts gripped with rules of pleading and strict rules of evidence and tardy trial, four tier appeals, endless revisions and reviews under C.P.C are number suited to the needed expeditious dispensation. The adjudicatory system provided in the new forums is cheap and rapid. The procedure before the Tribunal is simple and number hide bound by the intricate procedure of pleadings, trial, admissibility of the evidence and proof of facts according to law. Therefore, there is abundant flexibility in the discharge of the functions with greater expedition and inexpensiveness. In order to find out the purpose in creating the Tribunals under the statutes and the meaning of particular provision in social legislation, the Court would adopt the purposive approach to ascertain the social ends envisaged in the Act, to companysider scheme of the Act as an integrated whole and practical means by which it was sought to be effectuated to achieve them. Meticulous lexographic analysis of words and phrases and sentences should be subordinate to this purposive approach. The dynamics of the interpretative functioning of the Court is to reflect the companytemporary needs and the prevailing values companysistent with the companystitutional and legislative declaration of the policy envisaged in the statute under companysideration. In Denna v. Union of India, 1984 1 SCR 1 this Court held that the Law is a dynamic science, the social utility of which companysists in its ability to keep abreast of emerging trends in social and scientific advance and its willingness to readjust its postulates in order to accommodate those trends. Law is number static. The purpose of Law is to serve the needs of life. The law should, therefore, respond to the clarion call of social imperatives evolve in that process functional approach as means to subserve social promises set out in the Preamble, directive principles and the fundamental Rights of the Constitution. It is seen that the Inams Act is an integral part of the scheme of the Andhra Pradesh Estates Aboilition and Conservation into Ryotwari Act, 26 of 1984 for short Estate Abolition Act to companyer the left over minor Inams. It determined the pre-existing rights of the Inamdars and the religious institutions envisages grant of ryotwari patta afresh to the companycerned and seeks to companyfer permanent occupancy rights on the tenants. It also regulates the relationship between institutions and its tenants. It created appellate and revisional and forums and declared finality to the orders passed by the tribunals and expressly excluded the jurisdiction of the Civil Court, numberwithstanding anything companytained in any other law or inconsistent therewith the Inams Act shall prevail. The exception engrafted was that a suit would lie to challenge the decision obtained by fraud, misrepresentation and companylusion by parties. Section 9 of the Civil Procedure Code, 1908 provides that whenever a question arises before the Civil Court whether its jurisdiction is excluded expressly or by necessary implication, the Court naturally feels inclined to companysider whether remedy afforded by an alternative provision prescribed by special statute is sufficient or adequate. In cases where exclusion of the Civil Courts jurisdiction is expressly provided for, the companysideration as to the scheme of the statute in question and the adequacy or sufficiency of the remedy provided for by it may be relevant, but cannot be decisive. Where exclusion is pleaded as a matter of necessary implication such companysideration would be very important and in companyceivable circumstances might become even decisive. The jurisdiction of a Tribunal created under statute may depend upon the fulfilment of some companydition precedent or upon existence of some particular fact. Such a fact is companylateral to the actual matter which the Tribunal has to try and the determination whether it existed or number is logically temporary prior to the determination of the actual question which the tribunal has to companysider. At the inception of an enquiry by a Tribunal of limited jurisdiction, when a challenge is made to its jurisdiction, the Tribunal has to companysider as the companylateral fact whether it would act or number and for that purpose to arrive at some decision as to whether it has jurisdiction or number. There may be Tribunal which by virtue of the law companystituting it has the power to determine finally, even the preliminary facts on which the further exercise of its jurisdiction depends but subject to that, the Tribunal cannot by a wrong decision with regard to companylateral fact, give itself a jurisdiction which it would number otherwise had. Except such tribunals of limited jurisdiction when the statute number only empowers to enquire into jurisdictional facts but also the rights and companytroversy finally it is entitled to enter on the enquiry and reach a decision rightly or wrongly. If it has jurisdiction to do right, it has jurisdiction to do wrong. It may be irregular or illegal which companyld be companyrected in appeal or revision subject to that the order would become final. The questions to be asked, therefore, are whether the Tribunal has jurisdiction under Inam Act to decide for itself finally whether the institution or the Inamdar or the tenant is entitled to ryotwari patta under ss. 3,4 and 7 and whether the Tribunal is of a limited jurisdiction and its decision on the issue of patta is a companylateral fact. The companysideration as to exclusion of the jurisdiction of Civil Court is numberlonger res integra. This Court in bead-roll of decisions companysidered this question in diverse situations. In Kamala Mills Ltd. v. State of Bombay, 1966 1 SCR 64 the questions arose were whether an assessment made in violation of the Bombay Sales Tax Act companyld claim the status of an assessment made under that Act, and whether the nature of the transactions was a decision of companylateral fact. A Bench of seven Judges of this Court held that if it appears that a statute creates a special right or liability and provides for the determination of the right or liability to be dealt with by tribunals specially companystituted in that behalf would be companysidered whether all questions of said right and liability shall be determined by the tribunals so companystituted and it becomes pertinent to enquire whether remedies numbermally associated with actions in Civil Courts are prescribed by the said statute or number. It was held that the Court was satisfied that the Act provided all the remedies associated with actions in Civil Courts and the remedy for refund of the tax illegally companylected was provided and it was number companylateral. Section 20 prohibits such a claim being made before an ordinary Civil Court and held that the civil suit was number maintainable. The leading decision of the Privy Council in Secretary of State v. Mask C0., 1940 L.R. 67I.A.222 Raleigh Investment Co. Ltd. v. Governor-General in Council, L.R. 74 I.A. 50 and the ratio in Firm and Illuri Subbayya Cheety Sons State of Andhra Pradesh, 1964 1 SCR 752 were approved. In Desika Charyulu v. State of A.P, AIR 1964 SC 807 a Constitution Bench was to companysider whether the jurisdiction of the Settlement Officer and the Tribunal created under the Estates Abolition Act to determine whether Shotrium Village was an inam estate was exclusive and the Civil Courts jurisdiction to try the dispute was barred. Despite the fact that numberexpress exclusion of the Civil Courts jurisdiction was made under the Act it was held that very provision setting up an hierarchy of judicial tribunals for the determination of the questions on which the applicability of the Act depends was sufficient in most cases to infer that the jurisdiction of the Civil Courts to try the same was barred. Accordingly it was held that the jurisdiction of the Settlement Officer and the Tribunal by necessary implication was exclusive and that the Civil Courts are barred from trying or retrying the question once over. The decisions of the Settlement Officer and of the Tribunal were held final and companyclusive. In Dhulabhai Ors. v. State of M.p. Anr. 1968 3 SCR 662 another Constitution Bench reviewed the entire case law on the question of maintainability of civil suit and laid down seven propositions. Propositions 1 and 2 are relevant, which read thus Where the statute gives a finality to the orders of the special tribunals the Civil Courts jurisdiction must he held to be excluded if there is adequate remedy to do what the Civil Courts numbermally do in a suit. Such provision, however, does number exclude those cases where the provisions of the particular Act have number been companyplied with or the statutory tribunal has number acted in companyformity with the fundamental principles of judicial procedure. Where there is an express bar of the jurisdiction of the Court, an examination of the scheme of the particular Act to find the adequacy or the sufficiency of the remedies provided may be relevant but is number decisive to sustain the jurisdiction of the civil companyrt. Where there is numberexpress exclusion the examination of the remedies and the scheme of the particular act to find out the intendment becomes necessary and the result of the inquiry may be decisive. In the latter case it is necessary to see if the statute creates a special right or a liability and provides for the determination of the right or liability and further lays down that all questions about the said right and liability shall be determined by the tribunals so companystituted, and whether remedies numbermally associated with actions in Civil Courts are prescribed by the said statute or number. It was held therein that the civil suit was number maintainable to call in question of assessment made under the Madhya Bharat Sales Tax Act. In hatti v. Sunder Singh, 19712 SCR 163 the tenant had a declaratory relief before the authorities under Delhi land Reforms Act that he was Bhoomidar. When it was challenged in the civil suit as number being binding, this Court held that the civil suit was number maintainable. In Muddada Chayana v. Karam Narayana and Anr. etc., 1979 3 SCR 201 under s. 56 1 c of the Estates Abolition Act, the dispute whether who the lawful ryot in respect of any holding is, shall be decided by the Settlement Officer. Whether it is liable to be questioned in the Civil Court. Chinnappa Reddy, J., who had intimate knowledge as an Advocate and the Judge on the subject reviewed the law and held that the Act is a self-contained companye in which provision was also made for the adjudication of various types of disputes arising, after an estate was numberified, by specially companystituted tribunals. On the general principles it was held that the special tribunals companystituted by the Act must necessarily be held to have exclusive jurisdiction to decide dispute entrusted by the statute to them for their adjudication. Dealing with the object of the Act it was held at p. 207 C-D that the Act intended to protect ryots and number to leave them in wilderness. When the Act provides machinery in s. 56 1 c to discover who the lawful ryot of a holding was, it was number for the Court to denude the Act of all meaning and by companyfining the provision to the bounds of ss. 55 and 56 1 a and b on the ground of companytextual interpretation. Interpretation of a statute, companytextual or otherwise must further and number frustrate the object of the statute. It was held that the civil suit was number maintainable and approved the Full Bench judgment of 5 judges of the High Court of Andhra Pradesh in T. Munuswami Naidu v. R. Venkata Reddy., AIR 1978 P. 200. The same view was reiterated in O. Chenchulakshmamma Anr. v.D. Subramanya Reddy, 1980 1 SCR 1006 and held that the order of the Addl. Settlement Officer was final in so far as the dispute between the rival claimants to the ryotwari patta was companycerned and number liable to be questioned in any companyrt of law. In A. Bodayya Anr. L. Ramaswamy dead by Lrs. 1984 Suppl . SCC 391 while reiterating the ratio in both the judgments, Desai, J. Speaking for a Bench of 3 Judges held that under Estate Abolition Act, who the lawful ryot was decided. Self-same question directly and substantially raised in the suit cannot be decided by the Civil Court as it had numberjurisdiction to decide and deal with the same but Settlement Officer had the exclusive jurisdiction to decide and deal with it. In Doe v. Bridges, 1831 1 B Ad. 347 at p. 859 the oft quoted dictum of Lord Tenerden, C.J. reads that where an act creates an obligation and enforces the performance in a specified manner, we take it to be a general rule that performance cannot be enforced in any other manner. In Premier Automobiles Ltd. v. Kamlakur Shantaram Wadke and Ors., 1976 1 SCR 427 a Bench of three Judges after reviewing the case law held that if a dispute was number industrial dispute, number does it relate to enforcement of any right under the Industrial Dispute Act, the remedy lies only in the civil companyrt. If the dispute arises out of the right or liability under the general companymon law and number under the Act, the jurisdiction of the civil companyrt is always alternative, leaving it to the election of the suitor to choose his remedy for the relief which is companypetent to be granted in a particular remedy. If the dispute relates to the enforcement of a right or obligation of the Act,the only remedy available to the suitor is to get an application adjudicated under the Act. In that view, it was held that the civil suit was number maintainable. In State of Tamil Nadu v. Ramalinga Samigal Madam, 1985 4 SCC 10 strongly relied on by Shri Kanta Rao, the question therein was whether the jurisdiction of the civil companyrt was ousted to redetermine the nature of the land rendered by the settlement officer under s. II of the Estate Abolition Act, Tulzapurkar, J. speaking for the Division Bench proceeded on three fundamental postulates namely that the decision of the Settlement authorities under s. 11 of the Act was for I revenue purposes, that is to say for fastening the liability on him to pay the assessment and other dues and to facilitate the recovery of such revenue from him by the Government and therefore, any decision impliedly rendered on the aspect of nature and character of the land on that occasion will have to be regarded as incidental to and merely for the purpose of passing the order of granting or refusing to grant the patta and for numberother purpose. II only revision against the order and number an appeal and III that by Madras Amendment, s. 64-c was deleted. It was unfortunate that it was number brought to the numberice of the companyrt that the purpose of Estate Abolition Act was number solely for the purpose of companylecting the revenue to the State. The Act had its birth from a long drawn struggle carried on by the ryots in Madras Presidency for permanent ryotwari settlement of tenures and grant of permanent occupancy rights and the Indian National Congress espoused their rights and passed resolution at Arvadi Session to make a legislation in that regard. The recovery of revenue was only secondary. In Syamala Rao v.Sri Radhakanthaswami Varu 1984 1 A.P.L.J. 113 a division Bench of the Andhra Pradesh High Court to which one of us K.R.S.,J was a member companysidered the historical background, the purpose of the Act and the scheme envisaged therein in extenso and held that the preamble of the Estate Abolition Act was to repeal the permanent settlements, the acquisition of the rights of the land-holders in the Estates and introduction of the ryotwari settlement therein under s. 1 4 by issuance of the numberification the prexisting rights shall cease and determined shall vest in the State free from all encumbrances and declared that all rights and interests created in particular over the State shall cease and determine as against the Government protected only dispossession of a person in possession of the ryoti land who was companysidered prima facie entitled to a ryotwari patta. Section 11 envisaged to enquire into the nature of the land and whether ryotwari land immediately before the numberified dates to be properly included or ought to have been properly included in the holding of the ryot. The enquiry under the Act was entrusted to the Revenue Authorities who have intimate knowledge of the nature of the lands and the entries in the revenue records of the holders, etc. Act created hierarchy of the tribunals, namely Asstt. Settlement Officer Settlement Officer Director of Settlements and Board of Revenue provided revisional powers to those authorities and ultimately the order is subject to the decision of the High Court under Art. 226. In that view it was held that by necessary implication the jurisdiction of the civil companyrt was ousted, the decision of settlement authorities under s. 11 was made final and numbercivil suit was maintainable. The legislature having made the Act to render economic justice to the ryots and excluded the dispute between land-holders and the ryots companyered under ss. 12 to 15 and the ryots inter se under s. 56 1 c , from the jurisdiction of the Civil Court, it would number be the legislative intention to expose the ryots to companytly unequal civil litigation with the state of the dispute under s. 11. It is number necessary in this case to broach further but suffice to state that unfortunately this historical perspective and the real purpose and proper scope and operation of Estate Abolition Act was number focussed to the numberice of this companyrt. In Jyotish Thakur Ors. v. Tarakant. Jha Ors.,1963 Suppl. 1 SCR 13 s. 27 of regulation III of 1872 provides that in respect of transfer of ryoti interest in companytravention of the regulation revenue companyrts shall number take companynizance of such a transfer. It was companytended that by necessary implication the civil suit was number maintainable. In that companytext this Court held that provisions therein were number intended to be exhaustive to bar the relief in Civil Court. In Sri Athmanathawami Devasthanam K. Gopalaswami Aiyangar, 1964 3 SCR 763 the question was whether the civil suit to recover damages and for ejectment of the ryoti lands belonging to the temple was barred. The findings were that the lands were ryoti lands and that the tenant acquired the occupancy rights, but the lease was granted in excess of 5 years. It was companytended that it was a transfer without permission of the Endowment department. While upholding that the lands were ryoti lands and the tenant acquired occupancy rights, this Court disagreeing with the High Court, held that there was numbertransfer and that the tenant is liable to pay the arrears of rent and the suit was maintainable. In Sri Vedagiri Lakshmi Narasimha Swami Temple v. Induru Pattabhirami Reddy, 1967 1 SCR 280 the companytention raised was that s. 93 of the Madras Hindu Religious and Charitable Endowments Act, 1951 was a bar to maintain suit for rendition of accounts and recovery thereof against the ex-trustees. This Court repelled the companytention and held that the suit for rendition of accounts was number expressly or by necessary implication barred the jurisdiction of the civil companyrt under s. 93. In Shree Raja Kandregula Srinivasa Jagannadha Rao Panthulu Bahadur Garu v. State of Andhra Pradesh, 1970 2 SCR 714 it was companyceded that the question whether Kalipathnam village is an Inam estate was to be adjudicated before the tribunals appointed under the Rent Reduction Act. It was companytended that the tribunals have numberjurisdiction to decide the validity of the numberification reducing the rent by operation of s. 8 1 thereof. It was held that there was numberstatutory prohibition to determine the nature of the land companytemplated by the Rent Reduction Act. Accordingly the suit was held to be maintainable. In Dr. Rajendra Prakash Sharma v. Gyan Chandra Ors.,1980 3 SCR 207 it was found that under s, 7 of the Administration of Evacuee Property Act, 1950, numberproceedings were taken to declare the suit house as on evacuee property. No numberification under sub-s. 3 of 7 was published in the gazette. Under those circumstances it was held that s. 46 did number bar the civil suit. In Anne Besant National Girls High School v. Dy. Director of Public Instruction Ors. 1983 1 SCC 200 this Court held that the Civil Court has jurisdiction to examine whether action or decision of an administrative authority was ultra vires the relevant rules of Grant-in-Aid Code and Rule 9 vii was held to be ultra vires. Accordingly the suit was held to be maintainable. In Raja Ram Kumar Bhargava dead by Lrs. v. Union of India, 1988 2 SCR 352 two questions were raised, firstly the validity of the assessment and secondly recovery of the tax paid under Excess Profit Tax Act, 1940. On the first question it was held that the suit was number maintainable. On the second question, without going into the technicalities of the maintainability of the suit, this Court granted the relief. In Pabbojan Tea Co., etc. v. The dy. Commissioner Lakhimpur, etc.1968 1 SCR 260 the questions were whether the workmen were ordinary unskilled labour or skilled labour whether the jurisdiction of the authorities under s. 20 of the Minimum Wages Act, 1948 is exclusive and whether the jurisdiction of the Civil Court was barred. This companyrt held that the authorities did number hold any inquiry number received any evidence for determining that issue. No proper hearing was given to the parties to tender evidence. Section 20 is number a companyplete Code as there was numberprovision for appeal or revision against the orders passed under s.20 3 . There was numberfurther scrutiny by any higher authority against the imposition of penalty. The Act in terms does number bar the employers from instituting a suit. In those circumstances, it was held that the legislature did number intend to exclude the jurisdiction of the civil companyrt. The ratio in K. Chintamani Dora Ors. v. G. Annamnaidu ors. 1974 2 SCR 655 also does number assist Gram Panchayat for the reason that the decree therein originally granted became final. Subsequently it was sought to be reopened in a later suit. Under those circumstances the civil suit was held to be maintainable numberwithstanding the provisions companytained under the Estate Abolition Act. Thus we have numberhesitation to hold that the ratio in all these case are clearly distinguishable and render little assistance to the Gram Panchayat. The scope, ambit and operation of the Inams Act was companysidered by P. Jaganmohan Reddy,J. as he than was in D.V. Raju v. B.G. Rao Anr. 1961 2 A.W.R. 368 and held that the paramount object of the legislature was to protect the tenant in occupation and is sought to be achieved by making effective orders of eviction made by the Civil Court either in execution or otherwise. It further prohibits the institution of any suit or proceeding in a Civil Court under s. 14 to set aside or modify any decision of the Tehsildar, Collector or Revenue Court except where such decision has been obtained by misrepresentation, fraud or companylusion. Section 15 enjoins that the provisions of the Act and orders made thereunder shall have effect numberwithstanding anything inconsistent therewith companytained in any other law for the time being in force or any instrument having effect by virtue of absolute jurisdiction on the Tehsilder, Revenue Court or the Collector, as the case may be, numberwithstanding any provision of law or any suit or decree of a Civil Court or for that matter even where evictions have taken place in pursuance of such decrees, the evicted tenants can be restored to occupation provided the requirements for the protection of the possession of the tenants are satisfied. In that case the occupant in possession laid proceeding before the Tehsildar for injunction restraining the writ petitioner from ejecting him from the lands. The Tehsildar in exercise of the power under Rule 16 of the Rules granted injuction pending companysideration of his right to Ryotwari patta. The order of injunction was challenged firstly on the ground of ultra vires of Rule 16 and secondly on the ground of jurisdiction. While upholding the order on both the grounds the learned Judge held that Tehsildar, Revenue Court and the Collector have exclusive jurisdiction and the civil suit is barred. We respectfully approve it as companyrect law. The Inams Act did number intend to leave the decisions of the revenue companyrts under s. 3 read with s. 7 to retry the issue once over in the Civil Court. Undoubtedly the decision of the division Bench in P. Pedagovindayy v. Subba Rao, 1969 2 A.L.T. 336 is in favour of the companytention that the civil suit is maintainable. It is number good law. Thus the glimpse of the object of the Inames Act, scheme, scope and operation thereof clearly manifest that Inames Act is a self companytained companye, expressly provided rights and liabilities, prescribed procedure remedies of appeal and revision, excluded the jurisdiction of the civil companyrt, numberwithstanding anything companytained in any law, given primacy of Inams Act though inconsistent with any law or instrument having force of law. The jurisdictional findings are an integral scheme to grant or refuse ryotwari patta under s. 3, read with s.7 and number companylateral findings. It was subject to appeal and revision and certiorari under Art. The decision of the Revenue Tribunal, are final and companyclusive between the parties or persons claiming right, title or interest through them. The trick of pleadings and the camouflage of the reliefs are number decisive but the substance or the effect on the order of the tribunal under the Inams Act are decisive. The civil suit except on grounds of fraud, misrepresentation or companylusion of the parties is number maintainable. The necessary companyclusion would be that the civil suit is number maintainable when the decree directly nullifies the ryotwari patta granted under s. 3 of the Inams Act. Under the Gram Panchayat Act the statutory interposition of vesting the tank and the appurtenant land in the Gram Panchayat made it to retain possession, companytrol and supervision over it, though the Gram Panchayat unlawfully took possession. The need to grant decree for possession in favour of the Gram Panchayat is thus redundant. The suit of the descendants numbermally to be decreed on the finding that ryotwari patta under s. 3 of the Inams Act was granted in their favour and that they were unlawfully dispossessed. Since the grant of ryotwari patta, though in the name of individuals, was to maintain the public tank which stood vested under s. 85 of the Act in the Gram Panchayat, the descendants are divested of the right and interest acquired therein. Thus the suit of the descendants also is liable to be dismissed. Accordingly, the decrees of dismissal of both the suits are upheld and the appeals dismissed. But in the circumstances, parties are directed to bear their own companyts.

Mr Justice Ryder :   These are proceedings in the Court of Protection and the Administrative Court concerning C, a young man who was born on 29 July 1992 and is aged 18. C suffers from severe autism and severe learning disabilities and exhibits extreme, challenging behaviours including severe anxiety, sensory impairment, aggressive and destructive traits, significant self harm and harm to his carers. He has very significantly impaired communication skills and has a minimal tolerance of any change in routine or physical transition between places or activities. His symptoms were first recognised when he was 3 years old. He lives at a residential special school for pupils with severe learning difficulties and complex needs (hereafter referred to as 'the school') owned and operated by an organisation (hereafter referred to as 'the organisation'). He moved there on 21 May 2007 at least in part in consequence upon earlier judicial review proceedings. The school has a head teacher who leads a senior management team which includes a head of residential services, a head of education and a head of behaviour support. At a national level, the organisation employs a clinical psychologist to provide clinical supervision. Save for the supervision provided by the psychologist, the school does not have a multi-disciplinary team to provide advice about the pupils, it purchases advice and support. The description in the evidence filed of the curriculum, behaviour management or support and residential care is that it is nationally regarded as at least good and in some respects outstanding. For example, although there are issues about the extent to which C can access education and social activities, he does have in place an individual education plan (IEP) with SMART targets for each term (specific, measurable, achievable, realistic and time dependent targets), a timetable of activities and a behaviour support plan. His accommodation includes a bedroom, a splash room, a bathroom, a toilet, a kitchen and a dining room. It also includes a room known as the 'blue room'. On the same corridor is another young man, who I shall refer to as A, who shares some of the facilities but has his own bedroom. In preparation for C's admission to the school a looked after children (LAC) care plan dated 21 May 2007 was agreed which provided for his special educational needs (SEN) as identified in his SEN Statement. That included 24 hour a day care every day of the year with a 2:1 staffing ratio. His 'behaviour management' since May 2007 has included the use of the blue room at the school. The room is a specially constructed blue room which is padded and which is approximately 10 feet square with a secure door and window, through which the whole of the room cannot be seen when the door is closed. The door cannot be locked. The room is said to have or have had a calming influence upon C. The purpose of the padding is to try and prevent C injuring himself in and on the structure of the room. At the time the room was introduced it was agreed, at least as between the parties to these proceedings who were then involved, that it was in his best interests to provide and use such a facility. In the local authority's amended Statement of Facts and Grounds in response to C's Claim for Judicial Review reliance was placed on an internal school guidance document for behaviour management i.e. the use of the blue room and physical management techniques as follows: "Staff Management of the Blue Room Staff will only hold the door shut from outside the blue room, preventing him from leaving the room if he is attempting to be or to continue with his aggressive outburst. There are other occasions where [C] might try to exit the blue room when he is undressed, at these times staff encourage [C] to go back into the blue room and get dressed. We can not allow him to compromise his privacy and dignity by exposing himself to others and in addition it is not appropriate for other young people to be exposed to his naked body. Physical management [The school] uses a BILD approved physical management system called CPI (Crisis Prevention Institute). If [C] becomes aggressive or self injurious staff will use one of the following: Transport Position: two staff, one either side of him, all facing forward, linking his arms and walking him to and into the blue room Seated Transport/Transport Seated: this is used on the bus and is normally instigated by [C]. This involves two staff sat next to [C], linking his arms, and steadying him, blocking his aggression and self-injury. Withdrawal door held: This is when [C] is in the blue room and staff remain outside the room, holding the door shut, preventing him from leaving if he is being aggressive to staff or others. Withdrawal door NOT held: This is when [C] requests the blue room and staff do not need to prevent [C] from leaving the room, he is not seen as a risk at this time. However, [C] might go into the blue room of his own accord, become agitated and attempt aggression so withdrawal with the door held. Staff are not required to complete data on when [C] has self-withdrawn as staff are not imposing any sanctions on him at this time. However, some do out of personal interest, hence the availability of some data on this. From time to time we collect sample data on his use of the blue room but we have not done so for some time." It is asserted by the local authority that although C's use of the blue room significantly increased in 2010 there were behaviour support plans in place the purpose of which was to try and reduce the use of the room. The evidence from the school is that despite the school's approach to C, his behaviours have become less controlled to the extent that since September 2010 education and activities are provided in his accommodation. The behaviours involve not only significant self harm but also physical assaults on staff which are frequent and sometimes serious. The most notable examples being a broken nose and a detached retina leading to loss of sight in one eye. By a claim made in the administrative court for judicial review on the 15 September 2010, C by his litigation friend and mother, LM, sought against the local authority the following relief: i) An appropriate care plan; ii) Disclosure of his behavioural support plan relating to the restraint of him by others; iii) Disclosure of all incidents of restraint and the duration of the same in the preceding 9 months; iv) Disclosure of the qualifications and training of all staff involved in his care; v) A declaration that the local authority had breached his article 3 and/or 5 and/or 8 ECHR rights vi) A mandatory order that the local authority provide him with an appropriate care plan vii) A mandatory order that the local authority make transitional arrangements for adult services provision including an appropriate pathway plan; viii) A mandatory order for the disclosure of a safeguarding investigation (report) relating to an allegation of abuse in January 2010; ix) A mandatory order requiring the local authority to provide C's mother with details of his daily care; and x) Damages for breach of his article 3, 5 and 8 ECHR rights. The relief sought included a referral to the Autism Treatment Trust and an allegation antecedent to that relief that the local authority had failed to fund the same. That relief was not pursued and during the course of the proceedings was withdrawn. The failures relied upon as against the local authority were: i) to put in place any or any adequate transitional arrangements for C including the failure to assess him or to prepare a pathway plan in time for his 18th birthday; ii) to prepare a care plan which provides for the transfer of C's residence from the school to a suitable adult placement in time for the end of C's placement at the school in 2011; iii) to put in place appropriate services to ensure that he has an adequate quality of life by: a) secluding C in the blue room in conditions which amount to an unlawful deprivation of his liberty and a breach of his article 3, 5 and 8 rights; b) accommodating C in an environment that amounts to a breach of his article 5 and 8 rights; c) failing to take steps since January 2010 when C's challenging behaviours increased, leading to him spending many hours every day in seclusion and having extremely limited access to outside space and the community in breach of his article 3 and 8 rights; iv) to provide C's mother with information about his care, in particular details of the safeguarding investigation referred to. By agreement, the Official Solicitor was substituted as C's litigation friend and has pursued the proceedings on behalf of C. C's mother, LM and his adult brother, LPM were made interested parties to the judicial review claim and respondents within the Court of Protection proceedings. Although LM has acted in person, LPM has had the benefit of public funding and together they have taken a very full part in the court's process. On the 8 September 2010 the local authority commenced proceedings in the Court of Protection asking for permission to make an application and for declarations as to capacity and best interests and for an expedited hearing to consider whether the arrangements to which C was subject constituted a deprivation of liberty and/or were in his best interests. On the 15 September 2010, a direction for expedition was made by His Honour Judge Pelling QC sitting in the Administrative Court in Manchester where this claim has been lodged and heard and as a consequence, all applications both in the Administrative Court and the Court of Protection were remitted to be heard concurrently by this court on the 8 October 2010. On that day and in reliance upon written evidence provided by Dr Lisa Rippon, Consultant Psychiatrist for Young People with a Learning Disability and Mrs E who is a chartered clinical psychologist, it was declared that C did not have the capacity to conduct litigation and did not have the capacity to make decisions about his residence and care. Subsequently, written evidence provided by Dr Arvind Lowe, Consultant Psychiatrist, confirmed C's continuing incapacity in both respects. Agreement was reached to undertake and implement a comprehensive review of C including functional assessments, speech and language therapy assessment, medical assessments and expert evidence relating to the use of the blue room, nakedness and sexual development and protection. That agreement included the implementation of existing recommendations relating to C's sensory dysfunctions by a specialist speech and language therapist, Ms L. Ms L had already advised that C has significant difficulties with proprioceptive functioning (the way that he processes his body movements) and modulation (the regulation of his sensory processing and behaviour). She was commissioned to provide additional assistance and a sensory profile. Significant directions were also made for the recording of the use of the blue room by C. It is important to note that on the evidence filed and heard on the 8 October 2010, the court was unable to hold that any deprivation of liberty as may be implicit in the arrangements for C's residence and care at the school was lawful. Furthermore, having regard to the nature and extent of the disagreements between the parties about the efficacy of those arrangements, it was not possible to make a best interests declaration about C's residence and care. On the 27 October 2010 a further urgent interim hearing was conducted in the concurrent proceedings and an interim declaration was made that to the extent that C's general living arrangements at the school amounted to a deprivation of his liberty such deprivation was lawful being in C's best interests. That declaration did not extend to the lawfulness of the use of the blue room, the local authority having wisely elected not to pursue that issue at that time. At the conclusion of this part of these proceedings, all remedies sought against the local authority have been compromised save for damages for the alleged Human Rights Act 1998 [HRA 1998] claims. Those claims have been remitted to be heard by this court in the Queen's Bench Division of the High Court and directions have been made for pleadings to be settled. Accordingly, there now exist: i) An appropriate care plan ii) Appropriate transitional arrangements for C's move into adulthood and out of the residential setting provided by the school by July 2011, including a pathway plan, an identified bespoke placement with social and health care support services, a behaviour support plan and agreed inter-disciplinary expert advice to include specialist sensory occupational therapy and advice about restraint and seclusion issues iii) A mechanism for review, the obtaining of inter-disciplinary advice and information sharing with all involved in C's care including his family. This judgment, which provides the basis for the declaratory relief given and the agreements entered into by the parties, does not deal with the historic allegations which it will readily be apprehended are significant. A further hearing dealing with the history for the purposes of damages claims under the HRA 1998 will take place later this year. For this reason, this preliminary judgment will look forward to the recommended future placement and services for C rather than to the disputed history. The expedited judicial review hearings have been heard concurrently with Court of Protection proceedings with a logical albeit at times complex case management matrix being developed to identify and resolve issues sequentially and as swiftly as possible. The court has read a great deal of factual and opinion evidence to inform the process of its own judgement and to identify issues for expert assessment and opinion. Where the evidence of fact remained relevant and in dispute, a process of early neutral evaluation had to be performed to summarise the best case of each party on any particular issue in order to obtain an opinion from the experts as to C's best interests having regard to the different factual scenarios relied upon by each party. As the court anticipated, although the disputed facts may be very relevant to adversarial damages claims and their defence, they were less relevant to the issues in judicial review or the best interests determination and in the final event, as I shall describe, the experts effectively agreed. Oral evidence was heard from 9 experts, including at a concurrent evidence day when 7 of the experts were sworn together and were taken through an agreed agenda of issues for resolution within which they were encouraged to comment and add evidence to that of others as each issue was addressed in turn. It is in the nature of such a forum that the court is in control, sets the agenda with the agreement of the parties and then introduces the issues to the experts under each heading on the agenda. Supplementary questions are permitted from parties and the overall effect is more focused than traditional examination and cross examination and is particularly suited to the inquisitorial and collaborative approach of the Court of Protection. The experts who gave oral evidence were: i) Mrs E, Clinical Psychologist ii) Ms L, Occupational Therapist and Advanced Practitioner in Sensory Integration iii) Ms S, Speech and Language Therapist iv) Ms Sharon Paley, Registered Nurse for People with Learning Disabilities v) Dr Lisa Rippon, Consultant Psychiatrist vi) Dr Arvind Lowe, Consultant Psychiatrist in Learning Disability vii) Dr Peter Carpenter, Consultant Psychiatrist in Learning Disabilities viii) Chris Read, Independent Social Worker ix) Chris Wall, Independent Social Worker Lest it be thought that there was a proliferation of experts, it should be remembered that with the exception of Ms L, and Mrs E , expert evidence of the nature and extent required by the court and the parties did not exist at the commencement of proceedings and some of the evidence commissioned went either to narrow i.e. discrete and very specialist areas of knowledge or to issues which remain seriously in dispute and where individual parties wished to be advised by an expert who they were prepared to pay for on the basis that his or her advice would be available to them and the court in respect of the contested issues which are yet to be resolved. The context Without determining the disputed facts, it is necessary to set out the context which is that C's mother asserts that C's behaviour has deteriorated to such an extent that what are prosaically known as 'the strategies for his behaviour management' have been invoked very frequently: many times on a single day and on most days if not every day. In particular, this has included confinement or seclusion in the blue room and the use of restraint techniques including the 'transport position', the 'team control position' or other restraint on a regular basis: on average more than twice a day. In June 2010, 2090 instances of challenging behaviour by C were logged, an average of 70 a day. In the same month, the log indicates that the blue room door was held so as to confine C on 192 occasions, that is on average 6.4 times a day and the effect, says LM, is that C is confined for many hours a day. On 27 January 2010 a safeguarding incident occurred involving a care worker who used physical restraint to force C to dress. An investigation concluded that the restraint was inappropriate. LM visits her son regularly and has seen evidence of him urinating and defecating in the blue room, which does not contain a toilet facility and engaging in distressing behaviours including the smearing and eating of his own faeces. She reports that there is frequently an acrid and pungent smell of faecal matter in the vicinity of the room which is overpowering in the room itself. The most recent deterioration in C's aggressive and self-injurious behaviours from January 2010 is said to have coincided with changes to his living environment which include the admission of another resident, A, on to the same corridor as C who exhibits noisy, disruptive and destructive traits and also changes to the complement of the care staff who work with C. LM's statement of evidence and LPM's statement in support contain the details of a mother's and brother's concerns but just one example from C's mother is graphic enough to set the scene: "When I do so, my son he presents as a pitiful figure. He is naked virtually all of the time. He presents as a tall, emaciated young man covered in bruises and scabs with protruded elbows and joints, malformed feet and cuts over his eyes. I hear him wailing, crying, shouting. He bangs his head with his fist on the window surround. He hurts himself …(he) always appears ashen faced and pale, partly because he never gets out of the Blue Room or into the fresh air" I emphasise that some of the key issues about C's presentation are denied and some will have to be litigated. Mother's pen picture of her son has itself to be taken in context and I heard the head teacher of the school at the beginning of these proceedings. He was undoubtedly a dedicated man, albeit one who in the judgment of this court has lost sight of the essential human problems that need to be solved in the morass of structural and guidance issues which also arise. In the context of conceding that the involvement of the court had never been contemplated, he said: "C's outbursts are some of the most severe I have seen and have resulted in some of the most significant injuries to staff that I have seen …. the blue room is used to manage his behaviour when he is aggressive or self injurious … or when he takes himself there … given the conditioning effect of the blue room I do not see any prospect of an immediately successful [alternative] intervention other than physical restraint" It is common ground that C has become habituated to the use of the blue room. It is not only a room where he is secluded and/or confined, but also a room to which he has been encouraged to go and indicate that he wishes to go as a safe place. There are real issues about the appropriateness of the room for these disparate purposes. Despite its use, C continues to self harm including in the room and his social activities are significantly curtailed. There is an issue about the appropriate staffing level for C when he is distressed and self harm is likely to occur and also to facilitate access to others in the community i.e. to enable any normal socialisation by him. There is also an issue about the possible harmful side effects of certain medications if taken together. One of the aspects of his behaviour is that he has increasingly found it necessary to remove all of his clothes. For a young man with the diagnoses he possesses, that is apparently not an entirely unexpected behaviour. There are very real sensory and perception issues involving touch, the feel of different materials, temperature, his ability to tolerate sensory stimulations and other extraneous but concurrent issues such as his tolerance of discomfort including noise and his own gastric symptoms. This description is not intended to be exhaustive or comprehensive: merely to example the complexity of the problem faced by assessors and carers alike. In practical terms there are real issues relating to safeguarding i.e. his personal dignity, privacy, safety (both physical and sexual) and emotional health which arise and which need the most carefully constructed and advised guidelines for staff to follow. A significant part of this hearing has involved the de-construction of existing practices and guidelines and the re-construction of new guidelines which meet the best interests of C for the time being. Although a document existed in January 2010 which purported to be a pathway plan: it was incomplete and was neither signed nor dated. LM says that the assessments then proposed were not undertaken or if they were they were not provided to her. The consequence alleged is that at the commencement of proceedings there was no plan for the transition of C from the school which in July this year he has to leave nor was there a plan which provided for his residence and care as an adult and as a person who was formerly a 'looked after' child. Likewise, although there exists a care plan and associated behaviour support plans and statutory review documentation, the extent to which those documents exhibit that any short or long term planning had taken place or even whether the documents reflect the reality of C's life in the school are issues of fact which may need to be determined. The local authority say in reply that the school is inspected twice a year by Ofsted's inspectors who have evaluated the school as satisfactory and meeting the full range of needs and interests of its pupils. Its boarding provision is good, and the overall welfare, health and safety of pupils is described as outstanding. The school is a very safe environment. Despite this, the local authority concede that "an Ofsted inspection of 28 April 2010 which reported that "one young person chooses to use a seclusion room excessively" was a mild response to an extraordinary situation and was an analysis lacking in rigour". They also say that the blue room was designed by an autism adviser in 2007 with the approval at the time of C's mother. They comment that until 2010 its use had not caused any adverse comment in the statutory review process and that the intention had been to reduce his 'dependence' upon it. They say that there are frequent planned activities for C inside and outside the school, not all of which can take place because of C's behaviours at any particular time. Although they concede that seclusion and restraint in the blue room is a deprivation of C's liberty which if not authorised by the court is unlawful and in breach of his article 5 ECHR rights, they deny that seclusion and restraint are in breach of his article 3 and/or 8 ECHR rights. They deny that it is inappropriate to seclude C in the blue room when he is naked because of the need to protect his dignity or that he is left to urinate and defecate, smear, mouth or eat his own faeces or self harm in the blue room. From the earliest stages in the Court of Protection proceedings the local authority has agreed to implement the recommendations of Ms L, Occupational Therapist, in particular a report of the 26 September 2010 in which she recommends sensory activities which are designed to meet C's needs and which are to be integrated with staff approaches to his behaviours. Despite this, it should be noted that Mr Wall has commented in writing about the Head Teacher's dismissive attitude to the behavioural approach suggested by Ms L and his 'programming approach' to the use of the blue room and nakedness. Although these are issues of fact yet to be determined, the court notes for future determination that it was Dr Rippon who recommended for C as long ago as 2007 the sensory and related behavioural strategies which are now agreed. Mr Wall says that if C feels the equivalent of neurological pain at certain times when his skin is touched and his desire to be naked is a form of tactile defensiveness, then he will understandably go where he is able to be naked i.e. the blue room where he can avoid pain and irritation. Whether and why these and similar issues have not been addressed before now will have to be the subject of further consideration by the court, but there is before the court a strong prima facie case condemning the lack of a problem solving inter disciplinary approach to C's needs. The statutory schemes It is important to understand that C's mother has at all times exercised her parental responsibility in respect of C without restriction. As a child and young person from the age of 6 to 18, C was accommodated by the local authority in accordance with section 20 of the Children Act 1989 [CA 1989] i.e. at the request of and with the agreement of his mother. At no time before these proceedings began did the local authority commence proceedings under the CA 1989 for a statutory order including for an authorisation to keep C in secure accommodation under section 25 CA 1989. At no time until it was known that the claim in judicial review was to be issued did the local authority make an application to the Court of Protection for a declaration as to the legality of the deprivation of C's liberty nor did they themselves or the organisation which operated the school have the power to authorise any deprivation of liberty under Schedules A1 and 1A of the Mental Capacity Act 2005 [MCA 2005] or otherwise (i.e. the power contained in Schedule A1 MCA 2005 for the managing authority of a hospital or care home to authorise deprivation of liberty for those persons who are not ineligible to be deprived of their liberty in accordance with schedule 1A). As I shall set out in more detailed in relation to the implications of the same, the school is a children's home not a care home or hospital for the purpose of this and analogous legislation. The statutory schemes which regulated C's care are as follows. He was an accommodated child in accordance with section 20 CA 1989: "20. Provision of accommodation for children: general (1) Every local authority shall provide accommodation for any child in need within their area who appears to them to require accommodation as a result of – a. […] b. […] c. The person who has been caring for him being prevented (whether or not permanently, and for whatever reason) from providing him with suitable accommodation or care. (2) […] (3) Every local authority shall provide accommodation for any child in need within their area who has reached the age of sixteen and whose welfare the authority consider is likely to be seriously prejudiced if they do not provide him with accommodation. (4) A local authority may provide accommodation for any child within their area (even though a person who has parental responsibility for him is able to provide him with accommodation) if they consider that to do so would safeguard or promote the child's welfare. (5) […] (6) […] (7) […] (8) Any person who has parental responsibility for a child may at any time remove the child from accommodation provided by or on behalf of the local authority under this section. (9) – (11) […]." When he turned 16 he was an eligible child within the meaning of paragraph 19B of Schedule 2 of the CA 1989 as inserted by the Children (Leaving Care) Act 2000 [CLCA 2000] having regard to Regulation 3 of the Children (Leaving Care) (England) Regulations 2001 [CLCA Regs 2001]. By sections 23B(3) and 23E and schedule 2 CA 1989 as amended by sections 1 and 3 CLCA 2000 the local authority is required to prepare a 'pathway plan' for an eligible child based upon an assessment of his needs which must set out the advice, assistance and support which the local authority intends to provide, both while the local authority intends to look after the child and in the future. In R (J) v. Caerphilly CBC [2005] EWHC 586 (Admin), Munby J. gave guidance as to who should prepare a pathway plan, what such a plan should contain and how it should be implemented. The assessment of needs should involve an evaluation of the nature, extent and severity of the child's needs so as to be sufficiently precise as to the manner in which those needs are to be met (see R (G) v. Nottingham CC & Nottingham University Hospital [2008] 1 FLR 1668). By sections 23B(2) and 23D and paragraph 19C of schedule 2 CA 1989 the local authority is obliged to appoint a personal adviser for C who is independent of the local authority: see also R (J) v. Caerphilly CBC supra. Once an eligible child turns 18 the local authority's duties to provide accommodation and care under the CA 1989 cease and the local authority's statutory obligations in respect of adults apply (see, inter alia sections 21 and 29 National Assistance Act 1948, section 2 Chronically Sick and Disabled Persons Act 1970 and section 47 NHS and Community Care Act 1990). However, the duties to assess need and maintain a pathway plan and personal adviser continue until the eligible child (now referred to as the former relevant child) is 21: section 23C CA 1989. The CLCA Regs 2001 prescribe certain detail relating to the assessment and the pathway plan which is required of the local authority, for example, at regulations 5, 7, 8 and 9: "5 Assessments and pathways plans – general (1) The responsible authority must prepare a written statement describing the manner in which the needs of each eligible and relevant child will be assessed. (2) The written statement must include, in relation to each child whose needs are to be assessed, information about, in particular – (a) the person responsible for the conduct and co-ordination of the assessment; (b) the timetable for the assessment; (c) who is to be consulted for the purposes of the assessment (d) the arrangements for recording the outcome of the assessment; (e) the procedure for making representations in the event of a disagreement. (3) The responsible authority must make a copy of the statement available to the child and the persons specified in regulation 7(5). (4) Nothing in these Regulations shall prevent the carrying out of any assessment or review under these Regulations at the same time as any assessment, review or consideration under any other enactment. 7 Assessment of needs (1) The responsible authority shall assess the needs of each eligible child, and each relevant child who does not already have a pathway plan, in accordance with these Regulations. (2) The assessment is to be completed – (a) in the case of an eligible child, not more than three months after the date on which he reaches the age of 16 or becomes an eligible child after that age; and (b) […] (3) Each responsible authority shall ensure that a written record is kept of – (a) the information obtained in the course of an assessment; (b) the deliberations at any meeting held in connection with any aspect of an assessment; and (c) the results of the assessment. (4) In carrying out an assessment the responsible authority shall take account of the following considerations – (a) the child's health and development; (b) the child's need for education, training or employment; (c) the support available to the child from members of his family and other person; (d) the child's financial needs; (e) the extent to which the child possesses the practical and other skills necessary for independent living; and (f) the child's needs for care, support and accommodation. (5) The responsible authority shall, unless it is not reasonably practicable to do so, seek and take into account the views of – (a) the child's parents; (b) any person who is not a parent but has parental responsibility for the child; (c) any person who on a day to day basis cares for, or provides accommodation for the child; (d) any school or college attended by the child, or the local education authority for the are in which he lives; (e) any independent visitor appointed for the child; (f) any person providing health care or treatment to the child; (g) the personal adviser appointed for the child; and (h) any other person whose views the responsible authority, or the child consider may be relevant. 8 Pathway plans (1) A pathway plan prepared under 19B of Schedule 2 to, or section 23B of, the Act, must be prepared as soon as possible after the assessment and must include, in particular, the matters referred to in the Schedule. (2) The pathway plan must, in relation to each of the matters referred to in the Schedule, set out – (a) the manner in which the responsible authority proposes to meet the needs of the child; and (b) the date by which, and by whom, any action required to implement any aspect of the plan will be carried out. (3) The pathway plan must be recorded in writing. 9 Review of pathway plans (1) The responsible authority shall review the pathway plan of each eligible, relevant and former relevant child in accordance with this regulation. (2) The responsible authority shall arrange a review – (a) if requested to do so by the child or young person; (b) if it, or the personal adviser considers a review necessary; and (c) in any case, at intervals of not more than six months. (3) In carrying out a review, the responsible authority shall, to the extent it considers it appropriate to do so, seek and take account of the views of the persons mentioned in regulation 7(5). (4) The responsible authority conducting a review must consider – (a) in the case of an eligible or relevant child, whether, in relation to each of the matters set out in the Schedule, any change to the pathway plan is necessary; and (b) [……] (5) the results of the review must be recorded in writing." The local authority is required to complete a pathway plan in order to comply with its statutory obligations, regardless of any view that it might come to that an alternative form of care planning is appropriate: R (P) v. Newham LBC [2004] EWHC 2210 (Admin). Statutory guidance has been issued under section 7 of the Local Authority Social Services Act 1970 [LASSA 1970] in respect of the CLCA 2000 and the CLC Regs 2001 as 'Children Leaving Care: Regulations and Guidance' [the CLC Guidance]. The entirety of the guidance bears consideration but the following provisions are particularly relevant: "Chapter 4 : Principles underlying preparation for leaving care 2. The principles underlying preparation for leaving care should reflect good child care practice generally, following the principles of the Children Act 1989. 3. Services for young people must take account of the lengthy process of transition from childhood to adulthood, to reflect the gradual transition of a young person from dependence to independence. The support provided should be, broadly, the support that a good parent might be expected to give. 4. As with the Pathway Plan, where it applies, parents should be invited to help formulate the continuing care plan (if they are not estranged from the young person) [.…] 9. Preparation for leaving care and the provision of aftercare must be planned in conjunction with all other interested agencies, e.g. education and housing authorities, the Connexions Service/Careers Service, health authorities and, where appropriate, other local authorities. These agencies should be invited to contribute to young people's continuing care plans and, as they reach 16, to their Pathway Plans. [….] 17. Disabled young people may well face more barriers than other young people who are being cared for or leaving care, and may also have needs specifically related to impairment. It is essential to ensure that these needs are met when preparing these young people for leaving care and subsequently, providing aftercare. At the same time, care must be taken to ensure that these young people do not fail to achieve their full potential as a result of under-expectation on the part of those caring for them. Chapter 5: Needs Assessment and Pathway Plan 20. The Pathway Plan should be pivotal to the process whereby young people map out their future, articulating their aspirations and identifying interim goals along the way to realising their ambitions. It will also play a critical part in making the new arrangements contained within the 2000 Act work. Each young person will be central to drawing up their own plan, setting out their own goals and identifying with their personal adviser how the local authority will help them. The authority should work to ensure that the Plan is owned by the young person and is able to respond to their changing needs and ambitions. It should look ahead at least as far as the young person's 21st birthday and will be in place beyond that where the young person is in a programme of education or training which takes them past that age. [….] 28. Councils should take steps to make sure that young people have the best chance to succeed in their accommodation. They should – avoid moving young people who are settled unless it is unavoidable or offers clear advantages; assess young people's needs and prepare them for any move; ensure that the accommodation meets any needs relating to physical and/or sensory impairment and/or learning difficulty; where practicable, offer a choice in the type and location of accommodation; set up a package of support to go with the accommodation; have a clear financial plan for the accommodation; and have a contingency plan in case the proposed accommodation breaks down. [….] 52. Regulation 9(4) states that the responsible authority conducting a review must, so far as reasonable practicable in collaboration with the child or young person, consider whether there is any need to change any of the elements of the Pathway Plan prescribed in the Schedule. 53. The purpose of regular review is to check that the goals and milestones are still right for the young person, and that they are being met. It will make sure that levels of support, both financial and other, are adequate and are being delivered according to plan. It will take account of any unexpected developments and will revise the Plan accordingly. Chapter 8: Care leavers aged 18-21 1. The Children Act 1989 as amended by the Children (Leaving Care) Act 2000 requires the responsible authority to continue to provide various forms of assistance to care leavers from the age of 18, if they have previously been eligible or relevant children. They are described in the 2000 Act (section 23C) as former relevant children. 2. These duties run until the young person reaches the age of 21 except for the duty to assist with education and training, which carries on to the end of the programme agreed and set out in the Pathway Plan." At the time of the safeguarding incident in January 2010, C was a child. The local authority is required by section 7 LASSA 1970 to act under the general guidance of the Secretary of State in respect of their social services (which includes children's services) functions unless there are exceptional reasons to justify a variation from the same. There have been in place throughout C's childhood Working Together guidelines which are issued by the Secretary of State under section 7. The latest edition entitled 'Working together to safeguard children' was issued by the Secretary of State for Children, Families and Schools in 2010 and provides: "6.45 Safeguards for disabled children are essentially the same as for non-disabled children. Particular attention should be paid to promoting a high level of awareness of the risks of harm and high standards of practice, and strengthening the capacity of children and families to help themselves. Measure should include: [.…] an explicit commitment to, and understanding of disabled children's safety and welfare among providers of services used by disabled children; close contact with families, and a culture of openness on the part of services; guidelines and training for staff on good practice in intimate care; working with children of the opposite sex; handling difficult behaviour; consent to treatment; anti-bullying strategies; and sexuality and sexual behaviour among young people, especially those living away from home; and guidelines and training for staff working with disabled children aged 16 and over to ensure that decisions about disabled children who lack capacity will be governed by the Mental Health Capacity Act (sic) once they reach the age of 16. Appendix 5 Supporting those involved 4. Parents or carers of a child or children involved should be told about the allegation as soon as possible if they do not already know of it (subject to paragraph 15 below). They should also be kept informed about the progress of the case, and told the outcome where there is not a criminal prosecution. That includes the outcome of any disciplinary process." In 2002 the Government also issued under section 7 LASSA 1970 statutory guidance entitled 'Guidance for Restrictive Physical Interventions' a document which describes itself as "How to provide safe services for people with Learning Disabilities and Autistic Spectrum Disorder". There is no question that this guidance applied to C and to the school and the guidance makes extensive cross reference to good practice both in implementing section 550A of the Education Act 1996 [EA 1996] which allows staff at a school to use reasonable force in relation to a pupil for the purpose of preventing him committing an offence, causing personal injury (including to himself) or damage to property and engaging in any behaviour prejudicial to the maintenance of good order and discipline, but also to other relevant guidance and good practice concerned with restraint and 'physical interventions'. Whether this guidance was applied to C's care both in spirit and as to the letter of the same will be a question for the next hearing in these proceedings. It follows that while C remains at the school this guidance continues to apply to him. Aside from re-iterating that the restriction of a person's freedom of movement should be considered to be a form of physical restraint to be used only in exceptional circumstances, the guidance helpfully sets out the need for primary and secondary preventative strategies (paragraphs 5.1 to 5.4), the necessity for risk assessments (paragraphs 7.1 to 7.4), the necessity of good practice which is reflective of the guidance and the law (paragraphs 10.1 to 10.5), the obligation of proper recording (paragraphs 11.1 to 11.6) and the requirement for staff training (paragraphs 13.1 to 13.4). The local authority has also been given non statutory guidance by the same Government Department in July 2009 entitled 'Safeguarding disabled children: Practice guidance' which provides: "3.20 In the event of allegations being made against an employee or a volunteer involving a disabled child, the safeguarding children policies and procedures of the agency or LSCB need to be instigated, in line with disciplinary procedures, where appropriate. This includes referring such allegations to the Designated Officer in the Local authority (LADO). In addition the procedures for managing allegations against people who work with children in appendix 5 of working Together to Safeguard Children (2006) should be adhered to. [….] 3.22 Where an employee or volunteer is dismissed or resigns during the course of investigations concerning the abuse of any child or vulnerable adult, a referral should be made to the Independent Safeguarding Authority (ISA) for consideration as to whether the individual should be barred from working with children and/or vulnerable adults." That much of the statutory schemes which relate to C is not apparently in issue between the parties. The legislation and guidance relating to seclusion (and restraint in that context) is not agreed between the parties and in so far as it is relevant to this hearing, I shall set out the submissions of the parties and my conclusions in due course. What is agreed, however, is the HRA 1998 provisions through which the issues relating to detention, seclusion and restraint need to be viewed. Articles 3, 5 and 8 of the European Convention of Human Rights [ECHR] provide as follows: "Article 3 No-one shall be subject to torture or to inhuman or degrading treatment or punishment Article 5 1. Everyone has the right to liberty and security of person. No-one shall be deprived of his liberty save in the following cases and in accordance with a procedure prescribed by law: […] (e) the lawful detention of persons for the prevention of the spreading of infectious diseases, of persons of unsound mind, alcoholics or drug addicts, or vagrants; 4. Everyone who is deprived of his liberty by arrest or detention shall be entitled to take proceedings by which the unlawfulness of his detention shall be decided speedily by a court and his release ordered if the detention is not lawful. 5. Everyone who has been the victim of arrest or detention in contravention of the provisions of this article shall have an enforceable right to compensation. Article 8 1. Everyone has the right to respect for his private and family life, his home and his correspondence. 2. There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well being of the country, for the prevention of disorder or crime, for the protection of health and morals, or for the protection of the rights and freedoms of others." Public authorities are under a positive obligation under article 3 ECHR to protect people for whom they are responsible from inhuman and degrading treatment (see, for example Pretty v. UK [2001] 2 WLR 1598). A similar positive obligation arises under article 8 ECHR (see, for example R (Bernard) v. LB of Enfield [2003] HRLR 4). A failure to fulfil these obligations may sound in damages under the HRA 1998: R (Bernard) supra and R (Anufrijeva) v. LB of Southwark [2004] QB 1124. The local authority denies that the complaints made on behalf of C amount to a breach of his article 3 ECHR rights on the basis that article 3 provides protection against only the most serious ill treatment which is why it is incapable of justification: S v. Airedale NHS Trust [2003] Lloyd's Rep Med 21 and on appeal at [2003] EWCA Civ 1036, Thomas v. Baptiste [2000] 2 AC 1 PC at 27, R (Prosser) v. SSHD [2010] EWHC 845 (Admin) at [18] and R (Limbuela) v. SSHD [2006] 1 AC 396. They also deny that they amount to a breach of his article 8 ECHR rights. In determining whether there is a deprivation of liberty within the meaning of article 5 ECHR, three conditions must be satisfied: i) An objective element of a person's confinement in a particular restricted space for a not negligible time; ii) A subjective element, namely that the person has not validly consented to the confinement in question and such consent can only be valid if the person has capacity to give it; and iii) The deprivation of liberty must be one for which the State is responsible. These conditions and the fact that a deprivation of liberty without lawful authority would be a breach of C's article 5 ECHR rights are settled law: see for example: Storck v. Germany (2005) 43 EHRR 96 at paras [74] and [89], JE v. DE, Surrey County Council and EW [2006] EWHC 3459 (Fam), [2007] 2 FLR 1150 at para [77], G v. E and Ors [2010] EWHC (Fam) 621 at para [77] and Re MIG and MEG [2010] EWHC 785 (Fam) at paras [102], [127 to 206] in particular at [151] as upheld by the Court of Appeal at [2010] EWCA Civ 822. As in the case of C, the local authority would be responsible for the deprivation of liberty where it is closely involved in the care plan and service provision: A Local Authority v. A, B and Equality and Human Rights Commission [2010] EWHC (Fam) 978 at paras [96] and [110-162]. It should be noted that although in consideration of the objective element the court will take into account a wide range of factors including type, duration, effects and manner of implementation of the measure in question, the distinction between a deprivation and a restriction of liberty is one of degree of intensity not of nature and substance: Guzzardi v. Italy (1980) 3 EHRR. The key factor is whether the person is, or is not, free to leave. That can be tested by asking whether those treating and managing the person exercise complete and effective control over the person's care and movements: HL v. United Kingdom (2004) 40 EHRR 761. The local authority's concessions and certain settled facts It is common ground that C is unable to leave the school nor is he able to leave the locked corridor on which his bedroom, bathing and other facilities are located i.e. it is submitted that the general conditions in which he lives amount to a deprivation of his liberty. In addition he is secluded in the blue room without being able to leave which arguably amounts to a further deprivation of his liberty. Between his 16th birthday on 29 July 2008 when by reason of section 2 MCA 2005 the jurisdiction of the Court of Protection could have been invoked and his 18th birthday and indeed until interim relief was obtained in these proceedings, there was no authority by court order or statutory power for C to be deprived of his liberty either generally or in the blue room. It is now conceded by the local authority that from the time C reached the age of 16 the approach of the MCA 2005 was more relevant to his situation than that of the CA 1989. That approach was not applied to C. The local authority maintain their denial that C's seclusion and restraint in the blue room or elsewhere amounts to a breach of his article 3 and/or 8 ECHR rights but now concede that when he is secluded and restrained in the blue room as a consequence of his extreme challenging behaviours that amounts to a deprivation of his liberty and in so far as that is not authorised by the court, such a deprivation is unlawful and in breach of his article 5 ECHR rights. On 14 October 2010 the local authority also conceded that they were in breach of their statutory obligations under the CA 1989, the CLCA 2000, the CLC Regs 2001 and the CLC Guidance to provide C (and LM) with a pathway plan setting out the arrangements for his transition to adult social services in sufficient detail to accord with the regulations and case law. That plan should have been created when C turned 16 and it was not until January 2010, 6 months before C became 18 that an incomplete pathway plan was produced. A plan which complies with the local authority's obligations was eventually produced within these proceedings and as a consequence of the inter-disciplinary working directed by the court within both its Administrative Court and Court of Protection jurisdictions. In addition, although not formally conceded, there is no evidence before this court that C was ever provided with a personal adviser. The treatment of the safeguarding incident by the local authority was in breach of the Government's statutory guidance at least in respect of its notification to C's mother in sufficient detail for her to take a reasoned position so as to be able to help her son. At the commencement of these proceedings and despite there being in existence an acknowledged end date in July 2011 beyond which C would not be able to remain at the school, there was no care plan which provided for the move to a new place of residence and care. Even the nature of the new placement was still the subject of discussion and dispute. There was no funding agreement about his future care and its health and social care components. The rival contentions included a specialist healthcare facility that was not then identified, adapted or staffed and home care in a facility not yet identified, purchased, built, adapted or staffed. It was necessary to make a decision about this aspect of C's care sooner rather than later not least to permit the plan once formulated to be implemented by detailed work including the adaptation of premises and the employment of dedicated specialist staff. In the event, and for which the court and all parties remain very grateful, the PCT identified an appropriate resource which will, when renovated and adapted, be a complete living environment within a specialist healthcare facility with dedicated staff, new procedures developed as a bespoke response to C's needs and managed and advised by a new inter-disciplinary team of experts. From the start of the court's involvement, there were secondary but important issues relating to C's best interests. Although the primary issues were the identification and approval of new residence and care arrangements and deprivation of liberty safeguards, there were also important best interest issues surrounding C's socialisation (in and out of the school), nakedness and the shared accommodation at the school with another young person, A, whose needs are similar to those of C save that A becomes destructive of material items and property when his behaviour is challenging. It was acknowledged in the written evidence of the Head of Residential Services at the school that the behaviours of C and A impact on each other and certainly so far as C is concerned, it has become common ground during this hearing that the impacts are exclusively adverse to the extent that the court has felt compelled to declare that it is not in C's best interests to share accommodation with A. C's use of the garden area at the school is compromised by his behaviours and needs, not least his nakedness. The school has not been able to find constructive ways around a 2010 Ofsted inspection opinion that his personal dignity would be compromised were he to have access to the sensory garden at the school. There is an overwhelming feeling that at no time does C get to exercise his own privacy, with or without clothes, so that he can do what he really likes doing in his own home: playing in the open air and preferably with water which he finds relaxing and a positive sensory perception. Solutions to the problems presented by C's needs in particular his need to be naked and how that and other behaviours are managed so as to be lawful and in his best interests have been the continuing subject matter of these proceedings. Without prejudice to the arguments yet to be heard on historic illegality and ECHR non compliance, new guidelines have been crafted based upon the expert evidence this court has heard and read. The framework within which that has occurred is that provided by the Mental Capacity Act 2005 [MCA 2005] albeit with the necessary overlay of the remedies available to the High Court whether in the Administrative Court, the inherent jurisdiction in support of the Court of Protection or the Court of Protection as a superior court of record: see section 47(1) MCA 2005. The Court of Protection jurisdiction The jurisdiction of the Court of Protection is defined by the provisions of the MCA 2005 which came into force on 1 October 2007. A decision made by the court under the MCA 2005 must be in the best interests of the protected person, C. By section 1 (6) of the Act: "before the act is done or the decision is made, regard must be had to whether the purpose for which it is needed can be as effectively achieved in a way that is less restrictive of the person's rights and freedom of action" There is power in the Court of Protection by section 48 MCA 2005 to grant interim declarations provided that the relevant person lacks capacity in relation to the matter and it is in the best interests of that person to make the order or make the directions without delay. The manner in which a best interests decision is to be made by a decision maker, including the court, is addressed in section 4 MCA 2005. There is no issue on the facts of this case as to how these provisions are to be applied, but for completeness, a summary is important in order to set this court's decision making process in context. By section 4(2) a court must consider all the relevant circumstances and by section 4(4), so far as is reasonably practicable, the court must permit and encourage the person concerned to participate in the decision affecting him. Given the severity of C's condition it has not been reasonably practicable to directly involve him in the decision making process, but the Official Solicitor, his family and indeed all of the parties to these proceedings, have striven to put before the court options based upon what C might or would want and the reasons for the same. There has been a very genuine desire on everyone's part to implement the letter and the spirit of the legislation and in particular section 4(6) which deals with C's past and present wishes and feelings, beliefs and values and other factors which C would be likely to consider if he were able to do so. The court is not obliged to give effect to the decision which C would have arrived at if he had capacity to make the decision for himself and was acting reasonably (sometimes referred to as a 'substituted judgement') but rather it applies an objective test as to what is in his best interests taking into consideration the factors which C would be likely to have considered if he had capacity including what C would have decided if that can be deduced. By section 4(7) the court must take into account, if it is practicable and appropriate to consult them, the views of other persons. It may be of some significance in the future hearing of claims under the HRA 1998 whether the section 4 requirements were applied by other decision makers relating to C's care before the involvement of this court. The process of best interests decision making described in the 2005 Act applies to all decision makers not just the court. In practical terms best practice both in proceedings before the Court of Protection and generally is to apply a structured approach to the decision to be made. The decision maker draws up a notional balance sheet of welfare factors describing the benefits and detriments of the available courses of action having encouraged the person concerned to participate in the process and having ascertained wishes and feelings, beliefs and values and other considerations particular to the person including consulting with relevant third parties. The role of the decision maker and that of an expert are distinct, albeit that the decision maker will want to pay appropriate regard to the opinion of experts in the context of all the circumstances (see, for example A County Council v. K, D and L [2005] EWHC 144 (Fam), [2005] 1 FLR 851). Having gone through this structured process, the decision maker must form an objective value judgement giving effect to the statutory imperative: Re P [2009] EWHC 163 (Ch), [2010] Ch 33 at [39] per Lewison J. and Re MM (an adult), A Local Authority v. MM [2007] EWHC 2003 (Fam), [2008] 3 FCR 788 at [34] to [35] per Munby J. Decision makers need not be risk averse and again this is a very important consideration as regards C. As Munby J. commented in Re MM at [120]: "The emphasis must be on sensible risk appraisal not striving to avoid all risk, whatever the price, but instead seeking a proper balance and being willing to tolerate management of acceptable risks as the price appropriately to be paid in order to achieve some other good…" While regard must be had to the principle of acting in a less restrictive way, the best interests principle takes priority i.e. the option which is in the person's best interests must be chosen which may not necessarily be the least restrictive option available. Guidance on the 2005 Act is set out in the Mental Capacity Act 2005 Code of Practice which is supplemented by the Mental Capacity Act 2005: Deprivation of Liberty Safeguards Code of Practice (26 August 2008). Paragraph 5.13 of the 2005 Code of Practice sets out a checklist of factors that need to be taken into account in determining what is in a person's best interests and paragraphs 2.6 and 4.61 of the DOLS Code of Practice describe deprivation of liberty, paragraph 4.61 inserting into that checklist additional factors that apply when considering best interests as respects deprivation of liberty as follows: " i) whether any harm could arise if the deprivation of liberty does not take place; ii) what that harm would be; iii) how likely that harm is to arise (i.e. the level of risk sufficient to justify a step as serious as depriving a person of liberty?) iv) what other care options there are which could avoid deprivation of liberty, and; v) if deprivation of liberty is currently unavoidable, what action could be taken to avoid it in the future." The local authority and the organisation submit that in accordance with paragraph 1(2) of schedule A1 to the MCA 2005 these safeguards only apply to a hospital or care home. The school is not a 'hospital' within the meaning of section 275 of the National Health Service Act 2006 nor is it a 'care home' within the meaning of section 3 of the Care Standards Act 2000 [CSA 2000] by reason of schedule A1 of the MCA 2005 at paragraphs 175 and 178 where the definitions are applied. In accordance with the meaning of a school as defined by section 4 EA 1996, the school is an independent special residential school operated by a non public sector organisation i.e. it is not part of the further education sector nor is it a specialist college service or part of the higher education sector. Having regard to the accommodation provided at the school, its status in law is a 'children's home' within the meaning of sections 1(2), 1(6) and 3(3) CSA 2000. Such a home is inspected by Ofsted not the Care Quality Commission. As a consequence and by reason of sections 8(2) and 20 of same, the Health and Social Care Act 2008 [HSCA 2008] and the Health and Social Care Act 2008 (Regulated Activities) Regulations 2010 do not apply to the school nor by section 21 HSCA 2008 does the Care Quality Commission Guidance. Although the deprivation of liberty safeguards set out in schedule A1 MCA 2005 do not apply to C because he is not detained in a hospital or care home (nor would they have applied in any event to C before he was 18 by reason of paragraph 13 of schedule A1), the application of good practice by the Court of Protection in any determination of best interests will of necessity have regard to the same material as that contained in the DOLS Code of Practice. That is because inter alia the DOLS Code of Practice is overtly informed by decisions of this court and the European Court of Human Rights as at the time of its publication (see the paragraphs under chapter 2 of the same). As the DOLS Code of Practice makes clear at paragraphs 10.11 and 10.12, the reason why the Code does not apply to circumstances other than hospitals and care homes is that save in respect of conditions to which the MHA 1983 applies, in all other circumstances an application must be made to the Court of Protection before the deprivation of liberty begins and in respect of C that should have been from his 16th birthday. The distinction between what a court will do when its jurisdiction is invoked and what others acting in relation to a person who lacks capacity have a duty to do is more than merely academic if breach of duty is alleged. Other decision makers, be they the local authority, the school or the organisation do not have a duty to act in accordance with the DOLS Code of Practice in relation to a decision to seclude or restrain C or which otherwise has the effect of depriving C of his liberty because the duty which is set out in section 42 MCA 2005 only applies the DOLS Code of Practice to those exercising functions under schedule A1. It hardly needs repetition that the absolution of one of more of the institutional parties from any finding of breach of duty in this regard hardly explains or mitigates the rather more significant illegality in not applying to the Court of Protection before the deprivation of liberty began. The Mental Health Act 1983 [MHA 1983] applies to the reception, care and treatment of mentally disordered persons. Section 1(2) of that Act defines mental disorder as "any disorder or disability of the mind". Section 1(4) MHA 1983 defines learning disability in the sense that the term has been applied to C as a "state of arrested or incomplete development of the mind which includes significant impairment of intelligence and social functioning". Learning disability is excluded from the definition of mental disorder for certain specific purposes in the Act as described in sections 1(2A) and 1(2B) "unless that disability is associated with abnormally aggressive or seriously irresponsible conduct on his part". In the judgment of this court, it is patently the case that from time to time C's disability falls within s 1(2) MHA 1983 and it is precisely because this is so obvious that the two psychiatrists who have given expert evidence to the court on the point have concluded that C needs assessment under the MHA 1983. Whether he would be better protected and treated by a regime constituted under the MCA 2005 or the MHA 1983 is a separate question from the nature and extent of his assessed disorders and his abnormally aggressive conduct. In any event, the exclusionary provisions relating to learning disability are concerned with the compulsory powers contained in the Act which have not been considered let alone exercised in respect of C. So far as the wording of the MHA 1983 is concerned, there appears to be nothing inconsistent in a person's disability falling within both definitions and that is what C's disability prima facie appears to do. Furthermore, such an interpretation would permit of the use of the community treatment and care provisions in the Act for someone like C. Had C been assessed for the purposes of the MHA 1983 and if his disability had fallen within the definition of mental disorder he would have been eligible for care and treatment in the community as a child patient who lacked competence. Such treatment within the meaning of the Act would have had to have been in accordance with the Code of Practice issued under the 1983 Act. It is a question worthy of enquiry why such a course was never contemplated or, if it was, was not undertaken. In the absence of a MHA 1983 assessment, this court has not been provided with the material to decide whether C is "within the scope of the Mental Health Act" nor whether C would object to being a mental health patient or to some or all of the treatment that may be recommended as defined in Case E of paragraph 2 of schedule 1A of the MCA 2005 so as to make him ineligible to be deprived of his liberty under the MCA 2005. No party has argued that in C's case the court's powers are as yet constrained by section 16A MCA 2005 i.e. ineligibility to be deprived of one's liberty by reason of the engagement of the MHA 1983. The question can be of critical importance (see J v. The Foundation Trust & Ors [2009] EWHC 2972 (Fam); [2010] 3 WLR 840 at [45] and [46] per Charles J. and BB v. AM & Ors [2010] EWHC 1916 (Fam) at [25] per Baker J.). As yet that factual matrix is not developed. The Mental Health Act 1983 Code of Practice is issued by the Secretary of State under section 118 MHA 1983. By section 118 (2A) the Secretary of State is required to include in the same a statement of principles to inform decisions under the Act and by section 118(2B) those principles include: "(c) minimising restrictions on liberty, (h) patient well being and safety and (i) public safety". By section 118(1) the MHA 1983 Code of Practice is: "(a) for the guidance of registered medical practitioners, approved clinicians, managers and staff of hospitals, independent hospitals and care homes and approved mental health professionals in relation to the admission of patients to hospitals and registered establishments under this Act and to guardianship and community patients under this Act; and (b) for the guidance of registered medical practitioners and members of other professions in relation to the medical treatment of patients suffering from mental disorder". It is submitted by the local authority and the organisation that the MHA 1983 Code of Practice does not apply to any seclusion which occurs at the school. It is, however, conceded by the organisation which operates the school that as a matter of good practice the school's measures and protections should be informed by the relevant principles of the Code. It is clearly the case that section 118(1)(a) does not apply to a children's home but there is nothing in the scheme of the 1983 Act or its application to children in the community who are incapacitated within the meaning of the MCA 2005 which prevents section 118(1)(b) from applying. The plain language of the sub-section and any purposive construction of the same compels the court to conclude that it applies. The purpose of the MHA 1983 Code of Practice and its enabling section is to protect those who have mental disorders as defined in the 1983 Act by making provision for their reception, care and treatment whether or not the Act's compulsory measures have been engaged. In my judgement, in the absence of any corresponding guidance that is applicable to a severely learning disabled child who is resident in a special school and whose condition prima facie falls within the definition of a mental disorder, the guidance applies. There is nothing inconsistent in determining that a young person's condition falls within the definition of a mental disorder and that that person is entitled to the protection afforded by the Code while maintaining the additional protection of the Court of Protection in relation to his deprivation of liberty at least until that person is assessed as being within the scope of the 1983 Act when a decision has to be made as to which statutory code shall apply i.e. the 1983 Act is engaged. It would be a dereliction of the duty of this court (whether constituted as the High Court in its inherent jurisdiction or the Court of Protection) to fail to afford such residual protection to a vulnerable person at least until another statutory code is invoked. Accordingly, so far as C is concerned and having regard to the expert evidence which I describe about the severity of his disability and behaviours, as a matter of law and good practice, the Mental Health Act 1983 Code of Practice applies to his care and treatment at the school and in particular to his seclusion and restraint. It should be noted that despite the intense argument that the court has heard and read on this issue, the MHA 1983 Code of Practice (unlike other forms of statutory guidance) does not impose a duty on professionals, rather they are to have regard to it and explain and record the reasons why they have decided to depart from it. Whether the MHA 1983 Code of Practice should apply by analogy to children and young persons in schools which are children's homes but whose learning disability does not fall within the definition of a mental disorder has not been argued before this court. At least so far as this school and this organisation are concerned it is conceded that in the absence of statutory control over seclusion and restraint in that context, the MHA 1983 Code of Practice should be applied as good practice. With respect, I agree. It would be unacceptable for C as an incapacitated child to be secluded or restrained without reference to best practice guidelines and that should apply to other children and young persons in the same or similar circumstances. A decision maker including a court has to make a decision for an incapacitated child in accordance with best interests and that of necessity includes a consideration of best practice not least so as to determine whether any less restrictive options are available. The expert evidence accepted by the court in this case is clear, the best practice is contained in the MHA 1983 Code of Practice. This court would have been constrained to consider it and apply it as best it could to its own determinations even if it had not applied to C as a matter of law. This conclusion no doubt has implications for other young people with serious learning disabilities who are in residential care. Although there are a multitude of provisions in the Code which are relevant to C, for example the physical restraint provisions in chapter 15, the following provisions are of particular application, in each case reading pupil for patient and school for hospital: "15.43 Seclusion is the supervised confinement of a patient in a room, which may be locked. Its sole aim is to contain severely disturbed behaviour which is likely to cause harm to others. 15.44 Alternative terminology such as "therapeutic isolation", "single-person wards" and "enforced segregation" should not be used to deprive patients of the safeguards established for the use of seclusion. All episodes which meet the definition in the previous paragraph must be treated as seclusion, regardless of the terminology used" 15.45 Seclusion should be used only as a last resort and for the shortest possible time. Seclusion should not be used as a punishment or a threat, or because of a shortage of staff. It should not form part of a treatment programme. Seclusion should never be used solely as a means of managing self-harming behaviour. Where the patient poses a risk of self-harm as well as harm to others, seclusion should be used only when the professionals involved are satisfied that the need to protect other people outweighs any increased risk to the patient's health or safety and that any such risk can be properly managed. 15.46 Seclusion of an informal patient should be taken as an indication of the need to consider formal detention. 15.47 Hospital policies should include clear written guidelines on the use of seclusion. Guidelines should: Ensure the safety and well being of the patient; Ensure that the patient receives the care and support rendered necessary by their seclusion both during and after it has taken place; Distinguish between seclusion and psychological behaviour therapy interventions (such as "time out"); Specify a suitable environment that takes account of the patient's dignity and physical wellbeing; Set out the roles and responsibilities of staff; and Set requirements for recording, monitoring and reviewing the use of seclusion and any follow-up action. […] 15.60 The room used for seclusion should Provide privacy from other patients, but enable the staff to observe the patient at all times; Be safe and secure and should not contain anything which could cause harm to the patient or others; Be adequately furnished, heated, lit and ventilated; and Be quiet but not soundproofed and should have some means of calling for attention (operation of which should be explained to the patient)." Paragraphs 15.48 to 15.59 of the Code set out a procedure for seclusion. This is also directly applicable to C but need not be set out in full. In essence there is a requirement for a local policy which sets out a procedure for starting and reviewing seclusion. A suitably qualified professional can make the decision but immediately informs others so that an initial multi-disciplinary review of the need for seclusion can occur as soon as is practicable after the seclusion begins. The review is to establish whether seclusion needs to continue, the individual care needs of the person while he is in seclusion and the steps that should be taken to bring the need for seclusion to an end as quickly as possible. There are review criteria: every 2 hours by the suitably qualified professionals and every 4 hours by a doctor or suitably qualified approved clinician. If the person is secluded for 8 hours consecutively or 12 hours over a period of 48 hours a more formal multi-disciplinary review is to be undertaken. There are also protections about the availability of suitably skilled professionals within sight and sound of the seclusion room, the observation and monitoring of the person and a documented record every 15 minutes. Paragraph 15.62 sets out basic record keeping requirements. Although the question has been raised as to whether the use of the blue room is a further deprivation of 'residual' liberty, it is agreed that, for the purposes of this Judgment and subject to the court determining whether and how the relevant guidance is to be applied, on the facts as they concern C the use of the blue room should be considered to be a seclusion rather than a further deprivation of 'residual' liberty. Experts Consensus Mrs E the clinical psychologist who undertakes clinical supervision for staff at the school and who has had an overview of C's problems for some time, outlined the problems which the other experts have been asked to advise upon. She said that: i) C's progress has been limited at the school: autism sufferers can deteriorate as teenagers and C has not done as well as had been expected; ii) She is not personally aware of any child centred unit that would have been suitable for C: the extent of the seclusion he needs i.e. several hours a day is, however, available to adults in a hospital setting; iii) A multi disciplinary hospital setting is necessary as the next move for C because there will be an escalation in his behaviour as change will be difficult for him with an increased risk of injury to himself and others. He will need a setting which is very safe while changes are assessed to gauge their benefit. Both staff changes and noise are triggers for C's harmful behaviours; iv) He is now very dependent on the blue room where he isolates himself or needs to be isolated because of his extreme behaviour; v) C's extreme behaviour will necessitate intervention from a multi disciplinary team for many years. He will need behaviour support plans that are reactive to the needs which are evidenced by distressed and out of control behaviour i.e. when he is posing a risk to himself and others; vi) Outside of these proceedings C's behaviour support plans were not reviewed formally i.e. regularly or on an annual basis although there was a support plan in 2007, one in December 2008 and one more recently with OT input. At no stage before these proceedings began was there a recommendation made that C be referred for assessment in or by a specialist unit; vii) C treats people as sensory objects and he will be denied that contact if he is inappropriately naked. He needs to learn the skill of recognising what are acceptable social boundaries, something autistic sufferers do not always understand but which C could be taught by consistent, repetitive routines; viii) The blue room was not intended to be used to provide for C's nakedness and has not / should not have been used solely for that purpose rather than when C is also aggressive. The purpose of the room is immediate protection. It should not be used when not needed and the whole aim from the time C started at the school was to withdraw the use of the room and seclusion. To the extent set out above, Mrs E's evidence is accepted in the context that there are significant disputes about what has in fact happened with respect to C's care since 2007. She concedes that it is now necessary that the multi functional use of the blue room i.e. for seclusion and relaxation or sensory desensitisation be changed so that there are separate areas for different purposes and that in future a withdrawal area must never be used for seclusion. She advised, however, that that change would itself be very stressful for C. Dr Carpenter agreed that it would be impossible for C to adapt to a change in his use of the blue room in the short time remaining at the school, although that would be different if the professionals had a year in which to assess and achieve change. Dr Carpenter gave clear and cogent evidence about C's needs in the future that was un-contradicted by anyone with similar skills and expertise. In so far as his evidence departed from the opinions of others, the court strongly preferred his evidence and advice not least because it was based upon research, skill and expertise which are at the leading edge of professional practice in the specialist fields which are relevant to C. The court ventures to suggest that advice of the nature Dr Carpenter provided to the court should have been available to the parties for C's benefit from at least 2007. He advised that: i) The term 'blue room' has no meaning or purpose, except that by naming it by its colour rather than purpose, it avoids people having to think about what is its purpose and what regulations govern its use. In this case it disguises the fact that the room is being used for many purposes and to the extent that one of its purposes is a seclusion room that alternative terminology would be contrary to the MHA 1983 Code of Practice paragraph 15:44. The blue room is the management method used to deal with C's aggression while also being used by C as a safe place: which purposes are arguably ethically incompatible. ii) Isolation rooms or seclusion rooms are not a recognised prescribed therapy for Autism Spectrum Disorders, Learning Disabilities, challenging behaviour or self injurious behaviour. They are a means of managing behaviour and should follow the first principle of managing behaviour, namely that they do not accentuate the undesired behaviour over time. iii) C is being secluded i.e. supervised in a confined space in accordance with the definition applied to seclusion in the MHA 1983 Code of Practice at paragraph 15:43 and the room has come to be used as a means of managing his behaviour. iv) An isolation room is a room which is not locked and which is not a confinement and is usually used for the purpose of isolating the person from an environment that is disturbing the person. The room insulates the person from the disturbance or over stimulation while carers remove the stimulus: hence the emphasis is on removal of the problem not placing the person in the room. In C's case the emphasis appears to be on removing him rather than the causes of his distress and irritation e.g. noise in the accommodation and other sensory intolerances such as his clothing. v) No room such as the blue room should be used without a full intervention plan which is used to train and instruct carers in how to enable the person to stay calm and interacting outside of the room without having to use the isolation room or seclusion. In this case there needs to be a holistic plan which includes dealing with C's sensory difficulties. The use of the room should be a small part of this, with a clear rationale for why and when it needs to be used for isolation and for seclusion and what are the boundaries and protections to be used in each event. vi) Any person working with C would need to have attended a course on how to safely manage him and to physically restrain and seclude him when that is necessary and permissible. In addition they should have extensive training in autism and how it applies in C's case in order to equip them to interpret his behaviour and prevent the need for seclusion, how to use seclusion, the legal implications of its use and how to withdraw from it and end it. They should also have training in other interventions likely to prevent the need for seclusion. The training would include a day's training with C. vii) C will react differently to new carers and all change has to be planned; viii) C needs a multi disciplinary setting for the foreseeable future albeit that in principle the hope is that C could move into the community within a year. Although there are now placements available in the country for 30 to 40 autistic children and young people with the severity of C's health and social care needs, there have at times in the recent past been as few as 18. This is a very scarce and expensive resource. ix) There should be a genuine choice available for C as between MCA 2005 arrangements with appropriate deprivation of liberty safeguards and assessment and detention provided for by mental health legislation; x) The use of a seclusion room and a separate strategy for the use of a withdrawal room as a safe haven (which may include a private space such as C's bedroom) where nakedness and some behaviours could be tolerated should be considered. Seclusion cannot just be abandoned, it is needed for his safety. xi) It would be sensible to start using alternative strategies which reduce reliance on the blue room by identifying and managing his different needs e.g. by encouraging C to withdraw into his own bedroom rather than the blue room and if it is established that the colour blue (or for that matter any colour) is of benefit to him, decorate that space accordingly. The use of alternative strategies and places where his needs can be satisfied should be used in preference to the blue room. Having said which, there are times when it is appropriate for C to use the blue room e.g. when he wishes to do so. xii) The blue room must never be used as a punishment. Placing him in the room to preserve his dignity is in effect punishing him for removing his clothes. There is no evidence of him feeling that his dignity is compromised, it is the carers who are embarrassed while at the same time he is distressed because of his sensitivity i.e. the irritation or pain he feels. A programme should be developed which understands his needs to be unclothed and develops strategies to help. xiii) There are a range of reasons why C wants to be naked which will include his own enjoyment, his control over a situation and his sensory problems including the reduction in his pain and irritation. Nakedness presents 2 aspects of respect for his privacy: the exercise of his autonomy i.e. providing facilities for him to do what he wants and the preservation of his dignity i.e. responding to his needs including his safety. xiv) Ideally the whole of his accommodation should be safe for him so that his nakedness, which does not yet have a sexual component, can be more easily controlled but with a re-consideration of why he cannot be naked in his own bedroom and that nakedness around staff can be possible provided the environment is a 'protected best interests environment'. xv) To narrow the emphasis so that he is only learning that he should be dressed in communal areas assumes his behaviour is wilful and misses his sensory distress: the latter will require an environment where a degree of nakedness is tolerated while encouraging him to dress and tolerate clothes so as to interact with others. xvi) Within the boundaries of the unit, the aim should be to give him as much freedom as possible to move between rooms including the garden when he chooses: he has to learn that he has choices not just that staff are in control. xvii) Psychological functional analysis will not tackle C's sensory needs: he will need and should have had a sensory assessment and formulation which is continuously developed and OT advice should include his clothing to find materials which are less painful or irritating. Ms Sharon Paley is an expert in the care of young people with learning disabilities with a particular emphasis on autism. It is now intended that the local authority and the school will use her to obtain advice about and a review mechanism for the continuing care of C until he moves. She joined Dr Carpenter in pointing out that the informal use of confined spaces to manage behaviour over a long period of time is unhelpful to achieving long term behavioural change in people with intellectual disability and that there is some evidence that such a strategy may cause trauma in people who have learning disabilities and autism. She also agreed with Dr Carpenter that the subjective belief that C's nakedness is offensive, which permeates the school's approach to C, needs re-consideration. Her opinion is that even in the circumstance that C is wishing to use the room, its continued use or the use of a similar environment for the same multiple purposes will present a significant risk to him leading to physical and psychological harm. She acknowledged, however, that in the interim the use of the room cannot be stopped but its use can be reduced or modified by the following strategies: i) Reduce the number of staff in C's care and support team to between 10 and 15; ii) Undertake a baseline assessment of the use of the room; iii) Re-establish a protocol for the continuing use of the room; iv) Evaluate the positive interactions between C and his care and support team; v) Support C's team in particular by specialist training; vi) Evaluate reporting and recording methods; vii) Regularly assess and review the use of the room and the behaviours of concern by reference to the aims, objectives and outcomes which are agreed for the use of the room; viii) Improve the approach to behavioural risk assessment; ix) Undertake joint work with Ms L relating to 'sensory integrative dysfunction'; and x) Explore the reduction of interactions which cause significant stress to C. The new healthcare facility: All of the experts agreed that the facility identified by the PCT would be suitable for C. There are some works required and a team of dedicated carers will need to be employed. The facility has a closed garden area and its private area i.e. the flat would not be shared with anyone else. The facility benefits from a multi disciplinary team although some expertise, for example the specialist sensory OT advice from which this court has gained considerable benefit, would need to be commissioned. LM and LPM are cautiously optimistic although they remain committed to an eventual move into a purpose built facility in the community nearer to where LM lives. Although the new placement and its multi disciplinary team would be a bespoke service, something the experts agree is the only and best practice solution to the problems identified, it is potentially a more restrictive placement. Dr Lowe advises although an in patient assessment and treatment regime may be more restrictive in the short term, it would have the benefit of identifying possible improvements for C and disentangling them from enduring behaviours. This would help to plan for the least restrictive placement in the community. Dr Lowe and Mrs E recommend a hospital setting because of the intensive inter-disciplinary work required to effect as much improvement as quickly as possible for C. Dr Rippon and Mr Read agree and Dr Rippon adds that this will ensure the best possible chance of a long term placement in the community and the holistic assessment and stabilisation of his needs. It has subsequently been agreed that the new healthcare facility will have a dedicated team of 15 members of staff. This will permit a 3:1 staff ratio during the day and a 2:1 staff ratio at night. There will be no need to use bank or agency staff. All 15 members of staff will be trained to work with C i.e. to respond to his needs in a consistent and planned way. C's new care plan will involve a comprehensive review of his needs and medication by a multi-disciplinary team which includes psychiatry, psychology, an advanced autism practitioner, nurses who specialise in managing aggression and separately behaviour therapies and speech and language therapy. The team will have access to an occupational therapist with experience in sensory integration. The suggested approach to his care is an adapted form of cognitive neuro rehabilitation which is extensively used at the healthcare facility which has been chosen. A detailed list of daytime activities has been drawn up for assessment and incorporation into C's care plan. The accommodation will be on the ground floor with a private and secure garden. It will be dedicated for C's use i.e. it will not be shared and any issues relating to nakedness and privacy can be accommodated within the accommodation so as not to restrict C's activities. There will be a low stimulation quiet lounge and a wet room, an activities room and private space including a bedroom, a living room/dining room and a kitchen. The confusion of purposes will not be replicated in the new accommodation. Light, temperature and colour sensitivity will be carefully considered, as will the use of materials and fabrics. There will not be a blue room or a room dedicated for use as a seclusion room. Supported living options: Although the experts were wary of prescriptive timescales, no-one dissented from the evidence of Dr Lowe and Mr Wall that the assessment of C in the PCT identified facility may take 18 months to 2 years before any move to a supported living option in the community. There was a unanimous opinion that such an option was not in C's best interests at the moment, not least because there would be an inadequate structure of staffing and clinical support for the intensive and comprehensive re-assessment of his needs that is required. On the positive side, Ms Paley and Ms L were of the opinion that a new environment with sensory integration therapy may produce a complete change and rapid progress albeit that time will still be required. There was again a unanimity of opinion that upon discharge from the new placement C will require a specialist provider to co-ordinate all of the services identified for his needs and that the model of care will need to be decided at that point not now. The use of the MCA 2005: Dr Carpenter would have liked to have seen a mental health assessment of C. Dr Lowe has consistently advocated the use of mental health legislation to control the assessment of C in circumstances where there will be no blue room and new staff. He anticipates the need for restraint, whether that be physical or chemical: a process which he anticipates might be cumbersome under the MCA 2005. Despite this prediction, however, he is content to agree with the balance of expert opinion that it will be the new team on the ground who must decide. They must have both assessment and treatment routes available. If experimental medications are to be considered, a second doctor's opinion should in any event be canvassed. Dr Carpenter, Dr Lowe, Mr Wall and Mr Read agree that the least restrictive legislative framework should be used and that the decision will be for the new team. Their experience of the MCA 2005 is that it can be sufficiently flexible and expeditious but just as important, it will involve independent assessors like Mr Wall and Mr Read who will be able to advise on the non medical aspects of welfare. Although the clinical regime must be a matter for the new team to consider, there is guidance which ought to be borne in mind. In GJ v. The Foundation Trust and Ors supra Charles J. provided guidance on the interplay between the MCA 2005 and the MHA 1983. At paragraphs [45] and [46] he said: "45. In my judgment, the deeming provisions alone, and together with that view on assessments, are strong pointers in favour of the conclusions that (a) the MHA 1983 is to have primacy when it applies, and (b) the medical practitioners referred to in ss 2 and 3 of the MHA 1983 cannot pick and choose between the statutory regimes as they think fit having regard to general considerations (e.g. the preservation or promotion of a therapeutic relationship with P) that they consider render one regime preferable to another. 46. This is because they point to the conclusion that when the MHA 1983 is being considered by those who could make an application, founded on the relevant recommendations, under s 2 or s 3 thereof they, like the decision maker under the MCA, should assume that (a) the treatment referred to in s 3(2)(c) MHA 1983 cannot be provided under the MCA, and (b) the assessments referred to in s 2 cannot be provided under the MCA in circumstances that amount to a deprivation of liberty." Transition: It is agreed that C's transition from the school to his new placement must be meticulously planned and that the plan must set out the agreed involvement of C's family: LM and LPM. It will not be possible to introduce or assimilate C to the new placement because that will only confuse and distress him. Familiarisation should be provided for the new nursing and care staff who should visit C at the school before the transition occurs and during the planning process on more than one occasion so that C might recognise them. The journey between the school and the new placement could be facilitated by doing something C has become used to e.g. going on a private adapted bus with a stop on the way at a fast food outlet that he likes. The interim use of the blue room: It is agreed that to provide an alternative environment for C in substitution for or in addition to the blue room might risk greater harm and an increased need for the blue room itself if the use of the alternative was to be introduced and then stopped within a 6 month period. To develop an alternative now which had to be carried across to the new placement would impose an unnecessary constraint on the fundamental re-assessment to be undertaken in the new placement. Even minor changes to the use of the room and his other accommodation would involve taking one change at a time and training the staff in their consistent use of the strategy introduced. Of more importance is the consensus that there should be a senior member of staff who ensures in so far as it is practicable that the care plan is adhered to as respects the use of the blue room and that any non adherence is reported upon. It was agreed that Ms Paley's specialist team are best placed to advise the existing carers and staff and to ensure that there is a consistent use of the blue room and reduction in any inappropriate use. Seclusion: As advised by Dr Carpenter there is a continuing need in the interim for seclusion in the blue room for C's own safety and for the safety of others. As Mr Wall put it, "unless physical intervention is routinely used, C is likely to cause severe harm to himself and those caring for him". Dr Carpenter advised that any attempt to change that need without a re-assessment risks compromising his safety in an unacceptable way by increasing the likelihood of aggressive outbursts in response to the changing environment. It is accepted that only those with specialist training and the skill and experience to identify what is a seclusion, what is a voluntary withdrawal and how to end a process of seclusion as quickly and safely as possible, can improve C's position in the interim. Best practice would dictate that such a skilled intervention is backed by integrated clinical involvement. No matter how good the carers and supervisory staff may be, that is not a service available in the school. This court is clear that that is the essential problem which underscores these proceedings. Just one example of the need for integrated inter-disciplinary advice and practice in this regard is provided by Mr Wall in his best interest report of September 2010, with which the court agrees, where he says: "It is difficult to determine to what extent the restrictions themselves are protecting C from harm or exacerbating the harm due to the lack of sensory profiling and assessment. An example of this would be the constant need for physical intervention, which is mainly due to environmental deficits and its impact on a person with an autism spectrum condition who may be hypersensitive to touch – note C's removal of his clothes which could be an indicator of such hypersensitivity. At the same time, without physical intervention C would harm himself by banging his head on doorways, walls and the floor, or harm other pupils… C needs an environment that will accommodate his needs. If he was able to access open space at will, he may be less likely to need physical intervention resulting in severe distress. If transitions were reduced in the environment, effective lighting installed, proper ventilation, soft sound absorbent surfaces in a self contained place where C was not affected by, nor could affect, other service users, his need for physical intervention may reduce…" This aspect of the use of the blue room requires the continuing and consistent intervention of someone senior and the court accepts that Ms Paley and her team can provide that intervention in the interim. Nakedness: Now that the expert evidence has been heard, no expert disagrees with Dr Carpenter. It is agreed that C should be able to use the bathroom, the splash room, his own bedroom and the corridor to get to one of these rooms when he is not clothed. During the proceedings the use of the corridor as a route through the school was stopped and provided that staff are vigilant about use of the corridor by others, C's privacy will be respected unless A has returned from his activities. C can therefore have 'protected time' for himself when he can be naked. Because C will not understand the choice he is sometimes allowed to make or any inconsistency in the places and times during which he can be naked there will need to be a very careful plan which sets out how the staff are to support nakedness without increasing C's distress. For the longer term there are proprioceptive strategies which will help him because they will lead to physiological change which will compensate for the physiological element of his need to be naked. Because of the risks inherent in any significant change before C moves, the experts consensus was to use the blue room in the least restrictive way possible and to encourage C to use his bedroom when he is naked and until he needs to or can be persuaded to get dressed. The blue room is not a resource to be used simply because C is naked. As Dr Lowe said, "the inappropriate use of the blue room will already have caused whatever psychological damage it has and the question is how to minimise further damage". At the end of the expert evidence, the court heard from some of those responsible for C's care. On the question whether A could be moved so as to improve C's circumstances, the head of children and young people service for the organisation, told the court that A's care was provided under a contract with a different local authority which had provisions for its termination with notice. There is no room to move A or C elsewhere and there would be no reason to terminate the contract relating to A whose care is regarded as appropriate. In practical terms, therefore, it is not going to happen before C has to move at the end of the July whatever conclusion the court comes to. Furthermore, an unplanned move as already described would be more harmful than the interim status quo. That does not alter the fact that C's present circumstance where he has to share accommodation with A is not in C's best interests. The noise generated by A and the restrictions imposed upon C are not in C's best interests and it is conceded by the school's head of residential services that no consideration was given to the adverse influences of the one young person on the other when A was moved in to join C. The experts firmly agree that it is not in C's best interests to share accommodation with A and the court without hesitation accepts their joint opinion. There was welcome confirmation from the senior team leader at the school that the corridor in C's accommodation would no longer be used as a walkway by other residents seeking to access a cloakroom which was now going to be moved. That will have the immediate effect of respecting C's privacy and reducing noise which is distressing to C. There was also confirmation that the existing staff levels were likely to be sufficient for the remainder of C's time thereby minimising change and the number of carers and support staff working with C. The senior team leader's oral evidence could not have been clearer in relation to the issue of nakedness i.e. Dr Carpenter and other witnesses are correct in their opinion that the staff on the ground are fearful of C being naked and have no positive strategies to deal with it other than to persuade him to dress as soon as possible. There appears to be no real understanding of the sensory or autonomy issues underlying this issue and the court is left with the overwhelming impression that C is conditioned to retreat into the blue room because that is the one location where he can remove his clothes without intervention. As the team leader confirmed in cross examination, even when C has not gone to the blue room to remove his clothes he now appears to adopt that practice as a ritual behaviour when he is in the room. Once there, although the room is not designed to be used to seclude him because he is naked, if he is naked his exit will be the subject of negotiation and even on the team leader's own evidence he may as a consequence be prevented from leaving. It is worth re-iterating the expert evidence that the court accepts: seclusion because of nakedness alone is wholly unacceptable. Having heard that evidence, the organisation now accepts that C should be allowed to be naked in the splash room, the bathroom, his bedroom and the blue room. The school's senior team leader also gave graphic evidence about a problem which is becoming increasingly evident. In accordance with the organisation's own guidelines, seclusion or withdrawal of C into the blue room or otherwise should be authorised (even if after the event) by a nominated senior manager at the school. The team leader's evidence was that this was impossible. There are too many withdrawals and seclusions. This has the effect that there is no oversight of what is happening from hour to hour of the average day. Informal and unmonitored seclusion operated in this way is totally unacceptable. It is plainly obvious from the written materials provided to the court that seclusion is neither understood nor even adequately recorded. The head of residential services gave evidence that in C's accommodation, the kitchen, bathroom and his bedroom are accessible by an electronic key fob. Even when C had access to such a fob he demonstrated no ability to use it. Although the bedroom lock should have been disabled it was not clear from his evidence whether it had or had not been. It is probable that there will be times when only the blue room is available to C from the corridor of his accommodation unless his own bedroom door is open. It transpires that the locks can be deactivated and that this can and should be done save where access to a facility needs to be controlled e.g. to keep C and A apart or to prevent a dangerous circumstance e.g. access to knives in the kitchen or the use by either of them of an inherently dangerous area without supervision. The court cannot leave the evidence without returning to that which LM said about her son. Contrary to the negative assumptions which I find are sometimes displayed in the attitudes to LM of others, the court found her to be a desperately worried, anxious but essentially reliable historian. More to the point she is and should be a partial defender of her son's interests. She is being accurate when she describes the extent to which her son's liberty is deprived and when she comments that for approximately 50% of the time her son's bedroom is locked and the court can therefore accept that as a fact; not least in the circumstance where management at the school do not know whether it is locked or not. The court likewise accepts her evidence, supported as it is by much of that which has been written, that the deterioration in her son's condition occurred from the time when he has had to share accommodation with A and changes in some of the staff complement who care for him. LM had hoped that at the age of 18 her son would have his own space where he could freely access his own things and that he should be able to make some simple choices which both adults and children take for granted. In his case enjoying water and food and some very simple sensory pleasures: the splash room, the garden and outside play, a bouncy ball to sit on and laminated books. At the same time his privacy and activities should not be compromised so that he is unable to minimise pain, irritation and distress caused by sensory perceptions which he can only avoid by being naked. C's recent deterioration has on any basis led to a significant increase in the deprivation of his liberty by his seclusion in the blue room, by confinement to his accommodation in the school so that his use of the garden and his enjoyment of outside activities and socialisation are curtailed and by the denial of choice in the manner in which his need to be naked is managed. That deprivation would be unlawful unless approved by the court as the only body with power to authorise a deprivation of his liberty. That a general deprivation of liberty in the school is necessary and proportionate and in C's best interests has been extensively canvassed in the evidence which the court has heard and is now established, but within a defined compass. Likewise, the use of seclusion is necessary and proportionate and in his best interests but within an even narrower compass. Seclusion at school – best practice Neither the local authority nor the organisation operating the school had any power to deprive C of his liberty. The deprivation which did occur was accordingly unlawful and contrary to article 5 ECHR. The court has decided that various statutory codes of guidance applied to C's residence and seclusion at the school and also that it is appropriate for the court to set out what it expects i.e. the best practice which the court will apply itself when an application is made for decisions and/or declarations under the MCA 2005. The expert evidence which the court accepts included that from Dr Carpenter and others that best practice relating to the seclusion of young people in particular those who are incapacitated with severe and complex healthcare needs is to be found in the MHA 1983 Code of Practice. In my judgement, the concession by the organisation that as a matter of good practice the school's measures and protections should be informed by the relevant principles of that code of practice is also the correct starting point for the court and any decision maker. In order to ascertain what is best practice in relation to seclusion, the court's attention has been directed not just to the statutory guidelines but also to academic literature which examines the other uses to which seclusion might be put. That literature echoes the evidence of Dr Carpenter in that it provides no empirical support for its use as punishment (the withdrawal of positive experiences) or positive therapy (behaviour management by the use of seclusion). The literature provided to the court[1],[2],[3],[4] provides advice which was agreed with by Dr Carpenter in evidence, namely that the purpose of seclusion is containment which is the prevention of harm to others until the crisis has passed. It should only be used in extreme cases i.e. it is an emergency procedure to be implemented when there is significant risk. Behaviour management strategies have one primary aim: to establish rapid and safe (temporary) control over high risk behaviours. They are not a constructive method of nor are they concerned with changing behaviour in the long term. Even in the short term seclusion may increase risk to the individual and there is insufficient evidence to support its use as a safe or effective short term behaviour management device. That material is coincident with the statutory and non statutory guidance to which I have referred. It also finds common purpose in the 'Guidance on Restraint and Seclusion in Health and Personal Social Services' which is a best practice report published by the Human Rights Working Group on Restraint and Seclusion in August 2005. I hope the court will be forgiven for including in this Judgment an extract from that report which having regard to the expert evidence it has heard the court finds to be persuasive evidence of good practice: "1.12. Restraint and seclusion should be used only for controlling violent behaviour or to protect the service user or other persons. In exceptional circumstances, physical intervention may be necessary to give essential medical treatment. The decision to use either is extremely serious and restraint and seclusion should only be used as follows: as intervention of last resort; where other, less restrictive, strategies have been unsuccessful, although an emergency situation may now allow time to try those other strategies; never for punishment; in reaching the decision, consideration should also be given to the individual needs of each service user in deciding the best method of control or restraint to be employed. […] 1.14. Risk assessment is an essential element in the care and treatment of all patients and clients and should underpin the guidance which service providers make available to staff. It could be argued that it is one of the most fundamental interventions in the recognition, prevention and therapeutic management of violence and aggression. The use of other interventions such as observation, psychosocial interventions or restraint should be part of a management plan based on an assessment of risk. While it is acknowledged that the occurrence of aggressive or violent incidents are not always predictable, assessment of risk, followed by a properly developed management plan is essential to the prevention and management of aggression and violence. Being able to predict who is more likely to engage in a violent act may enable staff to reduce the risk. […] 2.10. The issue of seclusion is particularly complex. Seclusion is an emergency procedure, only to be resorted to when there is an immediate risk of significant physical harm. There is general agreement that it should not be considered as a form of treatment; the aim should be simply that of safe containment. Seclusion is usually unpleasant, and difficult for a service user to view other than as punishment, and not a therapeutic experience. 2.11. In considering seclusion there is a need to draw a distinction between: seclusion where a service user is forced to spend time alone against his/her will; time out which involves restricting the service user's access to all positive reinforcements as part of a behavioural programme (this is explored in more detail in paragraph 2.13); and withdrawal which involves removing the person from a situation which causes anxiety or distress, to a location where he/she can be continuously observed and supported until ready to resume activities. […] 2.17. The planned use of physical interventions involves the use of an agreed strategy which includes the possible use of physical intervention to intervene in a sequence of behaviours with the aim of avoiding or reducing injury/injuries. […] 2.19. Planned physical interventions are normally used as a last resort. Strategies designed to manage aggressive/violent behaviours should include: i. ecological strategies and the environment of the service user; ii. early intervention and de-escalation; iii. emergency use of physical intervention. […] 5.5. Efforts to minimise the use of restraint or seclusion should be in place. This may require the adoption of primary and secondary preventative strategies. 5.6. Primary prevention is achieved by: ensuring that the number of staff deployed and their level of competence corresponds to the needs of service users and the likelihood that physical interventions will be needed. Staff should not be placed in vulnerable positions; helping service users to avoid situations which are known to provoke violent or aggressive behaviour, for example, settings where there are few options for individualised activities; developing care plans, which are responsive to individual needs and include current information on risk assessment; creating opportunities for service users to engage in meaningful activities which include opportunities for choice and a sense of achievement; developing staff expertise in working with service users who present challenging behaviours; talking to service users, their families and advocates about the way in which they prefer to be managed when they pose a significant risk to themselves or others. Some service users prefer withdrawal to a quiet area to an intervention which involves bodily contact. 5.7. Secondary prevention involves recognising the early stages of a behavioural sequence that is likely to develop into violence or aggression and employing 'defusion' techniques to avert any further escalation. Where there is clear documented evidence that particular sequences of behaviour rapidly escalate into serious violence, the use of interventions at an early stage in the sequence may, potentially, be justified if it is clear that: primary prevention has not been effective, and the risks associated with not acting are greater than the risks of using restraint or seclusion; and other appropriate methods, which do not involve restraint or seclusion, have been tried without success. […] 5.16. There must be a written protocol, which includes: a description of behaviour sequences and settings which may require the use of restraint or seclusion; the results of any assessment which has determined any contra-indications for the use of physical interventions; a risk assessment which balances the risk of using physical intervention against the risk of not using a physical intervention; a record of the views of the service user or those with parental responsibility in the case of children, and family members in the case of adults not deemed competent to make informed choices; a system of recording behaviours and the use of restrictive physical interventions using an incident book with numbered and dated pages; a record of previous methods which have been tried without success; a description of the specific physical intervention techniques which are sanctioned, and the dates on which they will be reviewed; details of staff who are judged competent to use these methods with this person; the ways in which this approach will be reviewed, the frequency of review meetings and members of the review team. 5.17.An up-to-date copy of this protocol must be included in the service user's individual care plan." The judicial review claims The following failures are conceded or have not been the subject of dispute within these proceedings and have formed the basis for the partnership approach of the parties within the Court of Protection proceedings so that formal remedies imposed in the Administrative Court have not been necessary other than on an interim basis to achieve an agreed outcome. In respect of each claim the approved outcome is as follows: i) The failure to prepare an appropriate care plan setting out the arrangements for C's care into adulthood including his transfer from the school to a suitable adult placement: the care plan and its detailed appendices including a new behaviour support plan, an intervention and prevention plan for the use of the blue room and a document advising upon the management of C's nakedness is agreed; ii) The failure to complete an assessment and an appropriately detailed pathway plan in time for C's 18th birthday and/or arrangements for the review of the same: the detailed pathway plan and review arrangements are agreed; iii) Disclosure of the behaviour support plan relating to the restraint of C by others: disclosed by consent; iv) Disclosure of all incidents of restraint and the duration of the same in the preceding 9 months: disclosed by consent; v) Disclosure of the qualifications and training of all staff involved in C's care: disclosed by consent; vi) A declaration that the local authority had breached C's article 3 and/or 5 and/or 8 ECHR rights: the local authority has made a limited concession as to the breach of C's article 5 ECHR rights, the broader allegation of breach and the article 3 and 8 questions are adjourned for further hearing of the historic allegations together with the damages claims; vii) A mandatory order for the disclosure of a safeguarding investigation report relating to an allegation of abuse in January 2010: disclosed by consent; viii) A mandatory order requiring the local authority to provide C's mother with details of C's daily care: disclosed by consent; and ix) Damages for breach of C's article 3, 5 and 8 ECHR rights: adjourned for further hearing. Best Interests Formulations Future placement: It is agreed by all parties and by the experts that C's next move must be to a dedicated and bespoke healthcare facility staffed by a multi-disciplinary team. The court approves this accord as being in C's best interests. It is likely that he will need to be there for a year or more while he is assessed, not least for the purpose of mental health care and treatment. The accommodation and its staffing and support will be that described earlier in this Judgment. It will not have a 'blue room'. The accommodation will be solely for C's use and will have access to a private garden and splash room. Its use and C's care and treatment will be in accordance with the MHA 1983 Code of Practice. Whether the outcome of the assessment as C's mother and brother fondly hope is that he can sooner rather than later be provided for in the community is undecided. The evidence is marginally optimistic but no more. At the moment, there is no evidence which suggests that an immediate move to a community facility is feasible or in C's interests. Interim placement: There is no evidence that any alternative interim placement exists for C which is better than the school. Until C is able to move by July of this year, the balance of evidence is that steps must be taken to improve his care and treatment regimes at the school so as to maintain his routine and minimise harmful disruption. The necessary improvements specifically relate to the implementation of the care plan and pathway plan now that they are agreed and approved by the court and in particular to implement best practice guidance and the evidence which this court has accepted relating to seclusion and nakedness Sharing accommodation with others: The overwhelming evidence is that it is not in C's best interests for him to share accommodation with A. That said, it is accepted that A cannot be temporarily moved from the school. He would adversely react to the change in routine in a way that would likely cause him significant harm. To move C in that way as an interim solution and before his planned move to the new healthcare facility would be more harmful than leaving him at the school and in the company of A for the relatively limited time when A returns from his own activities each day. There is no better option available. The school has voluntarily ceased the practice of other children and young people using the corridor of C's accommodation to access a cloakroom / changing room. It is common ground that this will improve C's living conditions and is in his best interests. The organisation has also agreed to limit the staff who care for C to a core group who will receive further training and advice so as to minimise any inconsistency in care or unexpected changes in routine or professional relationships. Deprivation of liberty within the school: The court will examine the facts so as to determine the full nature and extent of the alleged deprivation of liberty that has occurred during the next hearing. Although it may not be a question which the court is asked to determine, the court is well aware that the question includes the circumstance before C was 16 and when he was subject to a CA 1989 regime but when no application for a secure accommodation order was made nor was any alternative authorisation applied for in the High Court. For the purpose of this Judgment it is sufficient to find that there is and has been for a period not yet determined a deprivation of liberty i.e. no lawful authority existed for him to be deprived of his liberty generally or for him to be secluded in the blue room. From 29 July 2008 when he was 16 any deprivation of liberty that there was could and should have been authorised by the Court of Protection. Any deprivation of his liberty would be a breach of his article 5 ECHR rights and is accordingly unlawful. Whether the facts of and surrounding that deprivation of liberty breached statutory guidance, best practice and/or articles 3 and 8 ECHR will be a matter for the next hearing. The most recent declarations as to the deprivation of C's liberty were made by consent. Despite that, it is appropriate for the court to indicate why it has concluded that C's general living arrangements amount to a deprivation of liberty which needs authorisation: i) If C attempts to leave the school he will be prevented or brought back and the risk of absconsion is regarded as serious and is provided for accordingly; ii) He is closely accompanied at all times of the waking day by at least 2 members of staff and there are supervisory waking staff at night; iii) C has no choice but to accept the complete control of the staff as to what he does and where he goes including whether he can use the garden, his bedroom or the splash room; iv) All of the doors to the outside of C's corridor are locked and the majority of doors within his accommodation are capable of being locked and from time to time are locked in the circumstance that C is not able to unlock the doors; v) C's only access to the community is when that is organised for him and when sufficient staff are available; vi) C is subject to repeated daily restraints and seclusions in the blue room; vii) C has no control over the use of his accommodation by others. The balance of evidence is clear that C needs a placement which now and for the foreseeable future will involve physical and systemic restrictions that amount to a deprivation of liberty and that this is justified by his extreme vulnerability, his complex needs including his severe learning disability and aggressive behaviours and his propensity to abscond. However, the balance of evidence in respect of any continuing deprivation of liberty is that it should involve less restriction upon C's movements. It is in C's best interests that as often as is practicable he should have access to the garden and the internal doors within his accommodation should not be locked save for access to A's bedroom, the bathroom and those areas which would present him with danger e.g. access to some kitchen equipment or to slippery or sharp surfaces which would cause him harm i.e. for health and safety reasons. Nakedness: The balance of evidence in relation to nakedness is that policies and procedures should be less restrictive so that they acknowledge C's sensory needs and choices. It is in C's best interests for his dignity to be protected by him being clothed e.g. when visitors and residents other than staff and his mother and brother are present in the communal areas of his accommodation but having regard to C's sensory need to be naked, restrictions on his choice to be so must be minimised. There is little evidence that C is concerned about A's presence or that A is aware of or responds to C when or because he is naked. While the issue of privacy arises, a policy of encouragement for them to be in separate areas of the accommodation should always be preferred to any attempt to persuade C to get dressed which might lead to his seclusion by an escalation into aggressive behaviour. Seclusion in the blue room solely for reasons of nakedness is unacceptable as it represents nothing more than a sanction to achieve a purpose and the purpose is not the preservation of dignity or C's safety which can usually be achieved in other ways but rather an amateur attempt at behaviour modification which having regard to the expert evidence will either be unsuccessful or harmful or both i.e. it is not a proportionate response to any risk nor the least restrictive option and is not in his best interests. Staff must be aware of and be trained in strategies to allow C to be naked which must include him being naked in their presence e.g. they already happily interact with him when he is in the splash room naked: his communication with them and vice versa and the activities he undertakes with them can and must be undertaken in a way which is safe but also responds to his needs. C must not be taken to the blue room simply because he is naked or because he declines to get dressed. He should be encouraged to be in areas of his own accommodation where nakedness is acceptable to others e.g. his bedroom or the splash room or even the corridor if no persons other than staff or close family are present. The strategies must include dealing with situations when he is naked but becomes unacceptably aggressive to others and where dealing with the aggressive crisis must take priority by preventative and if necessary seclusive measures or where there is an urgent need to intervene to prevent or limit his self harm. Seclusion and the Blue Room: Having considered the evidence relating to C, the evidence of best practice and the statutory guidance which applies, I have come to the conclusion that for the blue room to be lawful and in the best interests of C, its use must be restricted as follows: i) It must comply with chapter 15 and in particular paragraphs 15.43 to 15.62, inclusive and paragraph 15.67 of the MHA 1983 Code of Practice, and the section 7 LASSA 1970 guidance issued by the Secretary of State: Guidance for restrictive physical interventions (2002), Working together to safeguard children (2010), together with the additional guidance cited in the same. ii) In so far as is practicable, it should accord with best practice as exemplified by Safeguarding disabled children: practice guidance (2009) and 'Guidance on Restraint and Seclusion in Health and Personal Social Services' Human Rights Working Group on Restraint and Seclusion (August 2005). iii) When it is used for reasons of C's aggressive or violent behaviour to others it should be used only so long as it is proportionate and necessary and in accordance with the above guidance iv) It must be the least restrictive option v) It must be in accordance with an intervention and prevention plan which is informed by a sensory advice and which has as an aim the reduction in the use of the room without causing harm to C i.e. it must be used in a way which safeguards his psychological and physical health vi) The intervention and prevention plan together with local guidance for use of the blue room must be written up in a protocol which is part of C's care plan and upon which staff have been trained and instructed in a manner that is specific to C vii) C must at all times be visible and be monitored when in the blue room viii) It must not be used for punishment or as part of a therapeutic or behaviour management or modification programme ix) It must not be used solely for nakedness x) It must not be used solely for self injurious behaviour unless it is the only place to protect him while staff try to minimise the self-injurious behaviour xi) When seclusion is used to deal with high risk crisis and C starts to self injure, staff must intervene to try and prevent or minimise self injurious behaviour xii) It can be used where C chooses to use the same but only where that choice is matched by unrestricted movement i.e. freedom to leave xiii) It must only be used for the shortest interventions necessary to resolve the crisis xiv) The policies and training relating to its use, the recording and review of its use and relating to prevention and intervention strategies should be those advised by Ms Sharon Paley. The parties are now agreed that Ms Sharon Paley should help to construct the plan to deal with interim use of the blue room, C's self-injurious behaviour, to identify strategies dealing with nakedness and how to cope with A and to provide expert advice in relation to C's behaviour support, managing his transition, recording, training and staffing issues and, very importantly, helping to ensure that C's seclusion accords with paragraphs 15.43 to 15.67 of the MHA Code of Practice. That accords with this court's view that the evidence of Ms Paley as highlighted in this Judgment provides for the best interests of C. The court also approves of the agreement between the parties that in future: i) a senior member of the management staff at the school is to be informed that C is secluded ii) a senior member of the management staff is to come to C's accommodation when he is very distressed or the seclusion has gone on for other than a short period of time iii) regular internal reviews of his seclusion should be undertaken iv) regular independent reviews should be undertaken by a multi disciplinary team which is to include, for example, Ms Sharon Paley. As a consequence of the findings, decisions and approvals made by the court detailed orders and declarations under the MCA 2005 have been made providing for C's interim placement at the school but under very clearly defined procedures and constraints, in particular, concerning his seclusion. His liberty may be deprived in very limited circumstances and only with the authority of this court. The identity of the parties, including C, his family, the school, the organisation and the public and health sector bodies have been anonymised to protect C. That anonymisation is protected by an order of the court. It would not be right to leave this tragic case without noting that there are many very dedicated people, professionals and trained carers alike who are involved in the care of those with complex needs like C: they deserve the court's and society's sincere thanks. Despite this and despite the plethora of Government guidance and regulation, the court is left with a worrying impression that urban myth and so called 'common sense' rather than expert advice and multi-disciplinary working practices continues to be influential in some residential settings. Inquiries long ago established the need for specialist, qualified care and treatment for pupils and patients with special needs and likewise in the management of the establishments which provide that care and treatment: whether they are schools, children homes, care homes or hospitals. Until this court's intervention, that multi-disciplinary environment with access to high quality inter-disciplinary advice did not exist for C. That was unacceptable. Judgment Ends. Afternote: at a subsequent hearing the court approved the new healthcare placement for C. Therafter, and without reference to the court or to any expert who knew anything of C's circumstances, he was removed from the school by an authorisation made under section 2 MHA 1983 in circumstances which are not yet clear. As a consequence, proceedings continue. Note 1   Paley, Sharon, “Seclusion and time out”, in Allen, David (Ed.) ‘Ethical Approaches to Physical Intervention volume II: changing the agenda’, Kidderminster, British Institute of Learning Disabilities, 2009.     [Back] Note 2   Allen, David, (Ed.), “Behaviour change and behaviour management”, in ‘Ethical Approaches to Physical Intervention: responding to challenging behaviour in people with intellectual disabilities’, Kidderminster, British Institute of Learning Disabilities, 2003.     [Back] Note 3   Lyon, C.M, Pimor, A, ‘Physical Interventions and the law; legal issues arising from the use of physical interventions in supporting children, young people and adults with learning disabilities and severe challenging behaviour’, Kidderminster, British Institute of Learning Disabilities, 2004.     [Back] Note 4   Nelstrop, L, et al “World Views on Evidence Based Nursing” in ‘A systematic review of the safety and effectiveness of restraint and seclusion as interventions for the short term management of violence in adult psychiatric in-patient settings and emergency departments’, (submitted), 2006, 3(1): 8-18.     [Back]

Dr. ARIJIT PASAYAT, J. Leave granted. Challenge in this appeal is to the judgment of a learned Single Judge of the High Court of Andhra Pradesh at Hyderabad allowing the second appeal filed by the respondent under Section 100 of the Code of Civil Procedure, 1908 in short CPC . Factual background in a nutshell is as follows The appellant-plaintiff filed O.S. No.78 of 1990 before the Sub-Court, Ramachandrapuram, East Godavari District, Andhra Pradesh against the respondent-defendant. The Trial Court by the judgment and order dated 27.06.1995 held that the plaintiffs are the owners of the schedule property and they being the owners of the schedule property are entitled to possession. Aggrieved by the judgment and decree of the Trial companyrt, the respondent-defendant preferred an appeal in the Court of Additional District Judge, Rajahmundry, East Godavari District. By judgment and order dated 14.06.2001, the first appellate companyrt companyfirmed the Trial Courts judgment. The respondent-defendant preferred a second appeal under Section 100 C.P.C. before the High Court of Andhra Pradesh at Hyderabad, being Second Appeal No.512 of 2001. By the impugned judgment, the learned Single Judge allowed the second appeal and the judgments and decree passed by the companyrts below were set aside. Though many points have been urged in support of the appeal, the primary stand of the learned companynsel for the appellants is that the second appeal was allowed without framing any substantial question of law as mandated by Section 100 CPC. Learned companynsel for the respondent submitted that though the High Courts judgment does number show that any substantial question of law was framed yet learned Single Judge has allowed the appeal after analyzing the factual position in the background of settled principles in law. Section 100 of CPC deals with Second Appeal. The provision reads as follows Section 100-Second Appeal 1 Save as otherwise expressly provided in the body of this Code or by any other law for the time being in force, an appeal shall lie to the High Court from every decree passed in appeal by any Court subordinate to the High Court, if the High Court is satisfied that the case involves a substantial question of law. An appeal may lie under this section from an appellate decree passed ex parte. In an appeal under this Section, the memorandum of appeal shall precisely state the substantial question of law involved in the appeal. Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question. The appeal shall be heard on the question so formulated and the respondent shall, at the hearing of the appeal, be allowed to argue that the case does number involve such question Provided that numberhing in this sub-section shall be deemed to take away or abridge the power of the Court to hear, for reasons to be recorded, the appeal on any other substantial question of law, number formulated by it, if it is satisfied that the case involves such question. A perusal of the impugned judgment passed by the High Court does number show that any substantial question of law has been formulated or that the second appeal was heard on the question, if any, so formulated. That being so, the judgment cannot be maintained, which is set aside and remitted back to the High Court for proceeding in the matter in accordance with law and in terms of observations made herein. In Ishwar Dass Jain v. Sohan Lal 2000 1 SCC 434 , this Court in para 10, has stated thus Now under Section 100 CPC, after the 1976 Amendment, it is essential for the High Court to formulate a substantial question of law and it is number permissible to reverse the judgment of the first appellate Court without doing so. Yet again in Roop Singh v. Ram Singh 2000 3 SCC 708 , this Court has expressed that the jurisdiction of a High Court is companyfined to appeals involving substantial question of law. Para 7 of the said judgment reads It is to be reiterated that under section 100 CPC jurisdiction of the High Court to entertain a second appeal is companyfined only to such appeals which involve a substantial question of law and it does number companyfer any jurisdiction on the High Court to interfere with pure questions of fact while exercising its jurisdiction under section 100 CPC. That apart, at the time of disposing of the matter the High Court did number even numberice the question of law formulated by it at the time of admission of the second appeal as there is numberreference of it in the impugned judgment. Further, the fact findings companyrts after appreciating the evidence held that the defendant entered into the possession of the premises as a batai, that is to say, as a tenant and his possession was permissive and there was numberpleading or proof as to when it became adverse and hostile. These findings recorded by the two companyrts below were based on proper appreciation of evidence and the material on record and there was numberperversity, illegality or irregularity in those findings. If the defendant got the possession of suit land as a lessee or under a batai agreement then from the permissive possession it is for him to establish by companyent and companyvincing evidence to show hostile animus and possession adverse to the knowledge of the real owner. Mere possession for a long time does number result in companyverting permissive possession into adverse possession Thakur Kishan Singh Arvind Kumar 1994 6 SCC 591 . Hence the High Court ought number to have interfered with the findings of fact recorded by both the companyrts below. The position has been reiterated in Kanhaiyalal and Ors. v. Anupkumar and Ors. 2003 1 SCC 430 , Mathakala Krishnaiah v. V. Rajagopal 2004 10 SCC 676 , Smt. Ram Sakhi Devi v. Chhatra Devi Ors. JT 2005 6 SC 167 , Sasikumar Ors.

WARNING The President of the panel hearing this appeal directs that the following should be attached to the file: An order restricting publication in this proceeding under ss. 486.4(1), (2), (2.1), (2.2), (3) or (4) or 486.6(1) or (2) of the Criminal Code shall continue.  These sections of the Criminal Code provide: 486.4(1) Subject to subsection (2), the presiding judge or justice may make an order directing that any information that could identify the victim or a witness shall not be published in any document or broadcast or transmitted in any way, in proceedings in respect of (a)     any of the following offences; (i)      an offence under section 151, 152, 153, 153.1, 155, 159, 160, 162, 163.1, 170, 171, 171.1, 172, 172.1, 172.2, 173, 210, 211, 213, 271, 272, 273, 279.01, 279.011, 279.02, 279.03, 280, 281, 286.1, 286.2, 286.3, 346 or 347, or (ii)      any offence under this Act, as it read at any time before the day on which this subparagraph comes into force, if the conduct alleged involves a violation of the complainant’s sexual integrity and that conduct would be an offence referred to in subparagraph (i) if it occurred on or after that day; or (iii)     REPEALED: S.C. 2014, c. 25, s. 22(2), effective December 6, 2014 (Act, s. 49). (b)     two or more offences being dealt with in the same proceeding, at least one of which is an offence referred to in paragraph (a). (2) In proceedings in respect of the offences referred to in paragraph (1)(a) or (b), the presiding judge or justice shall (a)     at the first reasonable opportunity, inform any witness under the age of eighteen years and the victim of the right to make an application for the order; and (b)     on application made by the victim, the prosecutor or any such witness, make the order. (2.1) Subject to subsection (2.2), in proceedings in respect of an offence other than an offence referred to in subsection (1), if the victim is under the age of 18 years, the presiding judge or justice may make an order directing that any information that could identify the victim shall not be published in any document or broadcast or transmitted in any way. (2.2) In proceedings in respect of an offence other than an offence referred to in subsection (1), if the victim is under the age of 18 years, the presiding judge or justice shall (a) as soon as feasible, inform the victim of their right to make an application for the order; and (b) on application of the victim or the prosecutor, make the order. (3) In proceedings in respect of an offence under section 163.1, a judge or justice shall make an order directing that any information that could identify a witness who is under the age of eighteen years, or any person who is the subject of a representation, written material or a recording that constitutes child pornography within the meaning of that section, shall not be published in any document or broadcast or transmitted in any way. (4) An order made under this section does not apply in respect of the disclosure of information in the course of the administration of justice when it is not the purpose of the disclosure to make the information known in the community. 2005, c. 32, s. 15; 2005, c. 43, s. 8(3)(b); 2010, c. 3, s. 5; 2012, c. 1, s. 29; 2014, c. 25, ss. 22,48; 2015, c. 13, s. 18.. 486.6(1) Every person who fails to comply with an order made under subsection 486.4(1), (2) or (3) or 486.5(1) or (2) is guilty of an offence punishable on summary conviction. (2) For greater certainty, an order referred to in subsection (1) applies to prohibit, in relation to proceedings taken against any person who fails to comply with the order, the publication in any document or the broadcasting or transmission in any way of information that could identify a victim, witness or justice system participant whose identity is protected by the order. 2005, c. 32, s. 15. COURT OF APPEAL FOR ONTARIO CITATION: R. v. C.B., 2019 ONCA 380 DATE: 20190509 DOCKET: C62631 & C63191 Watt, Huscroft and Fairburn JJ.A. BETWEEN Her Majesty the Queen Respondent and C.B. and A.C. Appellants Michael Lacy and James Harbic, for the appellant C.B. Matthew Gourlay, for the appellant A.C. Jessica Smith Joy, for the respondent Crown Heard: August 22, 2018 On appeal from the convictions entered by Justice D. K. Kirkland of the Ontario Court of Justice on September 4, 2015, and from the sentence imposed on C.B. on September 1, 2016 by Justice Catherine A. Kehoe of the Ontario Court of Justice. Watt J.A.: [1] D.P. and G.D. were friends. They were 16, attended high school and lived at home with their parents with whom each was in conflict. About truancy. And about drinking and drug use. [2] C.B. was 20. She also lived at home with her parents. She had a boyfriend, A.C. He was 31. Drugs and alcohol were readily available when C.B. and A.C. were together. [3] D.P. and G.D. spent a lot of time at C.B.’s house. School time. Weekend time. Drinking and smoking. Alcohol and marijuana. [4] One evening in May a few years ago, D.P. went to C.B.’s house. A.C. was there. D.P. smoked some marijuana and drank some alcohol. D.P. claimed that something else happened during this visit, something that took place without her consent: a sexual assault on her by both C.B. and A.C. [5] A few days later, D.P. returned to C.B.’s home. This time, she brought her friend, G.D., with her. A.C. was there. The same thing happened again. Marijuana. Alcohol. And a sexual assault. This time the victim was not D.P., but her friend, G.D. [6] C.B. and A.C. were jointly charged with several offences in relation to both D.P. and G.D. Assault. Sexual assault. Unlawful confinement. [7] After a joint trial before a judge of the Ontario Court of Justice, C.B. and A.C. (the appellants) were convicted on all counts. Each appeals conviction. C.B. also appeals sentence. [8] The reasons that follow explain why I have decided that errors in the course of the trial require that the convictions be set aside and a new trial ordered. In these circumstances, I do not reach the sentence appeal by C.B. The Background Facts [9] The grounds of appeal advanced do not require a detailed recital of the circumstances of the offences of which the appellants were convicted. A brief outline is sufficient. The Principals and Their Relationship [10] D.P. and G.D. were friends. Each was 16 and at odds with her parents about truancy, drinking and drug use. Each appears to have chafed at parental discipline. [11] C.B. was 20 years old and lived with her parents. She occupied the basement of her parents’ home. Her boyfriend, A.C., was 31 years old and often at C.B.’s home. [12] D.P. and G.D. were recurrent visitors to C.B.’s home, especially during the month preceding the offences charged. While there, D.P. and G.D. smoked marijuana and drank alcohol supplied by the appellants. The D.P. Incident [13] On the Saturday of a Victoria Day weekend a few years ago, D.P. went to a local fireworks show with several friends. After the show, D.P. went back to a friend’s house with several others. There, by her own admission, she had a lot to drink. [14] Around midnight, D.P. went to the appellant C.B.’s home where she drank more alcohol and smoked some marijuana. She was intoxicated. She could not speak or stand properly. The appellants prevented her from going to bed. [15] D.P. recalled that at some point she was lying face down on the couch. Her tights had been pulled down. Her buttocks were exposed. The appellant C.B. took out a long ruler, started hitting D.P. across her buttocks with the ruler and her hand, and told her that she was a “bad girl” who deserved these “spankings”, as the appellant C.B. termed them. The appellant A.C. watched, then held down D.P.’s arms as she tried to move away. The appellant C.B. occasionally groped D.P. as the spankings continued. [16] D.P. also recalled lying on the floor with her ankles and hands bound together with purple latex tape. She was blindfolded and gagged. The striking continued not only across her buttocks, but also on her thighs, breasts and vagina. Both appellants participated, but the appellant C.B. more so than the appellant A.C. [17] As the assaults continued, the appellant C.B. produced a dildo and nipple clamps. The appellant C.B. poured lubricant on D.P.’s buttocks and vagina and began to hit D.P. with the dildo in those areas. Then, the appellants applied the nipple clamps to D.P.’s breasts, but removed them when D.P. complained of pain. Then, after pouring more lubricant on her, the appellants penetrated D.P.’s anus, then her vagina with the dildo, while they were laughing, kissing and touching each other as they did so. The appellant A.C. also penetrated D.P. digitally. To get them to stop, D.P. faked an orgasm. The appellants complimented D.P. on being a “perfect sex slave”. [18] D.P. repeatedly told the appellants to stop what they were doing to her. Their conduct took place over somewhere between three to four hours. Following the assaults, D.P. slept upstairs at the appellant C.B.’s home. The G.D. Incident [19] The next Wednesday, D.P. and G.D. met at school. They went with others over to a friend’s house. G.D. was drinking alcohol. Then, they went with a friend to the appellant C.B.’s house for tacos. Marijuana and alcohol were made available. D.P. and G.D. took advantage of them. [20] As time passed, what had happened on the previous Saturday began to unfold again. But this time with G.D. The appellant C.B. grabbed G.D.’s legs. The appellant A.C. retrieved the purple tape. They held G.D.’s arms and legs despite her protests. They told her to “just go with it.” They said that she would be let go after 50 spankings. The appellant C.B. claimed that the spankings were a punishment for G.D.’s late school attendance. Afraid that the appellants might use whips on her, G.D. agreed to the spankings. [21] G.D. recalled that the appellants let go of her arms and flipped her over. As the appellant A.C. held G.D.’s arms, the appellant C.B. hit her buttocks 50 times with her hands and a wooden stick. The entire incident lasted about five minutes. [22] After the “spankings” had concluded, D.P. and G.D. went into the bathroom together. There, D.P. apologized for not intervening. She also told G.D. about what had happened to her on the previous Saturday. They agreed to leave, but remained at G.D.’s residence as the alcohol “took over”. G.D. continued to drink. She blacked out. Her next memory was waking up the following morning in her own bed. The Rescue of G.D. [23] G.D.’s parents learned from D.P.’s parents that G.D. was at the appellant C.B.’s house. Since their daughter had not returned home, G.D.’s parents drove over to the appellant C.B.’s home to retrieve G.D. After repeated knocks, the appellant A.C. answered the door. He said that G.D. had passed out downstairs. G.D.’s father went downstairs, a place that smelled of marijuana. He slapped G.D. to awaken her. Then, with some help, he carried her upstairs. As he did so, G.D.’s skirt flipped up revealing that her buttocks were red. [24] G.D.’s mother confirmed her husband’s account of finding G.D. unresponsive in the basement of the appellant C.B.’s home and of their attempt to rouse her. She and her husband questioned the appellant A.C. about whether G.D. had been drinking there. The appellant A.C. said that neither he nor the appellant C.B. supplied drugs or alcohol to the neighbourhood kids who hung out there. When awakened the following morning, G.D. was “very distraught" and “tearful”. The Initial Disclosure [25] The morning after the incident with G.D., D.P.’s mother yelled at D.P. for having left G.D. alone at the appellant C.B.’s home. Later that morning, D.P. and G.D. met. They discussed what had happened. When D.P.’s mother heard G.D. crying in the background as she spoke to her daughter on the telephone, D.P. “just told her [mother] everything.” The parents of both daughters took D.P. and G.D. for sexual assault examinations. The Forensic Evidence [26] Samples taken from both complainants’ internal and external genitalia disclosed neither male DNA nor foreign DNA profiles. A minor amount of DNA detected on G.D.’s right buttock was insufficient for testing. [27] A toxicologist found ethanol, Clonazepam and amphetamine, but no THC in samples taken from G.D. A sample from D.P. was unsuitable for testing because of the lapse of time between the alleged offence and the taking of the sample. When G.D.’s sample was analyzed to determine blood alcohol concentration, the sample contained a concentration of 90 milligrams of alcohol in 100 millilitres of blood. The Positions of the Parties at Trial [28] Neither appellant testified. [29] The appellant C.B. sought an acquittal on all counts in the information. She contended that the Crown had failed to establish her guilt of any offence beyond a reasonable doubt. D.P. and G.D. were incredible; their evidence, unbelievable. The testimony of each was replete with inconsistencies. [30] The appellant C.B. argued that D.P.’s text messages, sent contemporaneously with the alleged incident, belied her account of unwanted sexual activity and controverted her claim about the degree of her intoxication. Her credibility was further compromised, as was the reliability of her evidence, when she returned the next day to smoke a joint at the appellant C.B.’s house, then brought her friend, G.D., along a couple of days later. [31] The appellant C.B. acknowledged that G.D. was a more credible witness than D.P. but her testimony was equally unreliable as an account of what had taken place. This was so because the group photos taken of the complainants on the basement couch were indicative of the parties “horsing around” rather than engaging, as G.D. alleged in her evidence, in non-consensual conduct. Neither complainant was so intoxicated as to be incapable of consenting to what occurred. What is more, the complainants colluded on their accounts before being interviewed by police and providing the statements adduced as part of their evidence in-chief at trial. [32] The appellant A.C. adopted the submissions of the appellant C.B. about the credibility of each complainant and the reliability of each of their accounts. He also invoked the text messages as evidence that tolled heavily against the credibility of D.P. and emphasized the collusive nature of the allegations that emerged from the complainants’ meeting shortly after the alleged offences against G.D. [33] The Crown advanced the complainants as candid, credible witnesses who provided a reliable rendition of relevant events corroborated by other evidence adduced at trial. The text messages, far from putting the lie to the complainants’ accounts, were “barely worth the paper they [were] printed on.” They had not been properly authenticated by direct or expert evidence, and thus were valueless as evidence. [34] The Crown also disputed the defence submission that the accounts of the complainants were the product of collusion. The evidence at trial simply could not support such an inference. There was no “cooked-up” story. the grounds of appeal [35] On the appeal from conviction, the appellants advance two grounds of appeal and seek to introduce fresh evidence about the authenticity of text messages that trial counsel sought to use to challenge the credibility of D.P. and the reliability of her account. [36] As I would paraphrase their common grounds of appeal against conviction, the appellants say that the trial judge erred by: i. finding the text messages counsel put to D.P. in cross-examination had not been properly authenticated; and ii. misapprehending the evidence about photos taken (and text messages sent) shortly after the alleged assault on G.D. [37] Counsel tenders for reception as fresh evidence the report of Marty Musters, a certified forensic examiner, concerning his examination of a cellphone produced by the appellant C.B.’s mother and his opinion about the origins and authenticity of text messages and photographs extracted from that phone. Counsel also tenders an affidavit prepared by C.B.’s trial counsel detailing the circumstances giving rise to the manner in which she produced the photographs and text messages at trial and reasons for producing them the way she had. [38] The appellant C.B. also appeals her sentence. She says that the trial judge overemphasized the objectives of denunciation and deterrence, failed to recognize the individualized nature of the sentencing process by neglecting to sufficiently distinguish her sentence from that imposed on the appellant A.C., and imposed a sentence that was grossly disproportionate to her moral culpability. the ap peal from conviction Ground #1: The Authentication Issue [39] This ground of appeal arises out of a finding made by the trial judge that certain text messages and photographs put to the complainants in cross-examination had not been properly authenticated, and thus were of no probative value. [40] A brief canvass of what occurred at trial will provide a suitable frame of reference for the discussion that follows. The Essential Background [41] At trial, Crown counsel did not introduce evidence of any electronic communications between the parties, in particular, between D.P. and the appellant C.B., contemporaneous with the events alleged to constitute the offences charged. Nor did the Crown tender any photographs of any activities that preceded, accompanied or followed the relevant events. The Text Messages [42] At trial, counsel for the appellant C.B. (not Mr. Lacy) cross-examined D.P. on text messages she allegedly exchanged with C.B. contemporaneous with the offences alleged to have been committed upon her. [43] The trial Crown (not Ms. Smith Joy) asked whether the cellphone used to record or send these texts was available for examination. Defence counsel demurred but said she would tender the evidence of the person who “extracted” the messages, as well as some photographs, from the cellphone as part of the defence case. [44] During cross-examination, D.P. acknowledged that the phone number from which various texts were sent and at which other texts were received was her cellphone number. She also explained that the subject-matter of one of the texts related to her then-boyfriend. She did not deny the authenticity of these texts associated with her phone. She explained that after the alleged assault, she was “too scared” to tell anyone about what had happened. [45] When cross-examination resumed the following day, D.P. explained that the appellant C.B. had her (D.P.’s) cellphone and had downloaded an Application (“App”) to it so that C.B. could track the whereabouts of D.P.’s phone. D.P. claimed that her step-father had found the App on her phone. She explained that she could not recall having sent the several messages. Their contents did not sound like something she would have said because she does not “talk like that”. She did not believe that she had sent the texts associated with her cellphone number. [46] Counsel for the appellant A.C. suggested to D.P. that the texts showed her joking about sex and dildos around the time she alleged that she had been sexually assaulted. D.P. explained, “[t]hat’s what it shows, yeah.” But the term “LMFAO”, which was included in her text, could mean several things. It could mean what it says. Or it could mean that somebody is uncomfortable with the situation and is just laughing about it to show them that. It is undisputed that the term “LMFAO” is a common acronym used in text messaging for “laugh my fucking ass off”. [47] At trial, defence counsel for the appellant C.B. called a private investigator who explained that he had “extracted” the messages and certain photos from a cellphone provided to him by the appellant C.B.’s mother. He photographed the data he located on the cellphone and incorporated it into a written report he provided to counsel. He did not analyze or authenticate the underlying data. The report was filed as an exhibit at trial. [48] In reply, the Crown tendered the agreed fact that an officer from the local police service would have been available to do a “full forensic examination” of the cellphone produced to determine whether any of its contents had been altered. It was also admitted that it was possible to create “spoof” telephone calls coming from persons other than those identified as the caller. [49] The Crown did not seek an order to gain access to the cellphone for forensic analysis. The Photographs [50] G.D. was cross-examined on a photograph of a photo located on the cellphone provided by the appellant C.B.’s mother. G.D. identified the persons in the photograph (the two complainants and two appellants), which she acknowledged appeared to have been taken in the basement of the appellant C.B.’s home after the assault upon her (G.D.). G.D. agreed that the group appeared to be happy and “horsing around”. The copy counsel produced was taken from the private investigator’s report filed as an exhibit at trial. The photograph shown to the witness was not filed as a numbered exhibit. The Positions at Trial [51] At trial, the defence contended that the text messages said to have originated from or been received by C.B.’s cellphone had been properly authenticated. D.P. admitted that the relevant cellphone number was hers. That she did an about-face the next day in cross-examination was of no moment in light of the modest threshold for authentication. The testimony of G.D. authenticated the photograph. [52] The trial Crown characterized the text messages as unauthenticated and worthless as evidence. The Decision of the Trial Judge [53] In his reasons for judgment delivered after a luncheon recess immediately following the conclusion of argument, the trial judge described his recollection of the evidence about the text messages and his conclusion about their probative value in these terms: Crown counsel takes the position that this is material that was gathered well over a year after the alleged events took place, and cannot be seen as having any probative value for reasons that I just expressed, that is, the lateness, the inability of any forensic information to be obtained to verify whose phone it was, whose messages are on there, and I might say, I forgot to mention this earlier, that one of the statements that [D.P.] made was that [C.B.] had taken her phone and put an App into it, and she said: She would know where I was all the time, because [C.B.] put an App into my telephone. When shown the messages, the text messages, some of which were shown to her, two pages of messages, she denied making those statements. She said she didn’t recognise it, and then she added: “I don’t talk that way.” That was a direct quote from her, and then she went on to say that [C.B.] had put an App in her phone and knew where she was all the time. I’m coming to the conclusion that there’s really no probative value to that evidence. There’s no evidence as to whose phone it was, who put those messages in the phone, or who was depicted in the photographs. [54] The trial judge set out his findings in connection with the photographs in this passage of his reasons: With respect to the photos [taken] of the photos, as I said, there were quite a number there. I have no idea who is in the photos. There was no evidence telling me this is so-and-so. It could be anybody. Those are pictures, in most cases, of three people. I don’t know who any one of them is, so I can’t possibly identify who was being depicted in the photos. The photos are blurry, as well, but that doesn’t matter. There was no evidence to tell me who was depicted in the photos. Also, those photos were not shown to either of the two complainants, and asked if they had, in fact, been photographed, which could have been done, but they didn’t have an opportunity to say “that’s me” or “that’s not me”. The photos were taken, according to the booklet that was filed, between 8:26, that would be p.m., I understand, and 8:32 on the 21st of May. There’s no indication of where the photos were taken, either. The Arguments on Appeal [55] Setting to one side the issue of misapprehension of evidence which is the subject of a separate ground of appeal, the appellants say that the trial judge erred in failing to find that the text messages had been properly authenticated. Accepting the urgings of the trial Crown, the trial judge erroneously concluded that the text messages could only be authenticated by direct forensic analysis. [56] The appellants acknowledge that the trial judge did not use the terms “authenticate” or “authentication” in his reasons. But his finding of “no probative value”, when his reasons are reviewed as a whole, amounts to a finding that the messages were not properly authenticated. This, the appellants say, amounts to legal error. [57] Authentication of electronic documents, such as printouts of things like emails and texts, are governed by s. 31.1 of the Canada Evidence Act , R.S.C. 1985, c. C-85 ( CEA ) . This provision simply codifies the common law’s standard for authentication of documents. The threshold imposed, the appellants submit, is a modest one – the introduction of some evidence that the document or thing is what it purports to be. This burden may be discharged by direct or circumstantial evidence. Neither the common law nor s. 31.1 imposes any limitations on the manner of proof. [58] In this case, the appellants continue, there was ample evidence, both direct and circumstantial, to authenticate the text messages and make them available for use at trial. D.P. acknowledged that the number to or from which the texts appeared to have been sent was her phone number. She explained the content of one of the texts. The private investigator who testified as a defence witness linked the receiving phone to the appellant C.B. and the content of the messages themselves attested to their authenticity. [59] In addition, the appellants say, the possibility that the integrity of the cellphone having been compromised by a phantom App was sheer speculation. There was no air of reality to this prospect, hence no basis upon which to deny authentication. [60] The respondent concedes that the threshold to establish authenticity is low, satisfied by some evidence capable of supporting a finding that a document is that which, it purports to be. In the end, whether a document is what it purports to be is a question of fact for the trier of fact to decide on all the evidence adduced at trial, not by the trial judge as a preliminary issue of admissibility. [61] In this case, the respondent contends, as trial counsel argued, the trial judge received the evidence of text messages and arguments advanced about whether those messages were what they purported to be. It then fell to the trial judge to decide the weight to attribute to this evidence. The judge decided that there was not a sufficient evidentiary basis to conclude that the evidence was what it purported to be: a text message exchange between D.P. and the appellant C.B. [62] The appellants’ complaint, as the respondent sees it, is about how the trial judge weighed the evidence. This is a factual assessment entitled to deference in this court. The Governing Principles [63] To determine this ground of appeal requires consideration of what is involved in the process of authentication; how it may be established, especially with respect to the subject-matter in issue here; and the roles of the trier of law and the trier of fact in the authentication process. [64] The requirement of authentication applies to various kinds of real evidence. Authentication involves a showing by the proponent of the evidence that the thing or item proffered really is what its proponent claims it to be:  Kenneth S. Broun, ed., McCormick on Evidence , 7th ed., vol. 2 (Thomson Reuters, 2013), at § 212, pp. 4-5. [65] Authentication is the process of convincing a court that a thing matches the claim made about it. In other words, it is what its proponent claims it to be. Authentication is intertwined with relevance: in the absence of authentication, the thing lacks relevance unless it is tendered as bogus. Thus, authentication becomes necessary where the item is tendered as real or documentary evidence. [66] At common law, authentication requires the introduction of some evidence that the item is what it purports to be: R. v. Donald (1958), 121 C.C.C. 304 (N.B. C.A., at p. 306; R. v. Staniforth (1979), 11 C.R. (3d) 84 (Ont. C.A.), at p. 89; R. v. Hirsch , 2017 SKCA 14, 353 C.C.C. (3d) 230, at para. 18. The requirement is not onerous and may be established by either or both direct and circumstantial evidence. [67] For electronic documents, s. 31.1 of the CEA assigns a party who seeks to admit an electronic document as evidence the burden of proving its authenticity. To meet this burden, the party must adduce evidence capable of supporting a finding that the electronic document is what it purports to be. Section 31.8 provides an expansive definition of “electronic document”, a term which encompasses devices by or in which data is recorded or stored. Under s. 31.1, as at common law, the threshold to be met is low. When that threshold is satisfied, the electronic document is admissible, and thus available for use by the trier of fact. [68] To satisfy this modest threshold for authentication, whether at common law or under s. 31.1 of the CEA , the proponent may adduce and rely upon direct and circumstantial evidence. Section 31.1 does not limit how or by what means the threshold may be met. Its only requirement is that the evidence be capable of supporting a finding that the electronic document “is that which it is purported to be.” That circumstantial evidence may be relied upon is well established: Hirsch , at para. 18; R. v. Colosie , 2016 ONSC 1708 , at para. 25; R. v. Bulldog , 2015 ABCA 251, 326 C.C.C (3d) 385, at para. 35; see also R. v. Evans , [1993] 3 S.C.R. 653, at p. 663. This accords with general principles about proof of facts in criminal proceedings, whether the facts sought to be established are preliminary facts on an admissibility inquiry or ultimate facts necessary to prove guilt. [69] At common law, correspondence could be authenticated by the “reply letter” doctrine: to authenticate correspondence as having been sent by one individual to another, evidence is adduced to show it is a reply to a letter sent to that person. As a matter of logic, the same should hold true for text messages and emails. Evidence that A sent a text or email to B whom A believed was linked to a specific address, and evidence of a response purportedly from B affords some evidence of authenticity: David Paciocco, “ Proof and Progress: Coping with the Law of Evidence in a Technological Age ” (2013) 11 C.J.L.T. 181, at pp. 197-8 ( Paciocco ). [70] In a similar way, text messages may be linked to particular phones by examining the recorded number of the sender and receiving evidence linking that number to a specific individual, as for example, by admission: Paciocco , at p. 198. [71] But what of the prospect of tampering? Does it have to be negated before digital evidence can be properly authenticated? [72] As a matter of principle, it seems reasonable to infer that the sender has authored a message sent from his or her phone number. This inference is available and should be drawn in the absence of evidence that gives an air of reality to a claim that this may not be so. Rank speculation is not sufficient: R. v. Ambrose , 2015 ONCJ 813, at para. 52. And even if there were an air of reality to such a claim, the low threshold for authentication, whether at common law or under s. 31.1 of the CEA , would seem to assign such a prospect to an assessment of weight. The Principles Applied [73] I would give effect to this ground of appeal. In my respectful view, the trial judge erred in concluding that the text messages had no probative value because they had not been properly authenticated by direct evidence. [74] To begin, recall how the use of the text messages arose. Counsel for the appellant C.B. sought to cross-examine D.P. on her text message exchange with C.B. at times reasonably proximate to the alleged offence. The purpose of this cross-examination was to challenge the veracity of D.P.’s account of relevant events as having occurred without her consent. [75] In the cross-examination of D.P., defence counsel produced photographs of screenshots of messages located on the cellphone provided by the appellant C.B.’s mother. The photographs of the text messages had been taken by a private investigator who would later testify as a defence witness and explain what he had done to “extract” these contents from the cellphone. No evidence was called to link the cellphone to the appellant C.B., although a review of the contents of the messages would support an inference that the phone was hers, an issue not disputed by the respondent. [76] During the course of the cross-examination of D.P. about the text messages, she acknowledged that the number from or to which the messages were sent was in fact her cellphone number, and that she had her phone with her during the relevant time. She also explained the meaning of one of the texts sent from that cellphone. The content of the messages is consistent with relevant events involving D.P. and the appellant C.B. Even if we accept D.P.’s claim that the appellant C.B. installed an App on D.P.’s cellphone, the App, she said, allowed the appellant to trace her movements. Such an assertion falls well short of furnishing an air of reality to a claim of tampering and would not affect authentication. [77] In the result, I am satisfied that these various strands of evidence were capable of supporting a finding that the text messages were what they purported to be: an exchange of communications between D.P. and the appellant C.B. The trial judge erred in holding, as he appears to have done, that the authenticity threshold could only be met by direct evidence from the sender or expert opinion evidence from a forensic examiner. [78] Satisfaction of the evidentiary threshold for authentication under s. 31.1 of the CEA or at common law renders the evidence admissible; in other words, available to the trier of fact for ultimate evaluation. It does not follow from admissibility that the trier of fact must find that the evidence is in fact what it claims to be. What remains of the dispute after admissibility has been established relates to the weight to be assigned to the evidence. And that issue is left to the trier of fact to decide. [79] At first blush, as the respondent contends, the conclusion of the trial judge could be seen as a determination of the weight to be assigned to this evidence. But even if it were to be characterized in this way, it is equally flawed. This is so because the trial judge’s conclusion that the text messages had no probative value was inextricably intertwined with his insistence on direct evidence, a particular species of proof, to establish authentication. In the absence of any such requirement, his conclusion on the weight to be assigned to the text messages cannot stand. Ground #2: Misapprehension of Evidence [80] The second ground of appeal alleges that the trial judge misapprehended evidence relating to the text messages and photographs upon which the complainants were cross-examined. The Background Facts [81] Trial counsel for the appellant C.B. cross-examined G.D. on a photograph alleged to been taken around 8:30 p.m. in the basement of the appellant C.B.’s home. According to G.D.’s testimony about the assault on her, the time stamp on the photo would have been after the assault had been committed. As with the text messages, the document on which the cross-examination was based was a photograph of a photo located on the cellphone provided by the appellant C.B.’s mother to a private investigator retained by defence counsel. [82] In cross-examination, G.D. identified the individuals depicted in the photograph including herself, D.P., and the appellant C.B. She agreed with the suggestion that the photo had been taken with the participants on the couch in the basement of the appellant C.B.’s home. The copy of the photograph, removed from the report of the private investigator, was filed as a lettered exhibit. The report, without this photograph, was filed as an exhibit during the defence case. The Positions of Trial Counsel [83] At trial, defence counsel contended that the photograph of the principals on the couch, taken after the alleged assault on G.D., was an item of real evidence that tended to impeach the reliability of G.D.’s account and support the position that the “spanking” was part of “horsing around” among friends. [84] The trial Crown assailed the evidence “extracted” from the cellphone. Its origins and the integrity of its contents had not been established. It only emerged about ten days before the introduction of the evidence, and over a year after the communications and photographs “extracted” from it had been recorded. This untested material was of no evidentiary value in assessing the credibility of the complainants or the reliability of their testimony. The Reasons of the Trial Judge [85] The trial judge’s reasons with respect to the photographs are excerpted above at paragraph 54 of these reasons. The Arguments on Appeal [86] In this court, the appellants advance two arguments about the evidence of these photographs. [87] First, the trial judge misapprehended the evidence, and as a result, failed to properly factor it into his assessment of the testimony of G.D. [88] The misapprehensions, the appellants continue, were several in number and amount to palpable and overriding errors. Contrary to the findings of the trial judge, G.D. was shown the photograph. She identified the people depicted in it. Although she did not recall the photograph having been taken, she agreed that the location depicted appeared to be the area around the basement couch in the appellant C.B.’s home. The series of photos entered into evidence were time stamped between 8:26 and 8:32 p.m. on the day that G.D. said she was assaulted. If the time stamps were accurate, the photos were taken after the alleged assault occurred. [89] The appellants argue that this misapprehension of evidence was material in that it resulted in the failure of the trial judge to consider the after-incident conduct of G.D. as depicted in the photos in assessing her credibility and the reliability of her testimony, both of which were issues residing at the heart of the case. [90] Second, the appellants fault the trial judge for failing to apply the principles laid down in R. v. Nikolovski , [1996] 3 S.C.R. 1197 in his assessment of the photographs put to G.D. in cross-examination. These principles permitted the trial judge to compare the persons depicted in the photographs with those who testified or otherwise appeared at trial to determine their identity. This too resulted in a failure on the part of the trial judge to consider evidence relevant to the credibility of G.D. and the reliability of her testimony. [91] The respondent concedes that the trial judge’s approach to the cellphone photos involved a misapprehension of evidence. But not every misapprehension of evidence amounts to a fatal flaw in the determination of guilt. The misapprehension must be one of substance. And it must form an essential part of the trial judge’s reasoning in reaching a conclusion of guilt. [92] In this case, the respondent submits, counsel for the appellant C.B. focused her submissions on the text messages, referring to the photo only as being at odds with G.D.’s testimony that after the assault she did not go near C.B. for the rest of the evening and her claim of being traumatized by what occurred. Counsel for the appellant A.C. did not refer to the photos at all in closing submissions. [93] The respondent says that a review of the trial record as a whole reveals that the photos were not central to an assessment of the credibility of G.D. or the reliability of her evidence, and thus were not material to the outcome of the case generally or insofar as it related to the offences alleged by G.D. What is more, the potential use of the evidence suggested by the appellants engages myth-based reasoning, and thus, cannot be invoked as a pathway to proof of guilt. The Governing Principles [94] A claim of misapprehension of evidence takes in failures to consider evidence relevant to a material issue, mistakes as to the substance of evidence, and failures to give proper effect to evidence: R. v. Morrissey (1995), 97 C.C.C. (3d) 193 (Ont. C.A.), at p. 218. [95] Where a misapprehension of evidence is advanced as a ground of appeal, an appellate court must consider first whether the verdict from which the appeal is taken is unreasonable: Morrissey , at p. 219. Provided the verdict is not unreasonable, we are required next to determine whether the misapprehension of evidence caused a miscarriage of justice within s. 686(1)(a)(iii) of the Criminal Code of Canada , R.S.C. 1985, c. C-46. An appellant who succeeds on this ground will have the underlying conviction quashed and, in most cases, a new trial ordered: Morrissey , at p. 219. [96] The expansive scope of s. 686(1)(a)(iii) includes errors involving a misapprehension of evidence. Such an error, like other errors that fall within the section’s compass, is assessed by reference to its impact on the fairness of the trial. When an error involving the misapprehension of evidence renders a trial unfair, s. 686(1)(a)(iii) demands that the conviction be quashed: Morrissey , at p. 221. [97] Whether a misapprehension of evidence rendered a trial unfair and resulted in a miscarriage of justice depends upon the nature and extent of the misapprehension and its significance to the verdict rendered by the trial judge. This is so because we insist that a verdict be based exclusively on the evidence adduced at trial: R. v. Lohrer , 2004 SCC 80, [2004] 3 S.C.R. 732, at para. 1; Morrissey , at p. 221. [98] The standard applied to misapprehensions of evidence advanced in support of a claim that a miscarriage of justice has occurred is a stringent one. The misapprehension of the evidence must go to the substance of the evidence, not simply to its detail. And the misapprehension must be material rather than peripheral to the reasoning of the trial judge. But there is more. And that is that the errors must play an essential part, that is to say, a role in the reasoning process resulting in a conviction, not just in the narrative of the judgment: Lohrer , at para. 2. Said in another way, a misapprehension of evidence amounts to a miscarriage of justice only if striking it from the judgment would leave the trial judge’s reasoning on unsteady ground: R. v. Sinclair , 2011 SCC 40, [2011] 3 S.C.R. 3, at para. 56; R. v. Bains , 2012 ONCA 305, 291 O.A.C. 135, at para. 15. [99] Something should also be said about the principles that govern use by the trier of fact of real evidence, in particular, video images, as evidence of a person’s identity. [100] Photographs, video recordings and other video images are real evidence, that is to say, evidence that conveys a relevant first-hand sense impression to the trier of fact. They are also, to a certain extent, testimonial evidence: Nikolovski , at para. 28. [101] It is well-settled that a trier of fact, in particular, a judge sitting without a jury, may identify a person depicted in a photographic image as an individual who appears in the courtroom. That person may be an accused: Nikolovski , at para. 30; R. v. Slater , 2010 ONCA 376, at para. 3. But there would seem to be no reason in principle to limit this authority to identification of an accused as the person responsible for the commission of an offence. [102] Caution is required when a trial judge considers visual images as evidence of identification. The clarity and quality of the image may not be good. There may be changes or differences in the appearance of the persons involved: Nikolovski , at paras. 30, 32. The Principles Applied [103] I would give effect to this ground of appeal. [104] The respondent concedes that the trial judge misapprehended the evidence about the photograph on which G.D. was cross-examined. The photograph was in fact put to G.D. in cross-examination and was part of a series of related photos entered into evidence through the private investigator’s report. In the photo put to G.D., she identified the persons depicted there. She acknowledged that the photo appeared to have been taken in the basement of the appellant C.B.’s home. [105] Central to the findings of guilt in this case were the trial judge’s conclusions that D.P. and G.D. were credible witnesses who gave reliable evidence. [106] Counsel for the appellant C.B. challenged the veracity of G.D.’s account on the basis that the photographs taken after the alleged offence belied G.D.’s description of those events. It was essential that in reaching his conclusion on these issues he based his findings on a correct version of the evidence adduced at trial. He failed to do so. [107] The trial judge also appears to have rejected the evidence of the photos on the basis that they were not disclosed by the defence until well over a year after the relevant events. In the absence of any obligation on the defence to provide disclosure or turn the cellphone over to the police for forensic examination, these were not factors relevant to the veracity of G.D.’s evidence. Ground #3: The Fresh Evidence [108] The appellants seek leave to introduce as fresh evidence on the hearing of the appeal, affidavits from Marty Musters, a computer forensic examiner, and from C.B.’s trial counsel. Each relates to the text messages and photos on which the complainants were cross-examined at trial and, more particularly, to the authenticity and integrity of those electronic documents. [109] The respondent cross-examined C.B.’s trial counsel on her affidavit but did not cross-examine the forensic examiner. The Background Facts [110] The trial judge made specific findings of fact about the text messages on which D.P. was cross-examined and the photo on which G.D. was cross-examined. The relevant passages of the trial judge’s reasons on these issues have already been excerpted. No useful purpose would be served by their repetition here. Suffice it to say that the trial judge considered both the text messages and photos to have no probative value. The Affidavit of the Forensic Examiner [111] Marty Musters, a person qualified to conduct forensic analysis of digital and electronic devices, examined the cellphone said to have been used by the appellant C.B. in communications with the telephone number of D.P. He was asked to extract and extracted these communications and any photographs and accompanying metadata for the date on which the offences were alleged to have occurred. He provided an opinion about whether any of the data or photographs had been altered or changed in any way. [112] Mr. Musters deposed that the calls and messages he extracted from the cellphone are authentic. The messages are continuous and joined. No “spoofing” service was employed. [113] Mr. Musters also examined 31 photos taken with the camera feature of the cellphone on the date of the alleged offence against G.D. The images, with one exception, were unaltered and authentic. In his opinion, the altered image was a “touched up” copy of an original photo taken about 10 minutes earlier. The Evidence of Trial Counsel [114] In her affidavit, C.B.’s trial counsel deposed that when she learned about text messages and photos contemporaneous with the alleged offences, she retained a private investigator to “extract” those messages and photos from the cellphone. The photographs of the text messages revealed an exchange with the cellphone of D.P. The photos were all taken on the date of the alleged offence against G.D. [115] Trial counsel called the private investigator as a witness at trial and entered his report as an exhibit in the proceedings. Counsel considered that this report, coupled with D.P.’s testimony that she communicated with the appellant C.B. by text message and that the phone number displayed on the text messages was her number, was sufficient to support a reasonable inference that D.P. wrote the relevant messages and that the photos were taken at the dates and times depicted on the phone. [116] Trial counsel also relied on D.P.’s evidence that no one else had her phone at the relevant time. She did not consider D.P.’s evidence that the appellant C.B. had installed an App on her phone as credible because it only emerged on the second day of her testimony after having at least implicitly acknowledged on the first day that she sent one of the messages. Trial counsel did not consider retaining anyone to do a more sophisticated extraction and analysis of the contents of the cellphone and sought no instructions from the appellant C.B. to do so. [117] In cross-examination, trial counsel acknowledged that the case against the appellant C.B. turned on the credibility of the complainants and the issue of consent. Her trial strategy was to challenge the credibility of both complainants and the reliability of their accounts of non-consensual conduct. An important part of her strategy, which was discussed several times with her client, was to use the text messages and photos to challenge the complainants’ credibility and support the defence position. [118] Trial counsel agreed that when she cross-examined D.P. using the photographs of the text messages, no evidence had been adduced to establish that the cellphone was that of the appellant C.B., apart from counsel’s assertion in her questioning to that effect. But D.P. did agree that she had her cellphone that night, acknowledged the number as it appeared on the photographs of the texts, had texted the appellant C.B. that night and “sort of” adopted one of the messages, the meaning of which she explained. No decision had been made at this point in the trial about whether the appellant C.B. would testify. [119] The effect of the private investigator’s evidence, trial counsel accepted, was that he had picked up the phone from the appellant C.B.’s mother. No phone number was associated with it. Counsel acknowledged that the appellant C.B. could have been a source of getting the text messages and photos filed as numbered exhibits. In the end, counsel left it to the trial judge to determine the weight to be assigned to the text messages and photos in the credibility/reliability analysis. The Arguments on Appeal [120] The appellants say that the proposed fresh evidence, in particular, the affidavit of Marty Musters, should be admitted in this case. The evidence satisfies the conditions precedent to admissibility. The opinion advanced is admissible under the rules of evidence, cogent and not excluded for want of due diligence. [121] No dispute arises about the admissibility of the evidence of Marty Musters were it to be tendered at trial. He is a duly-qualified expert entitled to conduct an analysis on the contents of the cellphone. His evidence is relevant to a material issue: the origins and authenticity of the text messages and photographs used in cross-examination. [122] The appellants contend that the proposed evidence is well capable of belief; is related to a material issue at trial, being the credibility of the complainants and the reliability of their evidence; and, if given there, might well have affected the trial judge’s conclusion about the veracity of the complainants’ evidence, and thus the verdict at trial. [123] As for due diligence, the appellants begin with a submission that due diligence is not a condition precedent to the admissibility of this evidence. That this evidence, or evidence to the same effect, was not called at trial was not the product of a strategic or tactical decision not to do so. Counsel had a well-grounded belief that the text messages and photos had been properly authenticated to permit their use in cross-examination of the complainants. The combined effect of D.P.’s testimony that she believed no one else had possession of her cellphone at the relevant time, together with its number and admitted text exchanges with the appellant C.B., as well as the continuity of those messages, satisfied the low threshold required for authentication. Additionally, the private investigator explained the photographs of the texts and the photos taken and their origins. [124] The decision of trial counsel was not a tactical decision, one made to gain some sort of strategic advantage. It reflected considered judgment informed by heed of correct principles. The alleged failure of due diligence should not be permitted to defeat the reception of this cogent evidence directed to a material issue on appeal. The interests of justice require its reception. [125] The respondent rejects the appellants’ claim that the cogency requirement has been satisfied and that the due diligence factor does not warrant exclusion of the proposed evidence. [126] The respondent reminds us of the three-pronged focus of the cogency requirement. The proposed evidence must be relevant to a potentially decisive issue at trial. It must be credible. And it must be sufficiently probative that, when taken with the rest of the evidence received at trial, it could reasonably be expected to have affected the result. [127] The due diligence factor, the respondent concedes, is not a condition precedent to the admissibility of fresh evidence on appeal. It is concerned with the broader integrity of the criminal justice system, including the need for finality in the trial process. Due diligence requires an analysis of the reasons why evidence tendered for reception on appeal was not adduced at trial. It is a factor to be taken into account, along with the requirement of cogency, in deciding whether the “interests of justice” warrant admission of the evidence. [128] The respondent says that we should not receive as fresh evidence the affidavit of C.B.’s trial counsel. As a general rule, apart from appeals in which ineffective assistance is advanced as a ground of appeal, affidavits of trial counsel explaining trial strategy are not received as fresh evidence. Moreover, the trial judge permitted the cross-examination, admitted the report of the private investigator and considered the impact of the cross-examination on the weight he assigned to the complainants’ testimony. This was as counsel agreed at trial. [129] As for the forensic examiner’s affidavit and report, the respondent says that it fails to meet the cogency requirement and could have been obtained by the exercise of due diligence at trial. That it was not adduced there was a tactical decision made by competent trial counsel. [130] The respondent submits that the evidence of the forensic examiner is not relevant to the issue of consent or to the credibility of the complainants because its introduction would invite the application of myths and stereotypical reasoning. The respondent does not dispute that the evidence is credible, but says that it could not reasonably be expected to have affected the result of trial if admitted with the rest of the evidence given there. And its availability there with the exercise of due diligence renders it contrary to “the interests of justice” to receive it here. The Governing Principles [131] The principles governing the reception of fresh evidence on appeal are uncontroversial and in no need of elaborate recitation or discussion. They are expressed in “the interests of justice” standard in s. 683(1) of the Criminal Code and described in the decision in R. v. Palmer , [1980] 1 S.C.R. 759, at p. 775. [132] The Palmer criteria involve three requirements: i. admissibility; ii. cogency; and iii. due diligence. See Truscott (Re) , 2007 ONCA 575, 225 C.C.C. (3d) 321, at para. 92. [133] The precondition that the material tendered for admission on appeal must be admissible under the operative rules of evidence permits the reception of fresh evidence for impeachment purposes, as for example, to undermine the basis for findings of fact made at trial: Truscott , at paras. 96, 98. [134] The cogency requirement involves a qualitative assessment of the evidence tendered for reception on appeal. The evidence must be relevant in that it bears upon a decisive or potentially decisive issue at trial. It must be credible in that it is reasonably capable of belief. And it must be sufficiently probative that, when taken with the other evidence adduced at trial, it could reasonably be expected to have affected the verdict rendered at trial. Provided the fresh evidence considered in this context could reasonably be expected to have affected the result at trial, it is sufficiently cogent to justify its admission on appeal, subject to a consideration of the failure to lead that evidence at trial: Truscott , at paras. 99-100. [135] The admissibility and cogency requirements are directed to the admissibility of the fresh evidence under s. 683(1). Not so the due diligence requirement, which is not a precondition to admissibility. Due diligence enters the analysis only if the proposed evidence satisfies the first two preconditions to admissibility – admissibility under the adjective law and cogency. The explanation offered for the failure to adduce the proposed evidence at trial, or absence of an explanation, can result in the rejection of evidence that would otherwise be admissible on appeal: Truscott , at para. 93. Where the proposed fresh evidence was available but not tendered at trial because of tactical reasons thought justifiable by competent counsel, an additional degree of cogency is necessary before the proposed evidence may be received on appeal: R. v. McDonald , 2017 ONCA 568, 351 C.C.C. (3d) 486, at para. 148; Truscott , at para. 102. The Principles Applied [136] As I will explain, I would admit the fresh evidence. In my respectful view, it satisfies the conditions precedent for reception of fresh evidence and should not be excluded for want of due diligence at trial. [137] In this case, the fresh evidence extends beyond evidence whose purpose is to impeach findings of fact made at trial. The expert opinion of Marty Musters is tendered for that purpose, but not so the affidavit and cross-examination of C.B.’s trial counsel. Its target is the issue of due diligence whose failure may result in the exclusion of evidence that satisfies the prerequisites for admissibility. [138] First, the expert opinion of Marty Musters. [139] No dispute arises about the admissibility of the expert opinion of Marty Musters under the operative rules of evidence. He is a qualified forensic examiner whose report would be admissible at the conclusion of the two-step analysis put in place by White Burgess Langille Inman v. Abbott and Haliburton Co. , 2015 SCC 23, [2015] 2 S.C.R. 182. [140] A critical issue at trial on which the outcome depended was the credibility of the complainants and the reliability of their account of non-consensual conduct on the part of both appellants, which the Crown alleged constituted proof of the offences charged. This evidence was vigorously challenged by the defence. Among the methods of challenge was cross-examination of the complainants on contemporaneous text messages (D.P.) and photographs (G.D.), which were said to be at odds with the complainants’ accounts of relevant events. And essential to impeachment on this basis was the authenticity of those text messages and photographs employed in the impeachment process. [141] The expert opinion of Marty Musters is relevant to the authenticity of the text messages and photographs used as impeachment mechanisms. His opinion establishes the nexus between the texting partners, D.P. and the appellant C.B., and the contemporaneity and source of the photographs. It tends to show that D.P.’s denial of authorship could be false. [142] The respondent takes no issue with the substance of the opinion on authenticity provided by Marty Musters, whom counsel did not cross-examine. I am satisfied that his opinion is reasonably capable of belief. [143] The final component of the cogency requirement involves an assessment of whether the opinion evidence, the expert opinion about authenticity, could reasonably be expected to have affected the verdict at trial. In my respectful view, the proposed evidence satisfies this aspect of the cogency requirement. [144] At trial, the case for the Crown depended on the evidence of the complainants. For all practical purposes, their testimony was the case for the Crown. To convict, the trial judge had to be satisfied beyond a reasonable doubt that the complainants were credible, their evidence reliable and of such persuasive force that it excluded any reasonable doubt about the appellants’ guilt. [145] In reaching his conclusion that the complainants were credible and their testimony reliable to such an extent that it excluded reasonable doubt, the trial judge rejected, as of no probative value, the text messages and photographs on which the complainants were cross-examined. The judge’s finding of “no probative value”, thus the lack of any impeachment value, was grounded on his conclusion that the messages and photographs were not established as authentic or genuine. But casting aside this evidence for want of authenticity, the fresh evidence shows, was wrong. It should have been factored into the credibility/reliability analysis. In the result, I am satisfied that had the expert opinion of Musters been before the trial judge, it could reasonably be expected to have affected the conclusion reached in that analysis, thus the verdict rendered at trial. [146] What remains is an assessment of whether the due diligence criterion should mandate exclusion of the evidence of Musters, despite its satisfaction of the conditions precedent to admissibility. [147] On this issue of due diligence, the evidence of trial counsel is relevant. Doubtless, trial counsel could have called the appellant C.B. or Musters, or some other forensic examiner, to authenticate the relevant contents of the appellant C.B.’s cellphone. That said, the decision of trial counsel was informed by her view that the record contained sufficient evidence to authenticate the contents put to the complainants. In this respect, trial counsel, as I have already explained, was correct. This was a reasonable conclusion in the circumstances, not a failure of due diligence that warrants exclusion of the expert opinion of Musters. Conclusion [148] In the result, I am satisfied that the combined force of the errors made at trial and the admission of the fresh evidence demonstrate a miscarriage of justice within s. 686(1)(a)(iii) of the Criminal Code. I would allow the appeal, set aside the convictions and order a new trial on all counts contained in the information. Released: “DW” May 9, 2019 “David Watt J.A.” “I agree. Grant Huscroft J.A.” “I agree. Fairburn J.A.”

COURT OF APPEAL FOR ONTARIO CITATION: Mandel v. 1909975 Ontario Inc., 2021 ONCA 844 DATE: 20211125 DOCKET: C68675 Feldman, van Rensburg and Sossin JJ.A. BETWEEN Robert Mandel and Ellen Pike Applicants (Appellants) and 1909975 Ontario Inc., 2458730 Ontario Inc., 2458721 Ontario Inc., HarrisonPike Inc., MatthewPike Inc. and Attorney General of Canada Respondents (Respondents) Peter H. Griffin, Matthew B. Lerner and Adam H. Kanji, for the appellants Diana Aird and Michael Ding, for the respondent Attorney General of Canada Mark A. Ross, for the respondents 1909975 Ontario Inc., 2458730 Ontario Inc., 2458721 Ontario Inc., HarrisonPike Inc. and MatthewPike Inc. Heard: May 19, 2021 by video conference On appeal from the order of Justice Markus Koehnen of the Superior Court of Justice, dated September 8, 2020, with reasons reported at 2020 ONSC 5343. Feldman J.A.: [1] The appellants restructured their family trusts in 2014 and 2015 to avoid a deemed disposition of the assets after 21 years and to maintain control of the underlying assets. As part of the restructuring arrangements, the appellants incorporated holding companies for their adult children (the “Child Corporations”) in which the appellants each subscribed for Class A voting shares and Class B convertible shares for a subscription price of $10 for the Class A shares and $100 for the Class B shares. The corporate documents stated that all the issued shares were fully paid. However, the appellants say that payment of $110 for the shares was never actually made. [2] In 2019, the Canada Revenue Agency (“CRA”) reassessed the appellants for the tax years 2014 and 2015, increasing each appellant’s taxable income by close to $15,000,000 on the basis that their receipt of shares in the Child Corporations constituted a taxable benefit under s. 15(1) of the Income Tax Act , R.S.C. 1985, c. 1 (5th Supp.). [3] The appellants brought an application in the Superior Court of Justice for a declaration that because the shares were not paid for before they were issued, as required by s. 23(3) of Ontario’s Business Corporations Act , R.S.O. 1990, c. B.16 (“ OBCA ”), they were not validly or lawfully issued, and that the appellants were never shareholders of the Child Corporations. They also sought an order for rectification of the share registers of the Child Corporations under s. 250(1) of the OBCA . [4] The application judge declined to exercise jurisdiction over the application, deferring to the jurisdiction of the Tax Court of Canada. He also found that he would not have granted the declaration or ordered rectification had he assumed jurisdiction. The appellants appeal from that ruling to this court. [5] The application judge’s decision to decline jurisdiction to grant a declaration is a discretionary decision. I see no reviewable error in the application judge’s exercise of that discretion. For that reason, I would dismiss the appeal. A. Facts [6] The families of each of the appellants hold a 25% interest in a successful manufacturing corporation through holding corporations. In the 1990s, the appellants transferred some of their interests in the holding corporations to family trusts, whose beneficiaries were the appellants’ respective children. In order to avoid a deemed disposition of the assets of the trusts at fair market value after 21 years, to defer the taxes that would become payable, and using a structure that would maintain control for the appellants, in 2014 and 2015 the family trusts reorganized their assets. [7] The application judge set out the details of the reorganizations in his reasons. For the purpose of these reasons, it is sufficient to summarize the structure that was employed for each Child Corporation: a Child Corporation was incorporated for each child of each of the appellants (three Mandel children and two Pike children); one of the appellants became the first director of each corporation; by-law no. 1 was passed for each corporation, providing, in accordance with s. 23(3) of the OBCA , that no share could be issued until it is fully paid for; the appellant subscribed for 1,000 Class A voting shares for a price of $10, signing corporate documents of the Child Corporation stating that the subscription price had been paid in full; the family trust then transferred Class D voting shares of the holding company that owned the shares of the manufacturing corporation to the child, who transferred those shares to the Child Corporation in exchange for 100 non-voting common shares of the Child Corporation; after that, the appellant subscribed for 100,000 Class B convertible shares in the Child Corporation for the price of $100, again signing documents that said that the purchase price for the shares had been paid in full. [8] In the result, each Child Corporation held shares in the family holding company, the appellants held Class A and Class B shares in each of the Child Corporations, and each child held non-voting common shares in their respective Child Corporation. Through this mechanism, the appellants each had control of the Child Corporations, and, in the event of a breakdown in any child’s marriage, by converting the Class B shares, the majority of the value of the Child Corporation would be protected. [9] Between 2014 and 2019, the appellants signed numerous documents relating to the Child Corporations in their capacities as sole directors and as shareholders, including shareholder agreements that described their shares as issued, outstanding, fully paid and non-assessable. The only contemporaneous evidence to the contrary was a “Notice to Reader” contained in the financial statements of the Child Corporations, prepared by Ernst & Young, which recorded a “Sundry Receivable” of $110 within each Child Corporation. However, those financial statements also indicated that the shares had been issued, and recorded shareholders’ equity of $110 in respect of the shares. [10] On June 5, 2019, the CRA advised each of the appellants that it proposed to reassess them for 2014 and 2015 and increase their respective taxable incomes on the basis that they had received a taxable benefit under s. 15(1) of the Income Tax Act by the issue of controlling shares in the Child Corporations for undervalue. Despite receiving submissions opposing the reassessment, the CRA proceeded with the reassessments on September 16, 2019, and Notices of Objection were filed on November 26, 2019. The CRA did not respond to the appellants’ Notices of Objection within 90 days. As a result, the appellants may appeal to the Tax Court, but at the time of the application, they had not yet done so. [11] In February 2020, after the application was commenced, transactions within each Child Corporation resulted in each child becoming the controlling shareholder and a director of their respective Child Corporations. [12] The appellants commenced this application on December 6, 2019 for a declaration that their shares in each Child Corporation were never validly issued because they did not pay for them, and for an order under s. 250(1) of the OBCA rectifying the share registers to reflect that the appellants never owned validly issued shares in the Child Corporations. In support of the applications, the appellants filed affidavits in which they explained that they never actually provided any consideration for the shares in each of the Child Corporations, and that those corporations never had bank accounts that would allow them to receive any monetary consideration. The appellants were not cross-examined on their affidavits. B. Findings by the Application Judge [13] The application judge accepted the submission of the CRA that the court should decline jurisdiction over the application because the matter should be determined by the Tax Court of Canada. Specifically, he found that: The Tax Court is much better placed than is this court to determine whether, for tax purposes, the applicants should be considered to be controlling shareholders of the Child Corporations. The Tax Court has expertise in dealing with sophisticated corporate structuring and assessing the tax consequences of planning exercises of that nature. Given its specialized expertise, the Tax Court is also better placed to make findings of fact and draw inferences about whether the applicants paid for their shares, why they recorded the purchase price as a receivable (if the “Sundry Receivable” in fact relates to the shares) and whether any of these findings or inferences should have a bearing on the application of s. 23(3) to the tax assessment. [14] The application judge also noted that the raison d’être for this application is the tax assessment, and referred to other cases where the Superior Court had declined jurisdiction in favour of the Tax Court: Baxter v. Attorney General of Canada , 2013 ONSC 3153, at paras. 8-29 and GLP NT Corp. v. Canada (Attorney General) (2003), 65 O.R. (3d) 840 (S.C.), at paras. 11-20. The application judge also referred to Danso-Coffey v. Ontario , 2010 ONCA 171, 99 O.R. (3d) 401, where this court found that the court below had erred by declaring that Ms. Danso-Coffey was not liable for retail sales tax rather than deferring jurisdiction on the tax liability issue to be determined under the Retail Sales Tax Act , R.S.O. 1990, c. R.31 scheme. [15] However, in that case, this court also upheld the decision of the court below to make a declaration that Ms. Danso-Coffey was not a director of the bankrupt corporation. The application judge distinguished that aspect of the case as well as Orman v. Marnat Inc. , 2012 ONSC 549, 108 O.R. (3d) 81, both relied on by the appellants. In Danso-Coffey , the court granted a declaration in favour of the applicant that she was never a director of the corporation, because the facts were not disputed and the applicant had other potential reasons beyond retail sales tax for wanting to be absolved of the status of director, to which she never consented, and the range of personal liabilities that may arise by virtue of that status. [1] [16] The application judge also distinguished the case of Orman , where the Superior Court granted a declaration that certain funds in an investment vehicle constituted a return of capital rather than income. In that case, the judge relied on the decision in Juliar v. Canada (Attorney General) (2000), 50 O.R. (3d) 728 (C.A.), leave to appeal refused, [2000] S.C.C.A. No. 621, where the court found that it should not decline relief because it might affect a tax assessment. However, Juliar has since been overruled by the Supreme Court of Canada in Canada (Attorney General) v. Fairmont Hotels Inc. , 2016 SCC 56, [2016] 2 S.C.R. 720. [17] Despite declining jurisdiction to determine the application, the application judge nevertheless addressed whether he would have granted the declaration requested by the appellants. [18] On the issue of the proper interpretation of s. 23(3) of the OBCA , and whether its effect is that if the appellants did not pay for the shares then the shares were never effectively issued and the appellants were never shareholders of the Child Corporations, the application judge found that there was no definitive answer. Referring to Dunham v. Apollo Tours Ltd. (1978), 20 O.R. (2d) 3 (H.C.), he stated that the case “demonstrates that the application of s. 23(3) is not absolutely black and white but depends on the context and purpose for which the section is being applied.” In that case, the court allowed the shareholder, who had not paid for his shares, to pay the share price of $1 in order to obtain standing as a shareholder to bring an application to wind up the corporation. [19] The application judge gave three further reasons why he would not have granted the declaration. First, there was contradictory evidence in the record regarding whether or not the appellants had paid for the shares. Second, he noted that there was no dispute within the Child Corporations about the status of the shares, and third, there could be unknown consequences to a retroactive declaration of invalidity of the shares. Based on these three considerations, he concluded that there was no injustice in declining to grant the declaration. [20] Finally, the application judge refused to make an order under s. 250(1) of the OBCA rectifying the share register. This flowed from his determination that if he had exercised his discretion to assume jurisdiction, he would have declined the declaration. He also found that such an order would not reflect the intentions of the parties at the time of the transactions, and referred to the Fairmont Hotels case for the principles that apply to equitable rectification. [21] The application judge emphasized that nothing in his analysis was intended to have any bearing on the Tax Court’s adjudication of the tax assessment dispute and its interpretation or application of s. 23(3) of the OBCA . C. Issues [22] There are four issues raised on this appeal: 1. Jurisdiction to hear the appeal: Is the appeal from the application judge properly brought to this court or to the Divisional Court? 2. Jurisdiction of the application judge: Did the application judge err in law in declining jurisdiction over the application in favour of the Tax Court? 3. Does a corporation’s failure to comply with s. 23(3) of the OBCA by issuing shares without payment make the issuance of such shares invalid and void? 4. Did the application judge err in declining to order rectification of the share register under s. 250(1) of the OBCA ? D. Analysis (1) Issue 1: Is the appeal from the application judge properly brought to this court or to the Divisional Court? [23] In their application to the Superior Court, the appellants sought a declaration under s. 97 of the Courts of Justice Act , R.S.O. 1990, c. C.43, that the shares of the Child Corporations were not validly issued under s. 23(3) of the OBCA because the subscription price was not paid, and an order for rectification of the share registers under s. 250(1) of the OBCA . [24] Section 255 of the OBCA provides that an appeal lies to the Divisional Court from any order made by the Superior Court under the OBCA . In this case, while the appellants sought relief under s. 250(1) of the OBCA , they were obliged to seek a declaration under s. 97 of the Courts of Justice Act in order to obtain the relief they sought as a result of the application of s. 23(3), because no order for relief for failure to comply with that section is mandated by the OBCA . An appeal from an order that grants or refuses a declaration of the Superior Court lies to the Court of Appeal. As a result, s. 6(2) of the Courts of Justice Act applies to this appeal: The Court of Appeal has jurisdiction to hear and determine an appeal that lies to the Divisional Court or the Superior Court of Justice if an appeal in the same proceeding lies to and is taken to the Court of Appeal. [25] The court therefore accepts the submission of all parties that this court has the jurisdiction to hear this appeal. (2) Issue 2: Did the application judge err in law by declining jurisdiction over the application in favour of the Tax Court? [26] The appellants submit that the application judge erred in law by declining to assume jurisdiction to decide the issues as a matter of corporate law. They argued that the Superior Court is the only court with jurisdiction over the issues raised in the application. They submitted that a declaration that bound the corporate and family parties could not be made by the Tax Court. They also submitted that the application was not about “whether for tax purposes” the appellants should be considered the controlling shareholders of the corporations. Instead, the issue was “whether shares in an OBCA -incorporated corporation were validly issued and if not, what the appropriate remedy should be. It was about correcting an error in the share register.” [27] Sections 23(3) and 250(1) of the OBCA provide: 23(3) A share shall not be issued until the consideration for the share is fully paid in money or in property or past service that is not less in value than the fair equivalent of the money that the corporation would have received if the share had been issued for money. 250(1) Where the name of a person is alleged to be or have been wrongly entered or retained in, or wrongly deleted or wrongly omitted from, the registers or other records of a corporation, the corporation, a security holder of the corporation or any aggrieved person may apply to the court for an order that the registers or records be rectified. [28] The appellants’ position on jurisdiction is that only the Superior Court may grant an order for rectification pursuant to s. 250 of the OBCA , and it is the jurisdiction of the Superior Court to determine the proper interpretation of s. 23(3), as a matter of law. While the Tax Court has the jurisdiction of a superior court and therefore may interpret the OBCA provision when determining cases arising under the Income Tax Act , the appellants say that they are entitled to a declaration of the status of their shares on the basis of a correct interpretation of s. 23(3), and as a matter of corporate law, and to rectification of the share register in accordance with that interpretation. [29] The appellants’ position on interpretation is that where shares of a corporation are issued without the corporation first receiving payment, the issuance of the shares is invalid and void, and the share register must be corrected to remove the shareholders’ names. [30] The contrary position is that while shares that are not fully paid for are issued in contravention of s. 23(3), they are nevertheless validly issued. This is the result provided in the OBCA where shares are issued without full payment because the directors of the corporation have authorized a share issuance for consideration other than money, such as property or past services, and where they have overvalued that consideration. In that event, s. 130(1) of the OBCA provides that the directors are responsible to the corporation for the difference between the actual value of the non-monetary consideration paid and the monetary value assigned to the shares. The share issuance is not void. The shares remain validly issued and the directors are liable to the corporation to make up the shortfall. [31] The issue before this court is whether the application judge erred in the exercise of his discretion by declining to answer the question and, instead, deferring jurisdiction in favour of the Tax Court of Canada. On matters of judicial discretion, this court will defer to the application judge unless the judge misdirected himself, gave no or insufficient weight to relevant considerations, or came to a decision that was clearly wrong, amounting to an injustice: Penner v. Niagara (Regional Police Services Board) , 2013 SCC 19, [2013] 2 S.C.R. 125, at para. 27; Ewert v. Canada , 2018 SCC 30, [2018] 2 S.C.R. 165, at para. 83; and Holmes v. Schoenfeld Inc. , 2016 ONCA 148, 345 O.A.C. 162, at para. 14. [32] The application judge gave one reason for declining jurisdiction in favour of the Tax Court, and also added three reasons why declining a declaration would not cause injustice, which reinforced his discretionary decision to decline to exercise jurisdiction. He understood that no appeal of the assessments had yet been taken to the Tax Court because the appellants were first pursuing this application. However, it is expected that depending on the outcome of this application, an appeal may be filed with the Tax Court. [33] The main reason the application judge gave for deferring to the Tax Court is that the only dispute in this case is between the appellants and the CRA, and that dispute is within the expertise of the Tax Court. He noted that pursuant to the Tax Court of Canada Act , R.S.C. 1985, c. T-2, the Tax Court is a superior court of record and has exclusive original jurisdiction to hear and determine appeals on matters arising under the Income Tax Act : ss. 3 and 12(1). As a superior court, it may interpret and apply provisions of the OBCA in the context of a tax dispute. [34] Related to the fact that the only dispute between any parties in this case is the appellants’ dispute with CRA, is the fact that the Child Corporations support the appellants in their request for relief. The application judge referred to this fact as the first reason that supported his conclusion that declining the declaration would not amount to an injustice. There is no dispute among the families or within the corporations about what should be done with the shares. In fact, as of February 2020, the families have reorganized the share structure such that each child was issued 2,000 Class A voting shares, becoming the controlling shareholder and a director of their Child Corporation. The respective shareholders meetings at which each child was elected as director of their Child Corporation proceeded on the basis that each child was the sole voting shareholder. [35] Therefore, although the appellants argue that unlike the Superior Court, the Tax Court has no authority to make a binding order that would bind the Child Corporations, in fact the parties do not require such an order to correct mistakes and amend the register. Consequently, the application judge concluded that the effect of the relief sought by the appellants would primarily be to “force the outcome of a tax dispute with the CRA before the taxpayers have pursued the remedies available under federal statute”. [2] [36] The second ground relied on by the application judge as demonstrating no injustice in declining the declaration request was the unclear factual record regarding whether the appellants paid for their shares and why the Child Corporations recorded the purchase price as a receivable in the financial statements. He concluded that the factual findings should be made within the tax context, where the court could determine what bearing the findings would have on the application of s. 23(3) to the tax assessment. [37] This application was brought under r. 14.05 of the Rules of Civil Procedure , R.R.O. 1990, Reg. 194. Rule 14.05(3)(d) allows an application to be brought for the determination of rights that depend on the interpretation of a statute. That rule could apply to this proceeding; however, there are both statutory interpretation and factual issues to be determined. Rule 14.05(3)(h) allows proceeding by an application “where it is unlikely that there will be any material facts in dispute requiring a trial.” An application under r. 14.05(3)(h) gives the application judge limited jurisdiction to make factual findings where the judge is satisfied that a trial is not needed. [38] Whether or not the application judge could have made the findings based on the record before him, he was entitled to determine that it was not appropriate for him to do so on this application. That decision regarding procedure on an application for a declaration also supports the decision not to take jurisdiction, but to defer to the Tax Court which has the full jurisdiction to decide the legal and factual issues put before the court in the context of an income tax appeal. The Tax Court has the expertise to resolve the uncertainty surrounding the appellants’ shareholdings to determine the tax consequences that flow from them, even if it does so by interpreting s. 23(3) only in the context of this specific tax dispute. [39] The third reason the application judge gave to support the justice of his decision to decline to grant a declaration was that if he were to accede to the appellants’ position that shares issued but not paid for are void ab initio , that finding could have unintended consequences regarding the status of transactions and other steps taken by the corporation and its directors before the shares were declared void. [40] This concern must be tempered by s. 17(3) of the OBCA , which provides: 17(3) Despite subsection (2) and subsection 3(2), no act of a corporation including a transfer of property to or by the corporation is invalid by reason only that the act is contrary to its articles, by-laws, a unanimous shareholders agreement or this Act. [41] In light of this section, I do not share the application judge’s concern generally, although it is possible that there could be unforeseen consequences to a retroactive order, if a court were to accept the appellants’ position on nullity. However, because the Tax Court cannot order an amendment to the share register, but can only make a decision on the tax issue, it would not be making an order with retroactive effect on others. Again, that supports the decision to defer to the Tax Court. [42] In my view, the application judge made no error in considering the factors he did — most importantly, that the only dispute is between the appellants and the CRA — in exercising his discretion to decline jurisdiction in favour of the Tax Court. [43] The appellants’ position that they are not seeking a tax determination but solely a declaration interpreting a corporate law statute and an order for rectification, over which the Superior Court has exclusive jurisdiction, may be seen, in effect, as an assertion that in this case the application judge had no discretion to decline jurisdiction. In their factum, they refer to the Superior Court as having “exclusive” jurisdiction over the application. Put another way, their position is that they are entitled to have the Superior Court determine the meaning of s. 23(3) of the OBCA . [44] I would reject that proposition. The appellants are correct that the Superior Court has the exclusive jurisdiction to grant an order under s. 250(1). However, that order would only follow if the declaration were granted, and would not be necessary if the Tax Court accepted that, for tax purposes, the shares were never properly issued and never belonged to the appellants. [45] In circumstances where parties to an action have a dispute that requires the court to interpret the meaning and effect of a statutory provision, the court is not being asked to exercise a discretionary jurisdiction. It is required to answer the questions necessary to decide the dispute. However, where a party seeks a declaration of right, the court will only assume jurisdiction to decide the issue where the nature of the request meets criteria defined in the Rules or in a statutory provision. In such cases, the court has the discretion to decline jurisdiction. This is such a case. [46] I would test it this way: if there were no CRA assessment, and the family members brought an application for a declaration under r. 14(3) for a ruling by the court whether the effect of what occurred was that the issuance of the appellants’ shares was void, but the parties could point to no issue that would turn on the outcome, the court would likely decline jurisdiction for the reason that its ruling would not be necessary to determine the rights of the parties (r. 14(3)(d)). In this case, although the Child Corporations support the appellants, and seek clarification regarding the status of the appellants’ shares, they have corrected the situation for the future, and have pointed to no issue in the past that would turn on the outcome of the declaration. In such circumstances, the parties have not established that a discretionary declaration is warranted in these circumstances. [47] To conclude, in my view, the application judge was entitled to exercise his discretion to decline jurisdiction over the issue raised by the appellants regarding the interpretation of s. 23(3) of the OBCA in favour of the Tax Court, to be considered in the context of a tax appeal of the CRA assessments. (3) Issues 3 and 4: Determining the meaning and effect of s. 23(3) and rectifying the share register under s. 250(1) [48] In light of my conclusion that the application judge made no error by declining jurisdiction to determine these issues, it is neither necessary nor appropriate to address these issues on this appeal. E. Conclusion [49] I would dismiss the appeal. I would order costs to the respondent CRA in the agreed amount of $10,000, including HST and disbursements. Released: November 25, 2021 “K.F.” “ K. Feldman J.A.” “I agree. K. van Rensburg J.A.” “I agree. Sossin J.A.” [1] In Danso-Coffey , the Ontario Minister of Revenue did not object to the court granting the declaration, unlike in this case. See footnote 2 below. [2] Counsel for the CRA confirmed that an order for rectification would be binding on the CRA’s tax assessment. In Dale v. Canada , [1997] 3 F.C. 235, the Federal Court of Appeal held that an order for rectification was “binding on all the world”, including the CRA, despite the fact that the CRA was not a party to the corporate dispute.

criminal appellate jurisdiction criminal appeal number219 of 1975 appeal by special leave from the judgment and order dated the 20th october of the andhra pradesh high companyrt at hyderabad in criminal misc. petition number1890 of 1975 p b basi reddy and av v nair for the appellants. m r k chaudhary and b k kanta rao for respondent number1 ram reddy and p parameshwara rao for respondent number. 2 and 3 the judgment of the companyrt was delivered by sarkaria j.-whether in view of clause a of the first proviso to s 22 1 of the companye of criminal procedure 1973 a magistrate who receives a companyplaint disclosing an offence exclusively triable by the companyrt of session is debarred from sending the same to the police for investigation under s. 156 3 of the companye is the short question is that falls to be determined in this appeal by special leave. the question arises in these circumstances respondent 1 herein made a companyplaint on july 26 1975 before the judicial magistrate first class dharamavaram against the appellants herein alleging that. on account of factions existing village thippapalli the appellants formed themselves into an unlawful assembly armed with deadly weapon such as axes spears and sticks on the night of june 20 1975 and entered the houses of several persons belonging to the opposite party attacked the inmates and forcibly took way jewels paddy ground-nuts and other valuables of the total value of two lakhs of rupees. it was further alleged that the miscreants thereafter went to the fields and removed parts of machinery worth over rs. 40000/- installed at the wells of their enemies. on these facts it was alleged that the accused had companymitted offences under ss. 147 148 149 307 395 448 378 and 342 of the penal companye. the offences under ss. 307 and 395 are exclusively triable by the companyrt of session. the magistrate on receiving the companyplaint forwarded ii to the police for investigation with this endorsement forwarded under s. 156 3 cr. procedure companye to the inspector of police dharmavaram for investigation and report on or before 5-8-1975. the appellants moved the high companyrt of andhra pradesh by petition under s. 482 of the companye of criminal procedure 1973 which companyresponds to s. 561-a of the old companye praying that the order passed by the magistrate be quashed inasmuch as it was illegal unjust and gravely prejudicial to the petitioners. the learned judge of the high companyrt. who heard the petition. dismissed it by an order dated october 20 1975. hence this appeal. mr. basi reddy appearing for the appellants companytends that the high companyrt has afield to appreciate the true effect of the changes brought by the companye of 1973. according to the counsel under the new companye is a companyplaint discloses an offence triable exclusively be companyrt of session the magistrate is bound to proceed with that companyplaint himself before issuing process to the accused. the point pressed into argument is that clause a of the first proviso to s. 202 1 the new companye peremptorily prohibits the magistrate to direct investigation of such a companyplaint by the police or any other person. the cases gopal da v. state of assam l . jamuna singh v. bhadai she 2 referred to by the high court are sought to be distinguished 1 1961 a.i.r. 19 1 s. c. 986 2 1964 5 s s.c.r. 37. on the ground that they were decided under the old companye s. 21 2 of which did number provide for any such ban as has been expressly enacted in the 1st proviso to s. 202 of the new code. as against this mr. ram reddy whose arguments have been adopted by mr. chaudahry submits that the powers conferred on the magistrate under s. 156 3 of the companye are independent of his power to send the case for investigation under. s. 22 of the companye that the power under s. 156 3 can be invoked at a stage when the magistrate has number taken cognizance of the case while s. 202 companyes into operation after the magistrate starts dealing with the companyplaint in accordance with the provisions of chapter xv. it is urged that since in the instant case the magistrate had sent the complaint for police investigation without taking such cognizance s. 202 including the ar enacted therein was number attracted. in the alternative it is submitted that the ban in the 1st proviso to s. 202 becomes operative only when the magistrate after applying his mind to the allegations in the company plaint and the other material including the statement of the companyplainant and his witnesses if any recorded under s. 200 is prima facie satisfied that the offence companyplained of is triable exclusively by the companyrt of session. the point sough to be made out is that a mere allegation in the companyplaint that the offence companymitted is one exclusively triable by the companyrt of session does number oust the jurisdiction of the magistrate to get the case investigated by the police or other person. the word appears according to companynsel imports a prerequisite or condition precedent the existence of which must be objectively and judicially established before the prohibition in the 1st proviso to s. 202 becomes operative. it is added that in the instant case the existance of this condition precedent was number and indeed companyld number he established. it appears to us that this appeal can be disposed of on the first ground canvassed by mr. ram reddy. before dealing with the companytention raised before us it will be appropriate to numberice the relevant provisions of the old and the new companye. section 156 of the companye of 1973 reads thus 156 1 . any officer in charge of a police station may without the order of a magistrate investigate any cognizable case which a companyrt having jurisdiction over the local area within the limits of such station would have power to inquire into or try under the provisions of chapter xiii. numberproceeding of a police officer in any such case shall at any stage be called in question on the ground that the case was one which such officer was number empowered under this section to investigate any magistrate empowered under section 190 may order such an investigation as above-mentioned. this provision is substantially the same as s. 156 of the companye of a 1898 excepting that in sub-s. 1 for the words chapter xv relating to the place of inquiry or trial the words chapter xiii have been substituted. sections 200 and 202 of the 1898 companye and the 1973 code placed in juxtaposition read as follows 1898 companye s. 200 a magistrate taking companynizance of an offence on companyplaint shall at once examine the companyplaint and the witnesses present if any upon oath and the substance of the examination shall be reduced to writing and shall be signed by the complainant and the witnesses and also by the magistrate provided as follows- a when the companyplaint is made in writing numberhing herein companytained shall be deemed to require a magistrate to . examine the companyplainant before transferring the case under section 192 aa when the companyplaint is made in writing numberhing herein companytained shall be deemed to require the examination of a companyplainant in any case in which the complaint has been made by a companyrt or by a public servant acting or purporting to act in the discharge of his official duties b where the magistrate is a presidency magistrate such examination may be on oath or number as the magistrate in each case thinks fit and where the complaint is made in writing need number be reduced to writing. but the magistrate may if he thinks fit before the matter of the companyplaint is brought before him require it to be reduced to writing c when the case has been transferred under section 192 and the magistrate so transferring it has already examined the companyplainant the magistrate to whom it is so transferred shall number be bound to re-examine the complainant. sec. 202 postponement of issue of process- any magistrate on receipt of a complaint of an offence of which he is authorised to take companynizance or 1973 companye s. 200 a magistrate taking companynizance of an offence on companyplaint shall ex. mine upon oath the companyplainant and the witnesses present if any and the substance of such examination shall be reduced to writing and shall be signed by the complainant and the witnesses and also by the magistrate. provided that when the companyplaint is made in writing the magistrate need number examine the companyplainant and the witnesses- a if a public servant acting or purporting to act in the discharge of his official duties or a companyrt has made the companyplaint or b if the magistrate makes over the case for enquiry or trial to anumberher magistrate under section provided further that if the magistrate makes over the case to anumberher magistrate under section 192 after examining the companyplainant and the witnesses the latter magistrate need number re-examine them. sec. 202 postponement of issue of process- any magistrate on receipt of a complaint of an offence which he is authorised to take companynizance or which has been transferred to him under section 192 may if he thinks fit for reasons to be recorded in writing postpone the issue of process for companypelling the attendance of the person companyplained against and either inquire into the case himself or if he is a magistrate other than a magistrate of the third class direct an inquiry or investigation to be made by any magistrate subordinate to him or by a police officer or by such other person as he thinks fit for the purpose of ascertaining the truth or falsehood of the complaint provided that save where the companyplaint has been made by a companyrt numbersuch direction shall be made unless the complainant has been examined on oath under the provisions of section 200. if any inquiry or investigation under this section is made by a person number being a magistrate or a police officer. such person shall exercise all the powers companyferred by this companye on an officer in- charge of a police-station. except that he shall number have the power to arrest without warrant. 2a any magistrate inquiring into a case under this section may if he thinks fit take evidence of witnesses on oath. this section applies also to the police in the towns of calcutta and bombay. which has been made over to him under sec. 192 may if he thinks fit postpone the issue of process against the accused and either inquire into the case himself or direct an investigation to be made by a police officer or by such other person as he thinks fit for the purpose of deciding whether or number there is sufficient ground for proceeding provided that numbersuch direction for investigation shall be made- a where it appears to the magistrate that the offence companyplained of is triable exclusively by the companyrt of session or b where the companyplaint has number been made by a companyrt unless the complaint and the witnesses present if any have been examined on oath under section 200. if any inquiry under sub-section 1 the magistrate may if he thinks fit take evidence of witnesses on oath provided that if it appears to the magistrate that the offence complained of is triable exclusively by the companyrt of session he shall call upon the complainants to produce all his witnesses and examine them on oath. if an investigation under sub- section i is made by a person number being a police officer he shall have for that investigation all the powers companyferred by this companye on an officer incharge of a police station except the power to arrest without warrant. before proceeding further we may have a look at s. 190 of the new companye. this section is captioned companynizance of offences by magistrates. this section so far as it is material for our purpose n provides subject to the provisions of this chapter any magistrate of the first class and any magistrate of the second class specially empowered in this behalf may take companynizance of any offence- a upon receiving a companyplaint of facts which constitute such offence b upon a police report of such facts c upon information received from any person other than a police officer or upon his own knumberledge that such offence has been committed. 2 it is well settled that when a magistrate receives a complaint he is number bound to take companynizance if the facts alleged in the companyplaint disclose the companymission of an offence. this is clear from the use of the words may take cognizance which in the companytext in which they occur cannumber be equated with must take companynizance. the word may gives a discretion to the magistrate in the matter. if on a reading of the companyplaint he finds that the allegations therein disclose a companynizable offence and the forwarding of the companyplaint to the police for investigation under s. 156 3 will be companyducive to justice and save the valuable time of the magistrate from being wasted in enquiring into a matter which was primarily the duty of the police to investigate he will be justified in adopting that companyrse as an alternative to taking companynizance of the offence himself. this raises the incidental question what is meant by taking companynizance of an offence by a magistrate within the companytemplation of s. 190? this expression has number been defined in the companye. but from the scheme of the companye the content and marginal heading of s. 190 and the caption of chapter xiv under which ss. 190 to 199 occur it is clear that a case can be said to be instituted in a companyrt only when the companyrt takes companynizance of the offence alleged therein. the was in which such companynizance can be taken are set out in clauses a b and c of section 190 1 . whether the magistrate has or has number taken companynizance of the offence will depend on the circumstances of the particular case including the mode in which the case is sought to be instituted and the nature of the preliminary action if any taken by the magistrate. broadly speaking when on receiving a companyplaint the magistrate applies his mind for the purposes of proceeding under s. 200 and the succeeding sections in chapter xv of the companye of 1973 he is said to have taken companynizance of the offence within the meaning of s. 190 l a . if instead of proceeding under chapter xv he has in the judicial exercise of his discretion taken action of some other kind such as issuing a search warrant for the purpose of investigation or ordering investigation by the police under s. 156 3 he cannumber be said to have taken companynizance of any offence. this position of law has been explained in several cases by this companyrt. the latest being nirmaljit singh hoon the state of west bengal and anr 1 . the position under the companye of 1898 with regard to the powers of a magistrate having jurisdiction to send a complaint disclosing a companynizable offence-whether or number triable exclusively by the companyrt of 1 1973 3 s.c.c. 753. 36-833sci/76 session-to the police for investigation under s. 156 3 remains unchanged under the companye of 1973. the distinction between a police investigation ordered under s. 156 3 and the one directed under s. 202 has also been maintained under the new companye but a rider has been clamped by the 1st proviso to s. 202 1 that if it appears to the magistrate that an offence triable exclusively by the companyrt of session has been companymitted he shall number make any direction for in vestigation. section 156 3 occurs in chapter xii under the caption information to the police and their powers to investigate while s. 202 is in chapter xv which bears the heading of companyplaints to magistrates. the power it order police investigation under s. 156 3 is different from the power to direct investigation companyferred by s. 202 1 . the two operate in distinct spheres at different stages. the first is exercisable at the pre companynizance stage the second at the post-cognizance stage when the magistrate is in seisin of the case. that is to say in the case of a complaint regarding the companymission of a companynizable offence the power under s. 156 3 can be invoked by the magistrate before he takes companynizance of the offence under s. 190 1 a . but if he once takes such companynizance and embarks upon the procedure embodied in chapter xv he is number competent to switch back to the pre-cognizance stage and avail of s. 156 3 . it may be numbered further that an order made under sub-section 3 of s. 156 is in the nature of a peremptory reminder or intimation to the police to exercise their plenary powers of investigation under s. 156 1 . such an investigation embraces the entire companytinuous process which begins with the companylection of evidence under s. 156 and ends with a report or chargesheet under s. 173. on the other hand s. 202 companyes in at a stage when some evidence has been companylected by the magistrate in proceedings under chapter xv but the same is deemed insufficient to take a decision as to the next step in the prescribed procedure. in such a situation the magistrate is empowered under s. 202 to direct within the limits circumscribed by that section an investigation for the purpose of deciding whether or number here is sufficient ground for proceeding . thus the object of an investigation under s. 202 is number to initiate a fresh case on police report but to assist the magistrate in completing proceedings already instituted upon a companyplaint before him. in the instant case the magistrate did number apply his mind to the companyplaint for deciding whether or number there is sufficient ground for proceeding but only for ordering an investigation under s. 156 3 . he did number bring into motion the machinery of chapter xv. he did number examine the complaint or his witnesses under s. 200 cr.p.c. which is the first step in the procedure prescribed under that chapter. the question of taking the next step of that procedure envisaged in s. 202 did number arise. instead of taking companynizance of the offence he has. in the exercise of his discretion sent the companyplaint for investigation by police under s. 156. this being the position s. 202 1 1st proviso was number attracted.

LORD JUSTICE PILL: On 19th September 1986, in the Crown Court at Nottingham before Tucker J and a jury, David James, John Melnichenko and Colin Richardson were convicted of grievous bodily harm with intent under section 18 of the Offences Against the Person Act 1861. They were acquitted of attempted murder and of causing grievous bodily harm with intent to resist apprehension. David James was sentenced to eight years' imprisonment, John Melnichenko to eight years' youth custody and Colin Richardson also to eight years' youth custody. A co-defendant, Alan Richardson, was convicted of the same offence and sentenced to eight years' youth custody. On 29th June 2004, this court allowed his appeal against conviction and his conviction was quashed. The prosecution did not oppose the appeal. The matter had come before the court, as do the present appeals, as a result of a reference by the Criminal Cases Review Commission under section 9(1) of the Criminal Appeal Act 1995. At the trial each of the defendants was represented by leading counsel. They appeal against conviction. This is, as we have said, a reference by the CCRC. Melnichenko and Colin Richardson did not appeal against conviction or sentence following their trial. We agree with the CCRC that there are exceptional circumstances which justify this reference under section 13(1)(a) of the 1995 Act. James did serve notice of appeal, but, in circumstances to which we will refer, he did not pursue it. We can say straightaway that we do propose to allow these appeals. It is, however, necessary, because of the public interest involved, to deal in some detail with the circumstances of the offence and the reference. During the early hours of 26th October 1985 a British Transport Policeman, Constable Neil Harvey, was performing duties on British Rail property in Nottingham. He was last seen at about 1.50 a.m.. At 4.30 a.m. he was found near the Fyffes warehouse on Castle Meadow Road. He was semi-conscious and had been severely beaten about the head. He was taken to hospital in a critical condition. He was left virtually blinded in one eye and with no sense of taste or smell. Medical opinion was that severe blows with a blunt heavy object had caused the victim's injuries. He could remember nothing about the attack. On 31st October, four to five days later, the appellants and co-accused were arrested for the offence following evidence from a neighbour of Melnichenko and James as to a conversation heard between them about Fyffes. Colin Richardson and Alan Richardson are brothers. David James and Melnichenko are half-brothers, having the same mother. The prosecution case was that it was the appellants and the co-accused who had inflicted the grievous bodily harm with intent. The victim probably disturbed them while they were trying to break into the Fyffes warehouse. There was evidence of disturbance at the warehouse premises. Each of the appellants made confessions to the police and the details they gave were in similar terms to each other. Their confession evidence was said to be consistent with that of the neighbour, who had overheard a conversation between two of them the morning after the offence had been committed. At trial the defence case was that the four men had nothing to do with the attack on the complainant. There was no scientific evidence linking them with the attack. The confession evidence was unreliable. The confessions did not represent the truth. The appellants had been denied access to a solicitor. Words were put into their mouths, or the confessions were made following inducements to them. The prosecution case depended on the confessions which had been made. Each of the appellants gave evidence, as did Alan Richardson. They described their movements. They claimed not to have been at the scene of the crime that night. Mrs James, the mother of David James and Melnichenko, gave evidence that they were at home. Mrs Richardson also gave evidence which supported their alibi, as did another witness. At the time of the offences James was 20 years old, Melnichenko 18 years old, Richardson 17 years old, although he was 18 by the time he was interviewed a few days later. Alan Richardson was 19 years old. It was proved that access to a solicitor had not been permitted to any of the defendants. Superintendent Newton gave evidence that the reasons for that were, first, he did not believe that all the assailants were in custody; secondly, that the police had not recovered the victim's truncheon; thirdly, the weapon which was used in the attack had not been recovered. He believed that the interests of justice might have been compromised had the suspects been allowed to consult a solicitor as this may have resulted in others involved being alerted and the weapon disposed of. We refer to the sequence of events in custody. Both Melnichenko and Colin Richardson had on earlier days given witness statements to the police. Alan Richardson did so on his arrest. They were arrested at 5.35 p.m. on 31st October simultaneously. At 9.20 p.m. Melnichenko admitted taking part in the attack and said he did so with the co-accused. There was no custody record indicating what had happened to him between his arrest at 5.35 and the first recorded interview which was at 9.37. The co-accused denied any involvement in the attack. Colin Richardson did so during his second interview, which lasted from 10.00 p.m. until midnight. At a third interview James continued to deny the offence. At 12.30 a.m. on 1st November the police took Melnichenko to see James and asked him to repeat his confession in front of James. He did so. James continued to deny his involvement at a further interview, the fourth interview, of him. Later that morning police took Melnichenko to see Colin Richardson and told him that Melnichenko had confessed to all their involvement in the offence and to claim that Colin Richardson had thrown the first punch. The prosecution evidence was that Colin Richardson had replied, "That's all I wanted to hear" and shortly afterwards admitted his guilt. James continued to deny guilt. Melnichenko signed a document which amounted to a confession of his part. Alan Richardson, interviewed for a fourth time, continued to deny involvement. James at a sixth interview later that morning continued to deny involvement. Alan Richardson was told that his brother, Colin Richardson, had also implicated him. At 1.54 p.m. Melnichenko was again taken to see James and repeated his admission of participation in the attack. The prosecution evidence, disputed at the trial, was that James said to Melnichenko, "Why have you told them? I thought we were not going to." James then admitted his guilt at interview. In the afternoon Melnichenko was taken to Alan Richardson and shortly after that confrontation Alan Richardson confessed to his involvement in the attack. When summing up the case the judge put it in this way: "The prosecution case is that each defendant at first strenuously denied involvement but that one by on, led by Melnichenko and subsequently confronted by him, each defendant admitted it and did so not once but several times in contemporaneously recorded interviews which were usually signed by the defendant in question." The point is made that the word "contemporaneously" was misleading, in that some of the interviews had not been contemporaneously recorded, but we refer to that passage to describe how the case was put to the jury. Each of the defendants gave evidence that they were elsewhere and were not involved. We need not refer to that. They did also give evidence about how they were approached while in custody. Melnichenko did not deny his confession and implication of the others. He stated that he acted as he did after the police had told him that all his friends had implicated him and he would be convicted of attempted murder, but they could "get him off with GBH". He claimed to have been assaulted and threatened by the police. He signed the second interview because he wanted to get out of the police station, not having read the statement before he signed it. As to the accuracy of his confession, he stated that some of it was the first thing that came into his head, but mostly it was in response to police suggestions and prompting. As to the first confrontation with James, he said that he told James to admit it so that he could get out and get bail and see a solicitor. James gave similar evidence that Melnichenko had said that. None of his confessions were true he said. Colin Richardson said that he was denied access to a solicitor and locked in a cell. He asked to see the police Code of Practice and to be allowed a phone call, but his requests were refused unless he agreed to "admit a bit". He later signed a document because it was the only way he was allowed to make a phone call. As to his admission following a second confrontation, James accepted that he had told the police he was at the scene of the crime. He had done this because he was following his half-brother John's advice, that if he admitted it he would be allowed bail and be able to see a solicitor. He said he was very frightened. The admissions he made at the eighth interview were a combination of lies, responses to prompting and suggestions following what he had seen in the media. At that time he was unable to read or write. Police had read his statement to him and he had signed it. His inability to read or write leads to a subsidiary submission made on his behalf, that an appropriate adult should have been present with him during interview. Alan Richardson, whose appeal has been allowed, also said that he asked for a solicitor but the request was refused. We need not refer to his other complaints. He said he was frightened and agreed to what the police officers suggested had happened. None of the confessions was true. The police had refused to accept his many denials of the offence. He made admissions only at the seventh interview. He had been given details as to what had happened to the victim and that accounted for the similarity between his admissions and those of the co-defendants. During the eighth interview he was told that his previous statements did not contain enough detail. He then gave further details but on the basis that he was simply agreeing with what the police put to him. Some of the detail had also come from what had appeared in the news. The central complaints are, first, that the appellants had not been allowed access to a solicitor and, secondly, that no contemporaneous record had been made of many of the interviews. Melnichenko said that he was refused access to a solicitor at 6.17 p.m., that is within an hour of his arrest. He had been detained for over 43 hours before being charged. At no time during that period was he given access to a solicitor. Within hours of being charged, and eventually being allowed access to a solicitor, he had made a retraction statement, denying the offence and denying the confessions, as did all the defendants. As to the second allegation, there was a lack of contemporaneous recording of all the confrontations of 1st November involving Melnichenko with James (two confrontations), Colin Richardson (one confrontation) and Alan Richardson (one confrontation on the afternoon). There was no contemporaneous recording of the crucial parts of the interviews in relation to any of the accused, it is submitted. That extends to the seventh interview of James, Colin Richardson and the eighth interview of Alan Richardson. The Police and Criminal Evidence Act of 1984, while on the statute book at the time of the arrest, had not come into force. The guidance at the time of arrest as to police conduct appeared in the Judges Rules, backed up by Home Office Circular 31 of 1964 as amended. The circular provided that: "... in addition to complying with the Rules, interrogating officers should always try to be fair to the person who is being questioned and scrupulously avoid any method which could be regarded as in any way unfair or oppressive." The Rules themselves provided: "It is a fundamental condition of the admissibility of evidence against any person, equally or any oral answer given by that person to a question put by a police officer and of any statement made by that person, that it shall have been voluntary, in the sense that it has not been obtained from him by fear of prejudice or hope of advantage, exercised or held out by a person in authority, or by oppression." The court has to consider what test it should now apply in the light of subsequent developments in the law, including, of course, the 1984 Act, to interviews which occurred before the Act came into force. The appropriate test was stated by Lord Bingham CJ in R v Ashley King [2000] 2 Cr App R(S) 391: "In looking at the safety of the conviction it is relevant to consider whether and to what extent a suspect may have been denied rights which he should have enjoyed under the rules in force at the time and whether and to what extent he may have lacked protections which it was later thought right that he should enjoy. But this court is concerned, and concerned only, with the safety of the conviction. That is a question to be determined in the light of all the material before it." That approach was followed in this court (Lord Bingham CJ presiding) in R v Bentley (deceased) [2001] 1 Cr App R(S) 307. Lord Bingham stated: "The conduct of the trial and the direction of the jury must be judged according to the standards which we would now apply in any other appeal under section 1 of the 1968 Act. We must judge the safety of the conviction according to the standards which we would now apply in any other appeal under section 1 of the 1968 Act. 'Where, between conviction and appeal, there have been significant changes in the common law (as opposed to changes effected by statute) or in standards of fairness, the approach indicated requires the court to apply legal rules and procedural criteria which were not and could not reasonably have been applied at the time.'" As to the need for the presence of a solicitor, in R v Samuel (1988) 87 Cr App R 232 this court stated that the right of access to legal advice was: "... one of the most important and fundamental rights of a citizen." Where it was sought to justify denial of the right of access to a solicitor on reasonable grounds that could not be done except by reference to specific circumstances, including evidence about the person detained or the actual solicitor involved. Reference was made to section 58 of the 1984 Act. The court stated that the tests were stringent and: "... the number of times that a police officer could genuinely be in that state of belief will be rare." That is a state of belief whereby the solicitor will act improperly. "... the grounds put forward would have to have reference to a specific solicitor. We do not think they could ever be successfully advanced in relation to solicitors generally." ] We turn to the decision of this court in the case of Alan Richardson. The court, Keene LJ presiding, described the facts, including the signed admissions made only at late interviews by Alan Richardson. The court continued at paragraph 11: "At trial he agreed that he had signed the statements, but said he had done so because the police had told him that he had a mental blockage and they could have him committed to a mental institution. The details of the attack, he said, had been supplied by the police at the time of the interviews. Eventually, at just before 1.00 p.m. on 2nd November, the appellant was charged. He was then given access, for the first time, to a solicitor. He immediately complained about his treatment by the police, and before long retracted his confessions. The heart of this appeal, and indeed of the reference by the Commission, relates to the circumstances in which the appellant's confessions were obtained. In particular, emphasis is placed on the denial of access to a solicitor until he had confessed and been charged, and on the absence of any proper record of the earlier interviews, including the duration of those interviews, or some of them." The court then made reference to the Judges Rules, which included a statement: "that every person at any stage of an investigation should be able to communicate and to consult privately with a solicitor. This is so even if he is in custody provided that in such a case no reasonable delay or hindrance is caused to the process of investigation or the administration of justice by his doing so." The court referred to authority, including Ashley King and Samuel to which we have referred, and stated at paragraph 19: "This is a point which is readily acknowledged by the Crown. Mr Thompson QC fully accepts that, fairly soon into the series of interviews, denial of such access to a solicitor could no longer be justified by contemporary standards of fairness, even if it had been justified initially. The Crown concedes that what happened in this case amounted to a breach of section 58 of PACE, as well as a breach of the then operative Judges Rules." Having considered further argument, the court concluded at paragraph 23: "The prosecution does not seek now to resist this appeal, and, in our judgment, rightly so. We accept the arguments put forward on the appellant's behalf. By current standards of fairness the admissions made by him in the final three interviews should never have been allowed to go before the jury. Had that been the ruling, the case against the appellant would have been non-existent." We have received a detailed skeleton argument from Mr Langdale on behalf of Melnichenko. Mr Wesley on behalf of James and Mr Reynolds on behalf of Colin Richardson rely on the report of the CCRC and adopt the submissions there made. The Commission stated at paragraph 231: "The Commission considers that there is a strong case for referral for David James, Colin Richardson and John Melnichenko on the basis of the strength of the Court of Appeal's judgment in Alan Richardson, as the court took an exceptionally critical view of the officers involved in the case. The conduct of the officers so pervaded the admissions that the Commission considers it to be a real possibility that the Court of Appeal will reach a similar conclusion in relation to [the present appellants]. 232. The Commission observes that it is an additional factor in the current referrals that it is difficult to unravel the extent to which the confrontations and statements from other defendants had an affect on the making of the admissions. Colin Richardson was shown Alan Richardson's statement in interview. In the summing-up, the judge had correctly directed the jury as follows. 'If you are satisfied that a defendant made an allegation in the presence of another defendant, and that the other defendant positively accepted and acknowledged it as being true, then that of course is evidence against that other defendant too.' 233. If Alan Richardson's confessions were unsafe, then any confession elicited on the basis of them was also likely to be found to be unsafe by the court. Whilst this makes the strongest case for referral that of Colin Richardson, the Commission believes that there is a strong basis for referral of all three youths." Mr Reynolds adopts that paragraph, stating that the confession of Colin Richardson followed that of his brother. The Commission stated its conclusions, paragraph 251: "The Commission notes that the only substantial evidence against [the appellants] was their confessions to the police. Without such confessions, the Commission is confident that the cases would not have proceeded to trial. The confessions were obtained in breach of the rules applicable at the time and in circumstances which denied them important safeguards later thought necessary to avoid the risk of a miscarriage of justice. 252. In the Commission's opinion, the judgments in Bentley and Richardson regarding modern standards of fairness, and the cumulative circumstances surrounding the police interviews raise a real possibility that the confessions of [the appellants] would now be ruled inadmissible. That in turn leads to the conclusion that there is a real possibility that the Court of Appeal would not uphold those convictions." The Commission also referred to the absence of an appropriate adult being present during the interviews with the illiterate appellant, that is David James. We mentioned earlier the previous appeal of James. That was based, first, on the alleged unacceptability of the neighbour's evidence and, also, that the inducement offered to the neighbour to give her statement supported the case that inducements had been offered to the appellants. It was also submitted that the confessions were more generally unsafe. On advice from counsel then appearing James did not proceed with his appeal. Mr Smith QC for the Crown does not, understandably in our view, oppose the allowing of these appeals. We have come to the conclusion that the appeals must be allowed. We note and respectfully agree with the general comments about fairness, about the police procedures at the time, and the way in which they are to be judged, made by this court in the case of Alan Richardson. Distinctions are possible between his case and those of the appellants, but when considering the safety of the convictions, which is our task, the differences are not material. The lack of safety of one conviction inevitably contaminates the safety of the others in the circumstances of this case where admissions were made and confrontations arranged. By present day standards these young men, and that is undoubtedly a factor to be considered, should have been allowed access to a solicitor and a contemporaneous record of the interviews should have been made. For Mr Melnichenko there should have been a record of events in the police station between his arrest and his confession, which was the first to be made. We do not need to go beyond that in assessing the conduct of the police and we have decided not to do so. These convictions are unsafe and must be quashed. LORD JUSTICE PILL: Does anything else arise? MR SMITH: No, thank you, my Lord.

Judgment of the General Court (Fourth Chamber) of 15 September 2011 – Lucite International and Lucite International UK v Commission (Case T-216/06) Competition – Agreements, decisions and concerted practices – Market for methacrylates – Decision finding an infringement of Article 81 EC and Article 53 of the EEA Agreement – Fines – Gravity of the infringement – Attenuating circumstances – Non-implementation in practice of the offending agreements or practices 1. Competition – Fines – Amount – Determination – Criteria – Gravity of the infringement – Gravity of the participation of each undertaking – Distinction (Council Regulation No1/2003, Art. 23; Commission Notice 98/C 9/03, Sections 1A, 2 and 3) (see paras 45-47, 52-53, 55) 2. Competition – Fines – Amount – Determination – Principle of equal treatment (Council Regulation No 1/2003, Art. 23; Commission Notice 98/C 9/03) (see para. 59) 3. Acts of the institutions – Statement of reasons – Obligation – Scope – Decision imposing fines – Indication of the factors which led the Commission to assess the gravity and the duration of the infringement – Sufficient indication (Art. 253 EC; Commission Notice 98/C 9/03) (see para. 61) 4. Competition – Fines – Amount – Determination – Criteria – Gravity of the infringement – Principle that penalties fit the individual circumstances – Application to the taking into account of aggravating or attenuating circumstances (Council Regulation No 1/2003, Art. 23; Commission Notice 98/C 9/03, Sections 2 and 3) (see paras 87-89) 5. Competition – Fines – Amount – Determination – Guidelines adopted by the Commission – Obligation on the Commission to comply therewith – Maintenance of a significant margin of discretion for the Commission (Council Regulation No 1/2003; Commission Notice 98/C 9/03) (see paras 90-93) 6. Competition – Community rules – Infringements – Fines – Infringement committed intentionally or negligently – Imputability to an undertaking of the conduct of its organs – Conditions (Council Regulation No 1/2003, Art. 23(2)) (see para. 95) 7. Acts of the institutions – Statement of reasons – Obligation – Scope – Decision to apply competition rules – Obligation to examine all the points of fact and law raised by the persons concerned – None (Art. 253 EC) (see para. 103) 8. Competition – Fines – Amount – Determination – Criteria – Mitigating circumstances – Conduct deviating from that agreed within the cartel – Guidelines adopted by the Commission requiring it to be taken into account (Council Regulation No 1/2003, Art. 23(2); Commission Notice 98/C 9/03, Section 3, second indent) (see para. 109) 9. Competition – Fines – Amount – Determination – Legal context – Guidelines adopted by the Commission – Discretion of the Commission – Judicial review – Unlimited jurisdiction of the General Court (Art. 261 TFEU, Council Regulation No 1/2003, Art. 31) (see para. 120) 10. Competition – Fines – Amount – Determination – Criteria – Mitigating circumstances – Elements to be taken into consideration (Council Regulation No 1/2003, Art. 23; Commission Notice 98/C 9/03, Section 3) (see para. 171) Re: APPLICATION for a reduction in the fine imposed on the applicants under Article 2(d) of Commission Decision C(2006) 2098 final of 31 May 2006 relating to a proceeding pursuant to Article 81 EC and Article 53 of the EEA Agreement (Case COMP/F/38.645 – Methacrylates). Operative part The Court: 1. Dismisses the action; 2. Dismisses the Commission’s request for withdrawal of immunity; 3. Orders Lucite International Ltd and Lucite International UK Ltd to bear 90% of their own costs and to pay 90% of the costs incurred by the Commission; 4. Orders the Commission to bear 10% of its own costs and to pay 10% of the costs incurred by Lucite International and Lucite International UK.

Judgments - Haward and others (Respondents) v. Fawcetts (a firm) (Appellants) and others HOUSE OF LORDS SESSION 2005-06 [2006] UKHL 9 on appeal from[2004] EWCA Civ 240     OPINIONS OF THE LORDS OF APPEAL for judgment IN THE CAUSE   Haward and others (Respondents) v. Fawcetts (a firm) (Appellants) and others     Appellate Committee   Lord Nicholls of Birkenhead Lord Scott of Foscote Lord Walker of Gestingthorpe Lord Brown of Eaton-under-Heywood Lord Mance     Counsel Appellants: Howard Palmer QC Neil Moody (Instructed by CMS Cameron McKenna LLP) Respondents: Michael Pooles QC Christopher McCourt (Instructed by Anthony Taylor)     Hearing dates: 21 and 22 November 2005   on WEDNESDAY 1 march 2006   HOUSE OF LORDS OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT IN THE CAUSE Haward and others (Respondents) v. Fawcetts (a firm) (Appellants) and others [2006] UKHL 9 LORD NICHOLLS OF BIRKENHEAD My Lords,   In this case the claimant Mr Haward invested money in a company on the advice of his accountant Mr Austreng. The company failed, and Mr Haward lost his money. The issue before the House concerns a defence of limitation. This was tried as a preliminary issue in the action.   Statutes of limitation seek to hold a balance between two competing interests: the interests of claimants in having maximum opportunity to pursue their legal claims, and the interests of defendants in not having to defend stale proceedings. Traditionally the limitation period for most claims is six years. This goes back to the Limitation Act 1623. On its face this period, with extensions in cases of fraud and mistake, is a generous, perhaps over-generous, period within which to be able to start court proceedings in respect of a wrong.   However, with certain types of claims this six year period would be far from generous or even reasonable. The starting date for the six year limitation period is when a cause of action accrues. In claims based on negligence a cause of action accrues when real damage, as distinct from minimal damage, is suffered. This principle has been applied in limitation cases even where, at the date of accrual of the cause of action, the claimant did not know he had suffered damage. The injustices to which this harsh approach gave rise are well known. They were high-lighted in decisions of your Lordships' House in appeals such as the pneumoconiosis case of Cartledge v E Jopling & Sons Ltd [1963] AC 758 and the defective chimney case of Pirelli General Cable Works Ltd v Oscar Faber & Partners [1983] 2 AC 1. There claimants were held to be statute-barred before they knew or could be expected to know they had suffered damage.   Considerable difficulty has arisen in finding a satisfactory formula remedying this deficiency in the law. The relevant statutory provisions now current are sections 11 to 14B of the Limitation Act 1980. Section 11 made provision for special time limits in respect of personal injuries. Sections 14A and 14B, inserted into the 1980 Act by the Latent Damage Act 1986, made similar provision for other negligence claims. The present appeal is concerned with these latter provisions.   Both sets of statutory provisions sought to remedy the deficiencies in the law by providing for an extended period of limitation to run from a date later than the date when the cause of action accrued. In the case of personal injuries claims the relevant later date, stated shortly, is when the person injured first knew his injury was significant, that the injury was attributable to the act or omission alleged to constitute negligence, and the identity of the defendant: section 14.   Parliament subsequently adopted a similar approach to other negligence claims. The extended three-year limitation period starts when the claimant first had both 'the knowledge required for bringing an action for damages in respect of the relevant damage' and a right to bring the action: section 14A(5). Section 14A(6)-(10) then defines what constitutes knowledge for this purpose. Essentially knowledge means knowledge of certain facts, of which two are relevant in the present case. These two facts are, first, 'the material facts about the damage in respect of which damages are claimed' and, second, 'that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence': section 14A(6) and (8)(a). For convenience I shall henceforth confine my references to section 14A, but my observations apply equally to the corresponding provisions in section 14.   By these provisions Parliament sought to identify the knowledge a claimant needs to possess before it is fair and reasonable that time should run against him. That is their purpose. This is made explicit in section 14A by its introductory description of the requisite knowledge as 'the knowledge required for bringing an action [etc]'. The claimant is to have a reasonable period, set by Parliament at three years, in which to start proceedings after he has the knowledge he reasonably needs for that purpose.     The degree of knowledge required   Two aspects of these 'knowledge' provisions are comparatively straightforward. They concern the degree of certainty required before knowledge can be said to exist, and the degree of detail required before a person can be said to have knowledge of a particular matter. On both these questions courts have had no difficulty in adopting interpretations which give effect to the underlying statutory purpose.   Thus, as to the degree of certainty required, Lord Donaldson of Lymington MR gave valuable guidance in Halford v Brookes [1991] 1 WLR 428, 443. He noted that knowledge does not mean knowing for certain and beyond possibility of contradiction. It means knowing with sufficient confidence to justify embarking on the preliminaries to the issue of a writ, such as submitting a claim to the proposed defendant, taking advice, and collecting evidence: 'suspicion, particularly if it is vague and unsupported, will indeed not be enough, but reasonable belief will normally suffice'. In other words, the claimant must know enough for it to be reasonable to begin to investigate further.   Questions about the degree of detail required have mostly arisen in the context of the need for a claimant to know 'the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence': section 14A(8)(a). Consistently with the underlying statutory purpose, Slade LJ observed in Wilkinson v Ancliff [1986] 1 WLR 1352, 1365, that it is not necessary for the claimant to have knowledge sufficient to enable his legal advisers to draft a fully and comprehensively particularised statement of claim. Where the complaint is that an employee was exposed to dangerous working conditions and his employer failed to take reasonable and proper steps to protect him it may well be sufficient to set time running if the claimant has 'broad knowledge' of these matters. In the clinical negligence case of Hendy v Milton Keynes Health Authority [1992] 3 Med LR 114, 117, Blofeld J said a plaintiff may have sufficient knowledge if she appreciates 'in general terms' that her problem was capable of being attributed to the operation, even where particular facts of what specifically went wrong or how or where precise error was made is not known to her. In proceedings arising out of the manufacture and sale of the drug Opren Purchas LJ said that what was required was knowledge of the 'essence' of the act or omission to which the injury was attributable: Nash v Eli Lilly & Co [1993] 1 WLR 782, 799. In Spargo v North Essex District Health Authority [1997] PIQR P235 Brooke LJ referred to 'a broad knowledge of the essence' of the relevant acts or omissions. To the same effect Hoffmann LJ said section 14(1)(b) requires that 'one should look at the way the plaintiff puts his case, distil what he is complaining about and ask whether he had in broad terms knowledge of the facts on which that complaint is based': Broadley v Guy Clapham & Co [1993] 4 Med LR 328, 333.   A similar approach is applicable to the expression 'attributable' in section 14A(8)(a). The statutory provisions do not require merely knowledge of the acts or omissions alleged to constitute negligence. They require knowledge that the damage was 'attributable' in whole or in part to those acts or omissions. Consistently with the underlying statutory purpose, 'attributable' has been interpreted by the courts to mean a real possibility, and not a fanciful one, a possible cause of the damage as opposed to a probable one: see Nash v Eli Lilly & Co [1993] 1 WLR 782, 797-798. Thus, paraphrasing, time does not begin to run against a claimant until he knows there is a real possibility his damage was caused by the act or omission in question.     Irrelevance of knowledge that the act or omission involved negligence   Difficulties may sometimes arise over the interaction of these 'knowledge' provisions and the statutory provision rendering 'irrelevant' knowledge that, as a matter of law, an act or omission did, or did not, amount to negligence: section 14A(9). By the latter provision Parliament has drawn a distinction between facts said to constitute negligence and the legal consequence of those facts. Knowledge of the former (the facts) is needed before time begins to run, knowledge of the latter (the legal consequence of the facts) is irrelevant. As Sir Thomas Bingham MR said in the clinical negligence case of Dobbie v Medway Health Authority [1994] 1 WLR 1234, 1242, knowledge of fault or negligence is not necessary to set time running. A claimant need not know he has a worthwhile cause of action.   A linguistic point, which can give rise to confusion, should be noted here. Sometimes the essence of a claimant's case may lie in an alleged act or omission by the defendant which cannot easily be described, at least in general terms, without recourse to language suggestive of fault: for instance, that 'something had gone wrong' in the conduct of the claimant's medical operation, or that the accountant's advice was 'flawed'. Use of such language does not mean the facts thus compendiously described have necessarily stepped outside the scope of section 14A(8)(a). In this context there can be no objection to the use of language of this character so long as this does not lead to any blurring of the boundary between the essential and the irrelevant.   This point is exemplified in Dobbie v Medway Health Authority [1994] 1 WLR 1234. The judge held the claimant had 'broad knowledge of sufficient facts to describe compendiously [1] that her breast had been unnecessarily removed, [2] that something had gone wrong, and [3] that this was due to the defendant's negligence': [1994] 1 WLR 1234, 1243. In the Court of Appeal this part of the judge's reasoning was criticised. These matters, it was said, were irrelevant. In my respectful view the Court of Appeal's criticism was well directed so far as it related to the third of these three matters, but not so far as it related to the other two. The essence of the claimant's case was that she had suffered injury by the removal of a healthy breast, that is, her breast had been removed unnecessarily and something had gone wrong. These were the acts and omissions she alleged constituted negligence. Under the statute time did not begin to run until she knew of these acts or omissions. Until she was aware of these matters she could not know her injury was attributable to them. I agree with the observations to this effect made by the Court of Appeal in Hallam-Eames v Merrett Syndicates Ltd [2001] Lloyd's Rep PN 178, 181.   In many cases the distinction between facts (relevant) and the legal consequence of facts (irrelevant) can readily be drawn. In principle the two categories are conceptually different and distinct. But lurking here is a problem. There may be difficulties in cases where a claimant knows of an omission by say, a solicitor, but does not know the damage he has suffered can be attributed to that omission because he does not realise the solicitor owed him a duty. The claimant may know the solicitor did not advise him on a particular point, but he may be totally unaware this was a matter on which the solicitor should have advised him. This problem prompted Janet O'Sullivan, in her article 'Limitation, latent damage and solicitors' negligence', 20 Journal of Professional Negligence (2004) 218, 237, to ask the penetrating question: unless a claimant knows his solicitor owes him a duty to do a particular thing, how can he know his damage was attributable to an omission? The present case   This particular difficulty does not arise in the present case. The facts are set out fully by my noble and learned friend Lord Mance. Once Mr Haward knew enough for it to be reasonable for him to investigate whether Mr Austreng's advice was flawed, he would thereupon have known his losses might well be attributed in whole or in part to that flaw. He would have known this, because he had relied upon Mr Austreng's advice when investing money in the company.   On the contrary, the present case calls simply for a careful application of section 14A(8)(a) as interpreted as summarised above. The judge's approach was that Mr Haward knew all the material facts as they occurred. He knew the terms of Mr Austreng's retainer, he knew the advice Mr Austreng gave him, and he relied on that advice, with the consequence that he lost his money. The causal connection between the advice and the damage was patent and obvious. The only thing Mr Haward did not know was that Mr Austreng's firm was (allegedly) negligent, or that he had a cause of action against the firm; but those matters are irrelevant.   This approach treats knowledge that Mr Austreng's advice might well be flawed as irrelevant. The Court of Appeal held that in so doing the judge fell into error.   I agree with the Court of Appeal. I agree with the Court of Appeal that the judge in the present case fell into the same error as the first instance judge in Hallam-Eames v Merrett Syndicates Ltd [2001] Lloyd's Rep PN 178. The language and intent of section 14A(8)(a) are clear. As already noted, in addition to having knowledge of the material facts about the damage, a claimant must know there was a real possibility the damage was caused by ('attributable to') the acts or omissions alleged to constitute negligence. The conduct alleged to constitute negligence in the present case was not the mere giving of advice. The conduct alleged to constitute negligence was the giving of flawed advice: Mr. Austreng did not give the advice appropriate to the true financial state of the company's affairs.   This feature of the advice cannot be brushed aside as a matter of detail. Nor can it be treated, as it was by the judge, as a matter going only to particulars. Far from it. This feature is the very essence of Mr Haward's claim. Stated in simple and broad terms, his claim is that Mr Austreng did not do his job properly. Time did not start to run against Mr Haward until he knew enough for it to be reasonable to embark on preliminary investigations into this possibility.   There may be cases where the defective nature of the advice is transparent on its face. It is not suggested that was so here. So, for time to run, something more was needed to put Mr Haward on inquiry. For time to start running there needs to have been something which would reasonably cause Mr Haward to start asking questions about the advice he was given.   The judge made no specific finding about when that was in this case. The judge did express a view on a different question, namely, when Mr Haward first knew he had a 'claim' against Mr Austreng's firm. On this question the judge held that Mr Haward had not discharged the burden of proving he first acquired this knowledge after 6 December 1998.   On the latter question the judge's reasons were subject to forceful criticism by Mr Haward's counsel. But that is beside the point. The relevant date was not when Mr Haward first knew he might have a claim for damages. The relevant date was an earlier date, namely, when Mr Haward first knew enough to justify setting about investigating the possibility that Mr Austreng's advice was defective. Mr Haward had the burden of proving that this date was after 6 December 1998. Mr Haward, it seems, did not attempt to discharge this burden. His evidence was not directed at this anterior issue. His evidence was directed at the date when he first knew he might have a claim for damages.   Accordingly, although the judge made no finding on this point, it is evident that, not having directed evidence to the relevant issue, Mr Haward failed to discharge the burden of proof resting on him. It may well be that an investigation into a possible causal link between the losses and Mr Haward's advice, or the lack of it, did not begin until May 1999. Jonathan Parker LJ so held (paragraph 147). But it by no means follows from this that until then Mr Haward lacked sufficient knowledge for it to be reasonable for him to set about investigating the possibility that Mr Austreng had slipped up when giving his advice. After all, the disparity between Mr Austreng's advice and the company's disastrous losses stared Mr Haward in the face long before December 1998. And Mr Haward was an experienced businessman. In these proceedings Mr Austreng's firm did not rely upon section 14A(10). But this does not preclude the House from finding that this disparity confirms, if confirmation is needed, that Mr Haward failed to discharge the burden of proof resting on him. I would allow this appeal and restore the judge's order. LORD SCOTT OF FOSCOTE My Lords, Background to section 14A of the Limitation Act 1980   This is a case in which professional negligence is alleged. The defendant, appellant before your Lordships, is a firm of accountants, Fawcetts. Mr J. H. Haward, the first respondent in the appeal, was a client of theirs. In October 1994 Mr Austreng, a partner in Fawcetts, gave professional advice to Mr Haward regarding the proposed acquisition by Mr Haward of a company, then called Kings Stag Engineering Ltd but later re-named Haward Agriculture Ltd (henceforth "the Company"). On 9 December 1994, and in reliance on the advice of Mr Austreng, Mr Haward (or his family company W. J. Haward Ltd, the second respondent) subscribed for 60,000 newly issued £1 shares in the Company at par. This shareholding constituted a controlling interest. In addition a Haward family Trust (the third respondent) acquired the freehold of the leasehold premises from which the Company carried on business for a price of £100,000. Fawcetts were appointed auditors to the Company.   It was contemplated at the time of this acquisition that additional money, £100,000 or thereabouts, would need to be put into the business in order to bring the Company to a state of reasonable profitability and so as to allow a reasonable return to be had from the Haward money that had been invested.   But the notion that the Company could be brought to profitability by the injection of the originally contemplated sums turned out to be mistaken. The Company's Balance Sheet and Profit and Loss Account for the year ended 31 December 1994 showed a loss for the year of £46,049 and net assets of £34,806. The accounts for the year ended 31 December 1995 showed a loss for the year of £266,340 and an excess of liabilities over assets of £231,534. And in the course of 1995 one or other of Mr Haward, the family company and the family Trust invested a further £431,000 in the Company. But this substantial investment, too, failed to bring the Company to profitability. The accounts for the year ended 31 December 1996 show a loss of £27,276 for the year and an excess of liabilities over assets of £258,810, and those for the year ended 31 December 1997 show a loss of £400,062 for the year and an excess of liabilities over assets of £658,872. These continuing losses were financed by further investment from either Mr Haward, the family company or the family Trust of £102,985 in 1996, £509,525 in 1997 and £208,950 in 1998. The yearly accounts were all prepared by Fawcetts. All were signed by Mr Haward. The only reason the Company was not put into liquidation, for it was plainly insolvent in a balance sheet sense, was that the bulk of the family investment to which I have referred had taken the form of loans and the lenders, via Mr Haward, controlled the Company.   In 1998 Mr Haward asked a Mr Peter Hughes, who specialised in corporate rescues, to look into the matter of the Company's ever-mounting losses. The involvement of Mr Hughes and associates of his in the Company's business affairs and fortunes led eventually to a claim for damages for professional negligence being made against Fawcetts. The proceedings were commenced on 6 December 2001.   The professional negligence claim was both a contractual claim and a claim in tort. Fawcetts' defence denied the alleged negligence but raised also the defence that the claims based on breaches of contract prior to 6 December 1995 were statute barred and that tortious claims for losses accruing prior to 6 December 1995 were likewise statute barred. If this were so the negligence claim could proceed in respect of the 1996, 1997 and 1998 investments but not in respect of the initial £160,000 invested in 1994 nor in respect of the £431,000 invested in 1995.   On 26 November 2002 a direction was given by Master Leslie that the issues of limitation be tried as preliminary issues.   It has, of course, been common ground throughout this litigation that the basic period of limitation for both the contractual claims and the tortious claims brought in these proceedings is six years from the date on which the causes of action accrued. The respondents, however, rely on the three year extended time limit provided by section 14A of the Limitation Act 1980. The question is whether, in relation to the 1994 and 1995 investments, their action is saved by section 14A. A limitation defence   It seems to me desirable, before attempting to apply section 14A to the facts of this case, to review the nature of a limitation defence and the intended purpose of section 14A. It is important, in my opinion, to keep in mind that limitation defences are creatures of statute. The expression "statute-barred" makes the point. And, in prescribing the conditions for the barring of an action on account of the lapse of time before its commencement, Parliament has had to strike a balance between the interests of claimants and the interests of defendants. It is a hardship, and in a sense an injustice, to a claimant with a good cause of action for damages to which, let it be assumed, there is no defence on the merits to be barred from prosecuting the cause of action on account simply of the lapse of time since the occurrence of the injury for which redress is sought. But it is also a hardship to a defendant to have a cause of action hanging over him, like the sword of Damocles, for an indefinite period. Lapse of time may lead to the loss of vital evidence; it is very likely to lead to a blurring of the memories of witnesses and to the litigation becoming even more of a lottery than would anyway be the case; and uncertainty as to whether an action will or will not be prosecuted may make a sensible and rational arrangement by the defendant of his affairs very difficult and sometimes impossible. Each of the various statutes of limitation that over the years Parliament has enacted, starting with the Limitation Act 1623 (21 Jac.1.c.16) and coming down to the 1980 Act, represents Parliament's attempt to strike a balance between these irreconcilable interests, both legitimate. It is the task of the judiciary to identify from the statutory language and the purpose of each amending enactment the balance that that enactment has endeavoured to strike and to apply the enactment accordingly. It is emphatically not the function of the judges to try to strike their own balance, whether as a response to the apparent merits of a particular case or otherwise. In 1825 in A'court v Cross (3 Bing.329) Best CJ, commenting on the 1623 Act, said that he was "sorry to be obliged to admit that the courts of justice [had] been deservedly censured for their vacillating decisions" (p,330) and went on "When by distinctions and refinements, which, Lord Mansfield says, the common sense of mankind cannot keep face with, any branch of the law is brought into a state of uncertainty, the evil is only to be remedied by going back to the statute …" (p.331) I think these strictures need to be borne in mind in the present case.   In reviewing the development of the statutory regime it is not necessary to delve deeper into history than the Limitation Act 1939. This Act prescribed a six year limitation period for both contract and tort actions but allowed an extended period for actions based on the defendant's (or his agent's) fraud or for relief from the consequences of a mistake (s.26). In fraud and mistake cases the six year period did not begin to run until the fraud or mistake had been, or with "reasonable diligence" could have been, discovered by the claimant. There was no extended period for cases where the damage had been suffered but had been undetectable by, and therefore unknown to, the claimant until after the six year limitation period had expired. Cartledge v Jopling & Sons Ltd [1963] AC 758 drew attention to this feature of the statutory regime and confirmed that the six year limitation period ran from the time the cause of action accrued, that is to say, in tort cases when the damage happened. Lord Reid at p.772 said: "If this were a matter governed by the common law I would hold that a cause of action ought not to be held to accrue until either the injured person has discovered the injury or it would be possible for him to discover it if he took such steps as were reasonable in the circumstances. The common law ought never to produce a wholly unreasonable result … But the present question depends on statute, the Limitation Act, 1939, and section 26 of that Act appears to me to make it impossible to reach the result which I have indicated." Cartledge v Jopling was a personal injury case and all their Lordships advocated amendment of the 1939 Act to cover the case of undetectable physical injury that only becomes apparent years later.   Parliament was swift to respond and the Limitation Act 1963 was enacted. Section 1(3) of the 1963 Act enabled an action for personal injuries to be brought "… if it is proved that the material facts relating to that cause of action were or included facts of a decisive character which were at all times outside the knowledge (actual or constructive) of the plaintiff until a date which … was not earlier than 12 months before the date on which the action was brought." The meaning of "material facts relating to that cause of action" was defined in section 7(3): "… any reference to the material facts relating to a cause of action is a reference to any one or more of the following, that is to say - (a)  the fact that personal injuries resulted from the negligence, nuisance or breach of duty constituting that cause of action; (b)  the nature or extent of the personal injuries resulting from that negligence, nuisance or breach of duty; (c)  the fact that the personal injuries so resulting were attributable to that negligence, nuisance or breach of duty, or the extent to which any of those personal injuries were so attributable." In Central Asbestos Co. Ltd v Dodd [1973] AC 518 a majority of this House rejected the proposition that knowledge of "material facts" for section 1(3) purposes included knowledge that the defendant's conduct entitled the plaintiff to a legal remedy.   The Law Reform Committee in its 1974 Report on Limitation of Actions in Personal Injury Claims (Cmnd.5630) thought that the date of knowledge of material facts, when the applicable limitation period would start to run, should be the date "when the plaintiff has knowledge, actual or constructive, both of his injured condition and of its having been caused by acts or omissions of the defendant" (para. 55 and see para. 69(3)). This Report led to the 1975 Limitation Act which was later consolidated into the 1980 Act. Section 11 of the 1980 Act prescribes a three year limitation period for personal injury claims with the period commencing either when the cause of action accrued, i.e. when the damage occurred, or on "the date of knowledge" whichever be the later. Section 14 adopted the Law Reform Committee's recommendation in para.69 of the Report as to when "the date of knowledge" would occur (see s.s(1)). There is no reference in section 14 to knowledge of "material facts" as such. The facts of which knowledge is required are spelled out more precisely.   But neither section 1(3) and 7(3) of the 1963 Act nor their replacement in the 1975 Act (which became part of sections 11 and 14 of the 1980 Act) dealt with damage to property or with economic loss. Attention was drawn to this feature of the statutory regime by Pirelli General Cable Works Ltd v Oscar Faber & Partners [1983] 2 AC 1. Damage to a factory arose out of the use of a material in constructing a factory chimney that was unsuitable for the purpose. The chimney had been built in 1969 but the faulty condition of the chimney could not have been discovered with reasonable diligence until 1972 and was not in fact discovered until 1977. A writ was issued in 1978. The question was whether the six year period ran from the date the faulty chimney was built or from the date when the fault could have been or was discovered. This House, following Cartledge v Jopling, held that the former was the starting date. So the action was statute barred.   The Law Reform Committee took the problem under advisement again and recommended the adaptation of section 14 of the 1980 Act so as to provide an extension of time where the negligence complained of had led to the creation of a latent defect in property. The Committee's Report (Cmnd.9390) resulted in the Latent Damage Act 1986 section 1 of which incorporated section 14A into the 1980 Act. Just as Cartledge v Jopling had led to an extension of the limitation period in personal injury cases so the Pirelli case led to an extension in latent damage cases. Section 14A and its intended purpose are critical to the outcome of this appeal and it is helpful, in my opinion, to bear in mind some of the Law Reform Committee's comments in its Latent Damage Report that led to the enactment of that section.   In paragraph 4.2 the Committee formulated "three principles … of critical importance … ". They were: "(i)  that plaintiffs must have a fair and sufficient opportunity of pursuing their remedy; (ii)  that defendants are entitled to be protected against stale claims; (iii)  that uncertainty in the law is to be avoided whenever possible." In para.4.4 the Committee commented that "a plaintiff who has no means of knowing that he has suffered damage should not as a general rule be barred from taking proceedings by a limitation period which can expire before he discovers (or could discover) his loss". This comment is clearly directed at Pirelli type cases of latent damage. In para.4.8 the Committee recommended "the adaptation of section 14 of the 1980 Act to cases of latent defect other than those of personal injury".   Section 14A applies to any action for damages for negligence other than personal injury actions (s.s(11)). So although the provenance of section 14A was the problem presented by cases of damage to property where the damage was not immediately apparent, the section applies also to cases, such as the present case, where the damage consists of economic loss. Here, too, it is reasonable to suppose that the mischief being addressed was that of loss that was not immediately apparent. Sub-section (4) of section 14A provides two alternative limitation periods, namely, the normal six year period from the accrual of the cause of action, or, alternatively, a three year period from "the starting date" as defined by sub-section (5). It is convenient to set out sub-sections (5) to (10) in full. "(5)  For the purposes of this section, the starting date for reckoning the period of limitation under subsection (4)(b) above is the earliest date on which the plaintiff or any person in whom the cause of action was vested before him first had both the knowledge required for bringing an action for damages in respect of the relevant damage and a right to bring such an action. (6)  In subsection (5) above "the knowledge required for bringing an action for damages in respect of the relevant damage" means knowledge both - (a)  of the material facts about the damage in respect of which damages are claimed; and (b)  of the other facts relevant to the current action mentioned in subsection (8) below. (7)  For the purposes of subsection (6)(a) above, the material facts about the damage are such facts about the damage as would lead a reasonable person who had suffered such damage to consider it sufficiently serious to justify his instituting proceedings for damages against a defendant who did not dispute liability and was able to satisfy a judgment. (8)  The other facts referred to in subsection (6)(b) above are - (a)  that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence; and (b)  the identity of the defendant; and (c)  if it is alleged that the act or omission was that of a person other than the defendant, the identity of that person and the additional facts supporting the bringing of an action against the defendant. (9)  Knowledge that any acts or omissions did or did not, as a matter of law, involve negligence is irrelevant for the purposes of subsection (5) above. (10)  For the purposes of this section a person's knowledge includes knowledge which he might reasonably have been expected to acquire - (a) from facts observable or ascertainable by him; or (b) from facts ascertainable by him with the help of appropriate expert advice which it is reasonable for him to seek; but a person shall not be taken by virtue of this subsection to have knowledge of a fact ascertainable only with the help of expert advice so long as he has taken all reasonable steps to obtain (and, where appropriate, to act on) that advice."   It is to be noted that sub-sections (6)(a) and (7) refer to "material facts", an expression used in sections 1(3) and 7(3) of the 1963 Act but not found in sections 11 and 14 of the 1980 Act. In the 1963 Act, however, the reference was to the material facts "relating to that cause of action." (s.1 (3)). In section 14A(6)(a) the reference is more limited - "… the material facts about the damage". The limited character of the reference is underlined by the definition of the expression in sub-section (7). What is wanted is knowledge of "such facts about the damage" as would be expected to lead to the institution of a claim against a solvent defendant who had no defence to the claim. This demonstrates that the sub-section (6)(a) "material facts" of which knowledge is needed do not include any facts about the acts or omissions of the defendant that allegedly constitute the negligence.   In addition, however, to knowledge of the sub-section (6)(a) "material facts", knowledge is needed also of the sub-section (6)(b) "other facts". These "other facts" are specifically described. They are facts of the three types specified in paragraphs (a), (b) and (c) of sub-section (8). Nothing for present purposes turns on the "other facts" specified in (b) or (c) but (a) is critical. Knowledge is required of the fact "that the damage was attributable" to the act or omission alleged to constitute negligence.   Section 7(3) of the 1963 Act had required knowledge of the fact that the personal injuries were "attributable" to the negligence, nuisance or breach of duty constituting the cause of action. In Central Asbestos Co. Ltd v Dodd Lord Pearson examined the meaning of "attributable". He cited, at p.543, the definition of "Attributable" and "Attribute" given by the Oxford English Dictionary (1888) Vol.1 p.556, and continued: "Thus 'attributable to' refers to causation but it has to cover cases of dual or multiple causation …"   The statutory language in sub-section (8)(a) has been considered in a number of cases and raises the question whether a claimant, in order to obtain the extended period of three years, need show no more than a lack of knowledge of an allegedly negligent act or omission that is a link in the causation chain leading to the damage, and regardless of the importance of that link in the chain. In other words, a causative connection is a necessary part of attributability but is it necessarily sufficient to constitute attributability?   In Nash v Eli Lilly & Co. [1993] 1 WLR 782, a personal injuries case, Purchas LJ, giving the judgment of the Court of Appeal, said, at p.799, that "It was not … the intention of Parliament to require for the purposes of section 11 and section 14 of the [1980] Act proof of knowledge of the terms in which it will be alleged that the act or omission of the defendants constituted negligence or breach of duty. What is required is knowledge of the essence of the act or omission to which the injury is attributable." (emphasis added)   Dobbie v Medway Health Authority [1994] 1 WLR 1234 was a case in which a patient had had a lump on her breast. The surgeon, without first subjecting the lump to a microscopic examination in order to determine whether it was cancerous or benign, removed the breast. This was in 1973. The lump was subsequently found to be benign. The patient knew very soon after the operation that the lump was benign but did not know until 1988 that that meant her breast need not have been removed. She began proceedings for negligence in 1989. Sir Thomas Bingham M.R. (as he then was) referred to the "knowledge" test formulated by Lord Donaldson of Lymington M.R. in Halford v Brookes [1991] 1 WLR 428 at 443 and continued at 1240: "This test is not in my judgment hard to apply. It involves ascertaining the personal injury on which the claim is founded and asking when the claimant knew of it." and, at 1243, expressed this conclusion "The personal injury on which the plaintiff seeks to found her claim is the removal of her breast and the psychological and physical harm which followed. She knew of this injury within hours, days or months of the operation and she at all times reasonably considered it to be significant. She knew from the beginning that this injury was capable of being attributed to, or more bluntly was the clear and direct result of, an act or omission of the health authority. What she did not appreciate until later was that the health authority's act or omission was (arguably) negligent or blameworthy. But her want of that knowledge did not stop time beginning to run." And in Hallam-Eames v Merrett Syndicates [2001] LlR PN 178, in which a number of members of Lloyd's facing re-insurance underwriting liabilities were alleging negligence on the part of the active underwriter, their members' agents and their syndicates' managing agents and where limitation defences had been raised, Hoffmann LJ (as he then was) emphasised the statutory words "attributable… to the act or omission which is alleged to constitute negligence" and gave this explanation at 181 (left hand column) "In other words the act or omission of which the plaintiff must have knowledge must be that which is causally relevant for the purposes of an allegation of negligence … It is this idea of causal relevance which various judges of this court have tried to express by saying the plaintiff must know 'the essence of the act or omission to which the injury is attributable' (Purchas LJ in Nash v Eli Lilly & Co [1993] 1WLR 782 at 799) or 'the essential thrust of the case' (Sir Thomas Bingham M.R. in Dobbie [1994] 1WLR 1238) or that 'one should look at the way the plaintiff puts his case, distil what he is complaining about and ask whether he had in broad terms knowledge of the facts on which that complaint is based' (Hoffmann LJ in Broadley [1993] 4 Med LR 328, 332)". Application of section 14A to the facts of this case   What was the "damage" allegedly caused by Fawcetts' negligence of which the respondents complain? The damage was the investment of the Haward money first in acquiring the Company and its business premises in 1994 and subsequently in trying to bring the Company to profitability. The damage, as I think was common ground, was the making of a bad investment. The measure of the loss depended on the eventual worth of the Company but the damage allegedly caused by Fawcetts' negligence was the making of the investment. Mr Haward plainly had knowledge that the investment of Haward money in 1994 and 1995 had taken place. He knew the exact amount of money that had been invested. But, on the footing that it was indisputable that Fawcetts' advice in respect of the investment had been negligent, at what date did Mr Haward know that the investment was a sufficiently seriously bad one to justify suing them? Mr Haward needs to establish that he did not have this knowledge until after 6 December 1998. This is the sub-section (6)(a) issue.   On this issue there cannot, in my opinion, be any doubt but that Mr Haward had the requisite knowledge well before 6 December 1998. He had made the initial investment in 1994 on the footing that a further £100,000 or thereabouts would need to be injected into the Company's business. But the Company had steadily made losses and £431,000 in 1995, £102,985 in 1996 and a huge £509,525 in 1997 had had to be put into the Company in order to keep it a going concern. The 1997 accounts showed a loss for the year of over £400,000 and an excess of liabilities over assets of £658,872. So far as the 1994 investment and 1995 investment are concerned it cannot, in my opinion, possibly be contended that there were any "material facts about the damage in respect of which damages are claimed" of which Mr Haward did not have knowledge by 6 December 1998.   The critical issue, therefore, is whether by that date Mr Haward lacked knowledge that the "damage", i.e. the investment of Haward money in 1994 and 1995, "was attributable in whole or in part" to the acts or omissions of Fawcetts alleged to constitute negligence. This is the sub-section (8)(a) issue.   As to this I would, for my part, accept and apply the opinions expressed in Nash v Eli Lilly, Dobbie v Medway Health Authority and the Hallam-Eames case that the requisite knowledge is knowledge of the facts constituting the essence of the complaint of negligence.   The particulars of the breaches of contract and of negligence that the respondents rely on in the present case are set out in the Amended Particulars of Claim in sub-paragraphs (a) to (q). It is not necessary, in my opinion, to refer to all of them, for the essence of the complaint can be distilled from just a few. Thus, paragraphs "(a)  failing to determine and to advise as to the proper value of the Company and the proper price to pay for a 60% shareholding in the Company", "(e) failing to advise as to the true financial state of the Company and its financial prospects for the future in the light of the true financial position of the Company", and "(g) failing to advise as to the extent of investment that it would be necessary to make to keep the Company trading" constitute to my mind the essence of the respondents' complaint against Fawcetts, namely, that Fawcetts, their financial advisers, did not give them the advice that the true state of the Company's affairs warranted and that, if given, would have warned them against a disastrous investment of their money. The other particulars are, in my opinion, essentially reasons why the failings alleged in paragraphs (a), (e) and (g) were negligent failings.   As to knowledge, Mr Haward knew what advice had been given by Fawcetts and he knew what advice had not been given by Fawcetts. He knew by 6 December 1998 that the true financial state of the Company had required, if the Company were to keep trading, the very substantial additional investment that had to be made, and was made, to cover the losses incurred in the years 1995, 1996 and 1997. He did not know that the advice actually given or the pleaded failings involved negligence, but knowledge of that is not required (see s.14(A)(9)).   Judge Playford QC summed up the situation very well in paragraph 20 of his judgment: "… it is the basis of [the respondents'] claim that [Fawcetts] advised on-going investment and it is hard to see how [Mr Haward] could have failed to appreciate that he was spending money either on their advice or without their advice. So far as [Mr Haward] was concerned, there was nothing of a factual nature that was latent; all was patent. The only thing that he did not know was that Fawcetts had been, as he now alleges, negligent or that he had a claim against them but such matters are irrelevant." In my opinion this summation was factually accurate and in accordance with the requirements of section 14A.   In the Court of Appeal Jonathan Parker LJ reviewed the relevant authorities meticulously and correctly identified that the critical issue was whether by 6 December 1998 the section 14A(8)(a) requirement of knowledge of attributability was satisfied (para.148 of his judgment). But he went wrong in my respectful opinion in paragraph 168 of his judgment when he said that there were "on the evidence, a number of possible causes for the failure of the Company apart from Fawcetts' advice (or lack of it)" and that "[Mr Haward] did not know [in July 1998] that all or part of the damage was capable of being attributed to Fawcetts' advice (or lack of it)." The Lord Justice was, it seems to me, looking at the wrong event. The "damage" allegedly caused by Fawcetts' negligence was not the failure of the Company. The damage was the making by the respondents of loss-making investments. Fawcetts could not have been made responsible for the failure of the Company. The respondents were seeking in the action to make Fawcetts responsible for their losses consequent upon the making of the investments. Mr Haward needed to have knowledge that Fawcetts' acts or omissions were causative of the making of the investments. He plainly had that knowledge at the time the investments were made. And very soon thereafter, in relation to the 1994 and 1995 investments (which is all that this limitation issue is concerned with) he knew that the investments were loss-making. As Judge Playford QC said, all he did not know was that Fawcetts' advice (or the lack of it) had been negligent. But that lack of knowledge is irrelevant (sub-section (9)).   A decision of your Lordships in favour of the respondents, enabling the action to be brought within three years of the discovery by Mr Haward of why it was that the advice he had received from Fawcetts was negligent (if that is what it was), or why it was that Fawcetts had not given him the advice that he alleges they should have given, would expand section 14A to cover cases that had nothing whatever to do with latent damage or losses. It would expose those who give advice on financial matters to potential liability not simply until the expiry of three years after the loss-making consequences of the advice are known but until the expiry of three years after all the reasons why that advice was negligent are known. This, in my opinion, is an unjustifiable extension of the scope of section 14A, substantially altering the balance between claimant and defendant that Parliament has struck. For these reasons, and also for the reasons contained in the opinions of my noble and learned friends, with all of which I agree, I would allow this appeal and restore the order of Judge Playford QC. LORD WALKER OF GESTINGTHORPE My Lords,   Despite the best efforts of the Law Commission the law in this area still has many problems. Section 14A of the Limitation Act 1980, as inserted by section 1 of the Latent Damage Act 1986, is closely modelled on sections 11 and 14 of the Limitation Act 1980 (which apply to actions for damages for personal injuries based on negligence, nuisance or breach of duty). Whether a claimant has suffered personal injury is in principle a straightforward question of fact, and the fact that the claimant has suffered personal injury is a given once it comes to the application of section 14 (definition of date of knowledge).   Section 14A, by contrast, covers a much wider field ("any action for damages for negligence, other than one to which section 11 of this Act applies"). Moreover the word "damage" (as used in the expression "relevant damage" in subsections (5) and (6) and elsewhere in subsections (6), (7) and (8)) must cover both latent damage to tangible property (as in Pirelli General Cable Works Ltd v Oscar Faber & Partners [1983] 2 AC 1) and cases of pure economic loss, such as Hallam-Eames v Merrett Syndicates (1995) [2001] Lloyd's Rep PN 178 (and the present appeal). The wide range of claims to which section 14A may extend suggests that general observations made by the court in one type of case may not be directly apposite in a case of another type.   This appeal turns largely on the interpretation, and the application to a rather confused set of facts, of section 14A (8)(a). The effect of that provision is that the claimant must know, before time starts to run, that "the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence." It is to be noted that this provision may involve an exercise in hindsight spanning a considerable period of time. Its function is as part of the process of ascertaining the "starting date" defined in section 14A (5)—that is, the date from which the alternative limitation period in section 14A (4)(b) is to run. As numerous reported cases show, the starting date may occur at a time when a claimant's knowledge about his claim is far from complete. Inquiries and investigations may have to be made, and expert advice may have to be obtained as to how the claim should be pleaded, and how special damages should be quantified. A claimant may have the requisite knowledge (as Slade LJ said in Wilkinson v Ancliff (BLT) Ltd [1986] 1 WLR 1352, 1365) "even though he may not yet have the knowledge sufficient to enable him or his legal advisers to draft a fully and comprehensively particularised statement of claim."     But by the time, often years later, that the limitation issue comes to be decided, whether as a preliminary issue or at trial, the claimant's case will have been pleaded, and the defendant's "act or omission which is alleged to constitute negligence" will (or at any rate should) have been clearly identified.   There are, as Charles J recognised in the Court of Appeal in the present case, tensions arising from the juxtaposition of subsection (8)(a) with subsection (9), which is in the following terms: "Knowledge that any acts or omissions did or did not, as a matter of law, involve negligence is irrelevant for the purposes of subsection (5) above.".     Nevertheless section 14A (8)(a) requires, as already noted, something of an exercise in hindsight, looking back from the pleaded particulars of negligence. The Court of Appeal has made clear that section 14A (9) excludes not only considerations of negligence in the technical sense but also the vaguer concept of fault (first put forward, in relation to section 7(3) of the Limitation Act 1963, by Lord Pearson in Central Asbestos Co Ltd v Dodd [1973] AC 518, 543): see Broadley v Guy Clapham & Co [1993] 4 Med LR 328, 333 (Hoffmann LJ); Dobbie v Medway Health Authority [1994] 1 WLR 1234, 1242-1243 (Sir Thomas Bingham MR); and Hallam-Eames v Merrett Syndicates (1995) [2001] Lloyd's Rep PN 178, 181.   I shall come back to these cases. But considering the matter for the present simply by reference to the statutory text, I think that it is clear that although section 14A(9) has the effect just mentioned, it cannot go so far as to free the section entirely of any hint of legal technicality. There are three pointers to this, all of which I have already mentioned: the word "damage" (which must in this context mean actionable damage, or at any rate what the claimant believes to be actionable damage, the cause of action being negligence); the words "attributable to" which are concerned in some way with causation, in the context of what becomes (once proceedings have been commenced and the claim pleaded) an allegation of negligence; and the words "acts or omissions alleged to constitute negligence." So although the claimant need not, at the starting date, know anything about the tort of negligence (not even its name) his or her state of knowledge cannot be assessed, with hindsight, without some reference to legal concepts, including what is causally relevant in the context of a negligence action.   This point can be illustrated by the facts of a reported case which was discussed before your Lordships, HF Pension Trustees Ltd v Ellison [1999] Lloyd's Rep PN 489. The background to the case appears from the judgment of Knox J in Hillsdown Holdings Plc v Pension Ombudsman [1997] 1 AER 862. The matter arose from the takeover in 1983 of Fatstock Marketing Corp Ltd (FMC) by Hillsdown Holdings Plc (Hillsdown). The trustees of one occupational pension scheme (the FMC scheme), acting on the advice of solicitors, transferred the entire assets of the scheme to another occupational pension scheme (the HF scheme). Soon afterwards the trustees of the HF scheme made a transfer of funds to the principal employer, Hillsdown. That company received about £11.1m and a further sum of about £7.4m (that is 40% tax on the gross sum) was paid to the Inland Revenue. The Pension Ombudsman's decision, upheld by Knox J, was that the first transfer was an improper exercise of a fiduciary power and was therefore invalid. Hillsdown repaid the sum transferred to it but recovery of the tax was uncertain. The trustees of the FMC scheme sued the solicitors for damages for professional negligence. The first transfer was made in November 1989 in reliance on advice given in May 1989. The second transfer was made in two tranches in December 1989 and June 1990. The writ was issued in October 1997. On a striking-out application it was accepted that the claim was statute-barred unless the plaintiff trustees could rely on section 14A. The solicitors argued that the last date on which damage occurred was in June 1990 (when the second tranche of the second transfer was paid) and that the plaintiff trustees then knew all the facts relevant to the pleaded case in negligence. They knew the advice that the solicitors had given, and that they had acted in reliance on it. It was not necessary, the solicitors' counsel argued, for them to know that the advice was wrong. The case seems to have been decided on a concession, recorded (after a reference to Perry v Moysey [1998] PNLR 657) at p 495: "In the instant case, by contrast, the plaintiff made the payments and thereby (to its knowledge) incurred the damage. The fact that at the time it did not realise that in making the payments it was suffering damage (in the sense of damage recoverable by legal action) is, as [counsel for the trustees] accepted, nothing to the point for present purposes."   In my opinion that concession was wrongly made, and should not have been accepted. Until the FMC scheme trustees knew that they had received seriously incorrect advice which overlooked the need for propriety in exercising fiduciary powers, they did not know that the interests of their beneficiaries, the scheme members, were being prejudiced. This lack of knowledge did not mean merely that they were ignorant of having a cause of action in negligence against the solicitors; more fundamentally and more relevantly, they did not know that they (on behalf of the beneficiaries) had suffered any damage at all. They did not know that what had happened was not a more or less technical reorganisation of two pension schemes, but an improper abstraction of funds which might (if the tax was not recovered) deprive their beneficiaries of over £7m. In short, they knew the bare facts, but they were ignorant of their real significance. Their ignorance was at a different and more basic level than that addressed by section 14A(9).   Hallam-Eames v Merrett Syndicates (1995) [2001] Lloyd's Rep PN 178 was another claim for pure economic loss. Hoffmann LJ delivered the reserved judgment of the Court (Sir Thomas Bingham MR, Hoffmann and Saville LJJ). It merits quotation at some length (at p 181): "In our judgment this [the judge's view of what the claimants had to know] is an over-simplification of the reasoning in Broadley and Dobbie. If all that was necessary was that a plaintiff should have known that the damage was attributable to an act or omission of the defendant, the statute would have said so. Instead, it speaks of the damage being attributable to the act or omission which is alleged to constitute negligence. In other words, the act or omission of which the plaintiff must have knowledge must be that which is causally relevant for the purposes of an allegation of negligence. There may be many acts, omissions or states which can be said to have a causal connection with a given occurrence, but when we make causal statements in ordinary speech, we select on common sense principles the one which is relevant for our purpose. In a different context it could be said that a Name suffered losses because some member's agent took him to lunch and persuaded him to join Lloyd's. But this is not causally relevant in the context of an allegation of negligence. It is this idea of causal relevance which various judges of this court have tried to express by saying the plaintiff must know the 'essence of the act or omission to which the injury is attributable' (Purchas LJ in Nash v Eli Lilly & Co [1993] 1 WLR 782, 799) or 'the essential thrust of the case' (Sir Thomas Bingham MR in Dobbie [1994] 1 WLR 1234, 1238) or that 'one should look at the way the plaintiff puts his case, distil what he is complaining about and ask whether he had in broad terms knowledge of the facts on which that complaint is based.' (Hoffmann LJ in Broadley [1993] 4 Med LR 328, 332). If one asks on common sense principles what Mrs Dobbie was complaining about, the answer is that the surgeon had removed a healthy breast. It would in our view be a seriously incomplete statement of her case to say that it was simply that the surgeon had removed her breast. This is not a matter of elaborating the detail by requiring knowledge of precisely how he had come to do the act complained of, such as this court rejected in Broadley. It was part of the essence of her complaint. Nor is it requiring knowledge of fault or negligence. The court's emphatic rejection of such a requirement is entirely consistent with characterising the act complained of (and of which knowledge was therefore required) as the removal of a healthy breast. But the judge, as it seems to us, has read Dobbie to mean that knowledge that the surgeon had removed her breast would have been enough. If one asks what is the principle of common sense on which one would identify Mrs Dobbie's complaint as the removal of a healthy breast rather than simply the removal of a breast, it is that the additional fact is necessary to make the act something of which she would prima facie seem entitled to complain. She was suspected of having a cancerous lump and if this had been the case, the removal of her breast would not have been a matter for complaint. Likewise Mrs Broadley's complaint was the surgeon had caused damage to her foot when he was supposed to be mending her knee. Mr Clarke QC, for the auditors, and Mr Toulson QC, for the members' agents, protested that such a principle was a back-door way of introducing a requirement that the plaintiff must have known that the defendant had been negligent (which section 14A(9) expressly declares to be irrelevant) or was by some other criterion at fault (which this court rejected in Broadley and Dobbie.) We do not agree. The plaintiff does not have to know that he has a cause of action or that the defendant's acts can be characterised in law as negligent or as falling short of some standard of professional or other behaviour. But, as Hoffmann LJ said in Broadley, the words 'which is alleged to constitute negligence' serve to identify the facts of which the plaintiff must have knowledge. He must have known the facts which can fairly be described as constituting the negligence of which he complains. It may be that knowledge of such facts will also serve to bring home to him the fact that the defendant has been negligent or at fault. But this is not in itself a reason for saying that he need not have known them."   Applying these principles, the Court of Appeal (reversing the judge) held that the claimants were not statute-barred because although they knew that they had lost large sums of money as a result of the run-off policies and RITC contracts entered into by their managing agents, they did not know that these heavy losses occurred because the business related to the US casualty market in which very large claims were being made for industrial pollution and asbestos-related risks. The claimants were ignorant of the real significance of the bare facts which they did know. The pollution and asbestos factors, which made it impossible to quantify incurred but not reported claims, were part of the essence of the complaint.   It is no coincidence, I think, that both HF Pension Trustees and Hallam-Eames were cases of pure economic loss occurring in areas (occupational pensions and reinsurance at Lloyd's) which call for specialised technical expertise. Areas of that sort are those in which it is most likely that a claimant may know the basic facts, but not know what, to an expert, they add up to.   Similar problems can arise in clinical negligence cases. In that area too the factual situations which may be contended for as cases of latent knowledge are extremely diverse, and some of them are very fact-sensitive (for instance Nash v Eli Lilly [1993] 1 WLR 782, drawing the distinction between acceptable and unacceptable side-effects of an anti-arthritis drug; Oakes v Hopcroft [2000] Lloyd's Rep Med 394, in which the claimant needed correct medical advice and legal advice before she knew that she had settled her original personal injury claim at too low a figure; and by way of contrast Davis v Ministry of Defence (26 July 1985, CA Transcript No 413 of 1985), in which the claimant received unsound medical and legal advice). But it is in the field of economic loss that a higher proportion of difficult cases is likely to arise, for reasons given by Janet O'Sullivan in an astute recent article (Limitation, Latent Damage and Solicitors' Negligence (2004) 20 JPN 218).   Nevertheless the Court of Appeal has given clear general guidance as to the principle to be applied, even if its application raises, as it inevitably will, some difficult borderline cases. The general principle is set out in the second paragraph of the passage which I have quoted from Hallam-Eames. The Court is concerned with the identification of the facts which are the "essence" or "essential thrust of the case" or which "distil what [the claimant] is complaining about." Mr Palmer QC (for the appellant firm of accountants) submitted that your Lordships should not follow Hallam-Eames, and should revert to a more starkly reductionist view of the minimum core of facts that must be within the claimant's knowledge (actual or constructive). I am not entirely without sympathy for that submission, because this area of the law has become crowded with authority, and it is sometimes necessary to remind oneself that section 14A (introduced as it was by the Latent Damage Act 1986) was intended to cover cases of latent damage (other than personal injuries) alleged to have been caused by negligence, and not causes of patent damage, even if they call for a good deal of investigation and advice before proceedings can be launched. (This is not a case where there was ever any doubt about the identity of the putative defendant; the respondents put in the forefront of their case that Fawcetts were the Haward family's long-standing and trusted financial advisers.) There may well be scope for Parliament to clarify and simplify the law, and the Law Commission has put forward some radical proposals (Limitation of Actions, Law Com No 270 published in July 2001, following on the consultation paper published in January 1998). Nevertheless the body of Court of Appeal authority which culminates in Hallam-Eames provides a reasonably clear and coherent test, and I see nothing in the legislative purpose of the Latent Damage Act 1986, or in its scheme or language, to lead your Lordships' House to depart from that line of authority. Nor is it necessary to do so, in my opinion, in order to dispose fairly of this appeal.   In her article ( p 236) Janet O'Sullivan makes this comment: "A further problem with the reasoning in Hallam-Eames, as Hoffmann LJ recognised, is that it comes close to saying that which is forbidden by section 14A (9), namely that time does not start to run until the claimant has knowledge that the defendant was negligent."     It is indeed a striking feature of the line of authority in the Court of Appeal that (with the modest exception of the reference in Hallam-Eames to cause for complaint) the Court has firmly rejected any language which suggests, even in the least technical terms, that some fault or mishap has occurred: see for instance Sir Thomas Bingham MR in Dobbie v Medway Health Authority [1994] 1 WLR 1234 at p1243 C-D, observing that the judge was open to criticism for using, not only the expression "negligence", but also "unnecessarily" and "something had gone wrong" (the Master of the Rolls nevertheless expressed complete agreement with the judge's conclusion); see also Steyn LJ at p1247H. I respectfully doubt whether the insistence on extremely non-judgmental language is required by section 14A(9), and I think that it may in some cases ignore the realities of the situation. I respectfully agree with the views expressed on this point by my noble and learned friend Lord Nicholls of Birkenhead in paras 13 and 14 of his opinion. But in any event there is a distinction to be made between two matters: (1) the generality or specificity (see Nash v Eli Lilly [1993] 1 WLR 782, 798-799) of the language in which the essence of the claimant's complaint is to be identified and expressed, and (2) the judgmentally colourful or non-judgmentally monochrome character of that language. So long as section 14A(9) is kept well in mind, the level of generality or specificity will often (as in this case) be the more important matter for the Court to address.   My Lords, this is the first case on section 14A to reach your Lordships' House, and it is therefore appropriate to address, as I have tried to do, the issues of principle which have been raised in argument. As I understand it there is little (if any) difference in the House as to the principles. Such difference as there is relates to the facts of the case, which has the unusual feature that constructive knowledge is not an issue.   In their amended particulars of claim the respondents pleaded that they had retained Fawcetts on two occasions: in September 1994 to investigate and advise on the acquisition of a controlling interest in the company which became Haward Agriculture Ltd ("Agriculture"); and from 9 December 1994 "to assess [Agriculture's] trading performance and to advise [the respondents] in respect of the same" and in particular to review monthly accounting information. The first retainer is elaborately pleaded in paragraph 7, as expanded by paragraphs 8 and 9, and the second retainer is less elaborately pleaded in paragraphs 23 and 24. Several parts of the elaborate pleading in paragraph 7, such as Fawcetts' agreement to undertake due diligence in respect of Agriculture and to negotiate for the purchase of shares, are expressly denied in Fawcetts' defence. But assuming for the purposes of the limitation issue that all the allegations in the particulars of claim can be proved, I regard the essence of Fawcetts' retainer as to give financial advice and assistance on the acquisition of a controlling interest in Agriculture, and on the subsequent state of that company's business and further investment in it; and the essence of the pleaded particulars of negligence (paragraph 43) that Fawcetts failed to carry out their retainer properly, or (in some instances) failed to carry it out at all.   There was not in fact, in December 1994, any purchase of shares in Agriculture by the respondents. It seems that Mr Haward took up and paid for 60,000 newly-issued £1 shares at par (although the schedule of damages attributes the share purchase to W J Haward Ltd ("WJHL")). Mr Haward became chairman of Agriculture and soon after, in May 1995 (when Mr and Mrs Rose resigned) he became company secretary also. During 1995 he seems to have acquired a further 19,714 shares by purchase, presumably from Mr and Mrs Rose or Mr Coleman (a sales director who resigned in July 1995). Mr Haward remained as chairman and company secretary throughout the period with which this appeal is concerned. The respondents' pleaded case is that during this period a sum of over £1.5m was advanced to Agriculture by way of loan from the respondents and was lost, although the last balance sheet in evidence (as at 31 December 1997) shows a loan of about £1.022m from WJHL, and no loan from Mr Haward himself, or from the family trust, is apparent.   It is not however necessary to pursue these apparent discrepancies between the pleadings and the accounts. The most salient points disclosed by the accounts are the figures for Agriculture's turnover, losses and the state of its shareholders' funds during the relevant period: £000 Turnover (Loss) Shareholders' funds (deficiency) 1994 500 (46) 35 1995 1,439 (266) (232) 1996 1,893 (27) (352) 1997 1,652 (400) (659)   Before the judge it seems to have been accepted that by 6 December 1998 at the very latest it was known to Mr Haward and the other respondents that the payments made to Agriculture (whether on taking up shares or as loans) were for practical purposes lost. This point was however in issue in the Court of Appeal (after a change of counsel on both sides) and it was also relied on (though not, I think, very strongly) before your Lordships. It seems to me that on this point the respondents are stuck with their own pleading, which asserts that the entire investment in Agriculture is recoverable as damages with interest from the respective dates of payment of each component part of the investment. They are also faced with some indisputable facts which seem to have guided the judge to his conclusion. Mr Haward was a mature businessman, even though most of his work seems to have been practical work on building sites. He was chairman and company secretary of Agriculture throughout, and he regularly attended board meetings (at which Mr Austreng of Fawcetts was also present). He saw the accounts in draft and in their final form (indeed, he signed them). The judge was right to conclude that the respondents' investment was completely lost by 6 December 1998 at the very latest. Mr Haward also knew that it was (to adapt the language of Hoffmann LJ in Hallam-Eames) "something of which [he] would prima facie seem entitled to complain." The outcome was very different from what he had expected when he acquired his controlling shareholding in 1994.   I am therefore inclined to think that (although his judgment is not without some defects and difficulties) the judge was basically right in his overall conclusion (para 20): "In my judgment, Mr Haward clearly knew all the material facts and events as they occurred. Thus, he knew of the terms of Fawcetts' retainer and he knew what he expected of them; that emerges from his witness statement and I have already noted how he relied on them. He obviously knew that money was paid—indeed he did the paying. He knew, as he appeared to accept in evidence, that he relied on Fawcetts' advice when he acquired [Agriculture] and committed himself and the other claimants to a substantial investment. He read the reports of the directors and could see the encouraging views expressed by Fawcetts in regard to the need for investment. Although he had a distinctly poor recollection of advice given by Fawcetts, it is the basis of the claim that they advised ongoing investment and it is hard to see how he could have failed to appreciate that he was spending money either on their advice or without their advice. So far as he was concerned, there was nothing of a factual nature that was latent; all was patent."   I do however think that the judge was wrong when he went on to say that he saw no material distinction between the present case and H F Pension Trustees Ltd v Ellison. That case was concerned with laymen's understanding and appreciation of legal advice on a highly technical subject, that is, the exercise of fiduciary powers under occupational pension schemes. This case is concerned with a mature businessman's understanding of financial advice on the trading activities of a small company carrying on a fairly straightforward sort of business. The relevant level of expertise is much lower. The judge made this point later in his judgment (at para 24): "The Act requires knowledge that the damage was attributable to the act or omission and that means knowledge that the damage is capable of being attributed to the act or omission. But the causal connection between the advice or non-advice and the damage in this case is patent and obvious, especially to a mature businessman and company director."     By this the judge did not of course mean that the accountants were obviously negligent. What he meant was that if the pleaded allegations were proved at trial, causation would be no problem at trial (and by the same token he had no problem with the "attributable" condition). Conversely if the allegations were not proved at trial, it would be because the claimants' loss from Agriculture's undoubted and obvious failure would have been shown to have been caused, not by negligent advice (or lack of advice), but by later events not foreseeable by a reasonably careful and competent financial adviser. But the judge had to assume that the allegations were capable of being proved.   Why then did the Court of Appeal reach a different conclusion? Jonathan Parker LJ embarked on a very lengthy analysis of the authorities, much of which I would respectfully agree with. But then in paragraph 168 he made these observations: "In the instant case there were, on the evidence, a number of possible causes for the failure of [Agriculture] apart from Fawcetts' advice (or lack of it). Those possible causes are set out in Mr Taylor's letter dated 1 July 1998, in the passage quoted in para 45 above. Of particular significance in this connection, as it seems to me, are the claims made against Mr Brunt. In my judgment, Mr Haward was at that stage (July 1998) in the same position as the man with the disabling cough (in the example given by Sir Thomas Bingham MR in Dobbie) or as the claimant in Ali v Courtaulds [Ali v Courtaulds TextilesLtd [1999] Lloyd's Rep Med 301]. He did not know at that stage that all or part of the damage was capable of being attributed to Fawcetts' advice (or lack of it)."     The relevant paragraphs of the letter were as follows:- "Mr Brunt as Sales Director has been responsible for the sales of tractors & equipment, the main area of the Company's activities. The decline in sales was thought to have resulted from a number of factors including the present uncertainties over the future of farm income, the effect of BSE, and the strong pound. Recently a further reason has come to light, namely the activities of Mr Brunt. By Clause 3(2) of his Service Contract, Mr Brunt is expressly permitted to carry on his existing Plant hire business known as RSI. It now appears that he has been referring the Company's customers to RSI for the hire of equipment and that the Company has suffered serious financial losses as a result. In addition he has over the last 18 months neglected his duties at HAL and concentrated on the interest of RSI, again to the serious detriment of HAL sales."     The Lord Justice went on to conclude that it was not until May 1999 that Mr Haward acquired knowledge of acts or omissions by Fawcetts which were causally relevant for the purposes of his allegations of negligence.   I cannot, with respect, follow this reasoning. The respondents' pleaded case was that they had lost large sums of money invested in Agriculture. They lost that money because Agriculture became hopelessly insolvent and no one was prepared to throw any more good money after bad. The calamitous failure of the business no doubt had many causes, probably including all the factors mentioned in the letter quoted above. But the respondents' pleaded case was that Fawcetts had failed to perform their professional duty and that this was legally causative of the respondents' loss. Whether their case will succeed at trial, if it comes to trial, will depend on the judge's findings as to what the scope of the duty really was; whether Fawcetts performed it properly; and whether (or to what extent) the failure of the business (and the consequent loss of the respondents' investment) was caused by unpredictable factors which no reasonable professional person could have been expected to take into account in his advice. The need to investigate and determine these issues at trial cannot alter the identification of "the act or omission which is alleged to constitute negligence." It might have been different if (for instance) the respondents had engaged one professional to investigate and advise on the company's books, another professional to investigate and advise on the competence and honesty of the company's existing and proposed workforce (including Mr Brunt), and yet another professional to investigate and advise on the general state of the agricultural machinery market in the west country. But that is not this case.   For these reasons I think that Jonathan Parker LJ erred in equating Mr Haward's position to that of the claimant in Ali v Courtaulds Textiles Ltd [1999] Lloyd's Rep Med 301 and that of the imaginary claimant described by Sir Thomas Bingham MR in Dobbie v Medway Health Authority [1994] 1 WLR 1234, 1240. In those two cases the claimant did not know whether his physical disablement was attributable to his working conditions, for which his employer was responsible, or to some more or less natural cause such as ageing. He was therefore in a state of ignorance on a fundamental point, and his ignorance could be dispelled only by a medical expert. I see no useful parallel with Mr Haward's situation. The relationship between a man's working conditions and his natural ageing as competing causative elements in his deafness is quite different, to my mind, from the relationship between a financial adviser's alleged professional incompetence and the various factors which eventually lead to the collapse of the business on which he advises.   At the end of his judgment the judge referred (as I understand it, for completeness only) to evidence and submissions as to when the respondents first knew that they had a claim against Fawcetts. Mr Pooles QC (for the respondents) made some telling criticisms of this evidence, especially a draft letter dated 8 December 1998 (but never sent). But I regard these criticisms as irrelevant because the whole of this discussion was directed to the wrong question: knowledge of the existence of a claim in negligence. The whole of the respondents' written evidence (witness statements by Mr Haward himself, Mr Taylor and Mr Quinney) was directed to this (irrelevant) question. Thus the relevant part of Mr Haward's witness statement was headed in bold, "When I first became aware that I might have a claim against Fawcetts", and this is the theme reiterated in paragraphs 26, 28, 29, 30 and 31. The date when the respondents knew that they had a worthwhile cause of action against Fawcetts was not the starting date within the meaning of the statute.   The respondents' last-ditch argument, as I see it, is that even if the respondents knew of the loss and knew what advice Fawcetts had or had not given, they did not know the reasons why Fawcetts had not given the right advice—for instance, whether it was because Mr Austreng had not gone into the books thoroughly enough, or had failed to verify trading stocks, or had failed to draw the obvious conclusions from information which was available to him. But the judge considered this point and dismissed it. He said (para 21), "I do not accept that the act or omission referred to can include such matters as failing to do the necessary homework. That is not the act or omission of which a claimant has to have knowledge but is rather a particular, which may make the act or omission a negligent act or omission. As Purchas LJ put it at page 799 in Nash: 'It was not, in our judgment, the intention of Parliament to require for the purposes of s11 and s14 of the Act proof of knowledge of the terms in which it will be alleged that the act or omission of the defendants constituted negligence or breach of duty. What is required is knowledge of the essence of the act or omission to which the injury is attributable.'"     The importance of isolating what is essential has of course been emphasised in later authority to which I have already referred.   I see nothing wrong with the judge's assessment of this point. It does not seem to have received any attention in the Court of Appeal (see the fairly full summary of counsel's submissions in paras 131-144 of the judgment of Jonathan Parker LJ). Nor does it appear in the respondents' printed case in your Lordships' House. I would treat it as rightly abandoned. To require that a claimant had a detailed knowledge of how and why the defendant failed in his duty of care (for instance, why in Hallam-Eames the managing agents had plunged so deeply into the US casualty market) would go beyond the settled principles mentioned in paras 10 and 11 of Lord Nicholls' opinion, and would tilt the balance too far in favour of dilatory claimants.   For these reasons I would allow this appeal. LORD BROWN OF EATON-UNDER-HEYWOOD My Lords,   I am grateful to my noble and learned friends Lord Scott of Foscote, Lord Walker of Gestingthorpe and Lord Mance for their very full exposition of the facts of this appeal, the statutory provisions in play and the many authorities in this difficult area of law. This enables me to state my own opinion in the matter quite shortly.   Shorn of all detail—indeed, simplified to the very limits of accuracy—the facts are these. In December 1994 Mr Haward acquired for £60,000 a controlling interest in an agricultural machinery company which he knew from the outset would require the injection of a further £100,000 or so before it turned to profitability but which in the event, despite the injection of some £431,000 in 1995, some £102,000 in 1996, some £509,000 in 1997 and some £208,000 in 1998, failed. Throughout the whole course of this disastrous enterprise Mr Haward had been advised by Fawcetts, a firm of accountants which had acted for him and his family since 1958. By, at latest, 6 December 1998 (three years before he issued proceedings against Fawcetts and thus the date at which Mr Haward's knowledge falls to be considered for the purposes of section 14A of the Limitation Act 1980) Mr Haward knew that these sums had become lost to him: the company was hopelessly insolvent. He believed, however, that his losses were to be explained, not by any deficiency in the advice he had received when making his investments but rather by a variety of damaging economic factors: initially adverse trading conditions such as the general agricultural recession and the effect of BSE, and later by a number of detrimental activities on the part of the company's sales director. It was not until May 1999 that Mr Haward for the first time began to question the soundness of Fawcetts' investment advice and only then did the investigations start which finally led to the issue of a negligence claim against them in December 2001.   It is in these circumstances that the central question arises: at what date did Mr Haward know that "the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence" within the meaning of section 14A(8)(a) of the 1980 Act? If it was before 6 December 1998, section 14A cannot avail Mr Haward: his claim would then be restricted to the damage he sustained after 6 December 1995 (six years before the issue of proceedings, the primary limitation period). If, however, it was after 6 December 1998, then he can benefit from section 14A's alternative three-year period of limitation. This preliminary point accordingly concerns Mr Haward's initial investment of £60,000 made in 1994 and the further advances of some £431,000 made in 1995.   "The damage" for the purposes of section 14A(8)(a) is "the damage in respect of which damages are claimed" within the meaning of section 14A(6)(a) which I take to mean the loss of the sums invested: a loss, as already stated, which was known to Mr Haward at latest by December 1998 and the loss for which he seeks compensation in his claim for damages. When, however, did Mr Haward know that this loss was "attributable in whole or in part to the act or omission which is alleged to constitute negligence"? That is the critical question.   Is it enough that Mr Haward knew, as plainly he did, that Fawcetts advised him that this was a sound and suitable investment (both initially and as to the subsequent advancement of further funds to the company) and that it was on the basis of this advice that he went ahead with it? Or did he need to know more than that and, if so, what more? Clearly, for time to start running, he did not have to know that Fawcetts had, as a matter of law, acted negligently in the giving of their advice—see section 14A(9). On the facts of this case the question ultimately seems to me to come down to this: to set time running did Mr Howard need to know not only that the investment was made on Fawcetts' advice but also that that advice had not been based on the kind of investigations which must necessarily be undertaken before any such advice can be reliably tendered?   As Lord Mance has pointed out, were Fawcetts able to rely upon section 14A (10) to assert constructive knowledge on Mr Haward's part, their case here would be a strong one even if the knowledge required was of their failure to make a preliminary investigation into the company before the advice to acquire it was given. Having regard to the huge scale of his losses from the outset, Mr Haward ought surely to have sought expert advice and set in train the consideration of a possible claim against Fawcetts long before he did. Given, however, that Fawcetts' case is based solely on Mr Haward's actual knowledge, to my mind it must fail if anything more is required than that Mr Haward knew that his loss might well have resulted from an investment made on Fawcetts' advice.   Having, I confess, changed my mind upon the point, I have finally come to the conclusion that nothing more is needed. I had earlier been attracted to the view that the analogy here was with Dobbie v Medway Health Authority [1994] 1 WLR 1234, as thereafter analysed in Hallam-Eames v Merrett Syndicates (1995) [2001] Lloyd's Rep PN 178: unless and until Mrs Dobbie knew that her removed breast had in fact been healthy, time would not start running against her. So too here, it has been suggested: until the investment was known not merely to have been lost but to have been intrinsically unsound when made (i.e. an ill-judged and ill-advised investment from the outset rather merely than one which proved unsuccessful as a result of subsequent events) time should not run. I have come to recognise, however, a critical difference between the two cases. In Dobbie's case what was unknown was not the attributability of the damage to the defendant's act but rather the very fact of damage: Mrs Dobbie would clearly have suffered none had her removed breast in fact been unhealthy; she would have been better off without it. Similarly, as Lord Walker has explained, H F Pension Trustees Limited v Ellison [1999] Lloyd's Rep PN 489 should have been differently decided, not because of any doubts about attributability but rather on the basis that the trustees there did not know that they had suffered any damage until they learned of the impropriety of the payments made and the consequent likelihood of tax losses. In both those cases, however, there could have been no question but that, once the fact of damage was known to the respective claimants, time started running. It was not necessary for Mrs Dobbie also to have known that the reason her healthy breast had been removed was because the surgeon had failed first to carry out a sufficient examination of the lump to be satisfied of its malignancy; nor would it have been necessary for the trustees in the pension case to have known what underlay the incorrect advice they had received when making the payments.   Here, by contrast with those two cases, it is now common ground that Mr Haward knew that he had suffered the relevant damage by the material date. Fawcetts' advice was more than merely the sine qua non of that loss. There is no parallel here with Hoffmann LJ's illustration in Hallam-Eames of the member's agent taking the Name to lunch and persuading him to join Lloyd's where he then suffered losses—an event which would clearly not have been causally relevant in the context of an allegation of negligence.   What the claimant must know to set time running is the essence of the act or omission to which his damage is attributable, the substance of what ultimately comes to be pleaded as his case in negligence. That essence or substance here could no doubt be characterised in either of two ways: either as the act of recommending investment in the company (or omitting to caution against it—on the particular parts of this case these are two sides of the same coin), or, with greater particularity, the act of recommending investment without first carrying out the investigations necessary to justify such positive advice. Having at first preferred the latter characterisation, I have come to prefer the former. True, under the former the claimant knows nothing beyond the fact that his advisers led him into what turned out to be a bad investment; he does not know, as under the latter characterisation he would, that he has a justifiable complaint against his advisers. But he surely knows enough (constructive knowledge aside) to realize that there is a real possibility of his damage having been caused by some flaw or inadequacy in his advisers' investment advice, and enough therefore to start an investigation into that possibility, which section 14A then gives him three years to complete.   If the other approach is adopted, time only starts to run once the claimant recognises that a fuller examination of the company's prospects should have been carried out than was in fact carried out, knowledge which Mr Haward only learned here at some unascertained date after the investigation into Fawcetts' conduct had itself begun in May 1999 (when another accountant first suggested to Mr Haward that a negligence claim might lie against Fawcetts). But what if that suggestion and the investigation which it prompted had themselves been made at a later date still, perhaps very substantially later? On this approach the limitation period would appear capable of almost limitless extension and for no sufficient reason: unlike the position in Pirelli General Cable Works Ltd v Oscar Faber & Partners [1983] 2 AC 1— the decision which precipitated what is now section 14A of the 1980 Act—there is nothing latent here about the damage or, indeed, about the identity of the prospective defendant. I recognise, of course, that that does not foreclose the argument on attributability: it provides, however, the relevant context in which it falls to be resolved.   For these reasons, which are not I think substantially different from those more fully set out in the opinions of my noble and learned friends, I too would allow this appeal and restore the order of Judge Playford QC. LORD MANCE My Lords, Introduction   Under s.2 of the Limitation Act 1980, the basic period within which a claimant must bring a cause of action for negligence is six years from the date when the cause of action accrued. S.14A provides, as its heading states, a "special time limit for negligence actions where facts relevant to cause of action are not known at date of accrual". The period under s.14A(4)(b) and (5) for bringing an action for damages for negligence is three years from the date when the claimant first had "the knowledge required for bringing an action for damages in respect of the relevant damage", where that period expires later than a period of six years from the date when the cause of action accrued.   This appeal raises for consideration the nature of "the knowledge required". Having regard to definitions and provisions contained in further subsections of s.14A., the "facts relevant to the current action" about which knowledge is required (subs.(6)(b)) include knowledge "that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence" (subs.8(a)), but not knowledge "that any acts or omissions did or did not, as a matter of law, involve negligence" (subs. (9)). What is involved in knowledge that damage was "attributable" to an act or omission alleged to constitute negligence? How and at what level of particularity is such an act or omission to be described? And at what point does it become a (statutorily irrelevant) matter of law whether such an act or omission involved negligence?   The further subsections of s.14A read: "(6) … 'the knowledge required for bringing an action for damages in respect of the relevant damage' means knowledge both - (a)  of the material facts about the damage in respect of which damages are claimed; and (b)  of the other facts relevant to the current action mentioned in subsection (8) below. (7)  For the purposes of subsection (6)(a) above, the material facts about the damage are such facts about the damage as would lead a reasonable person who had suffered such damage to consider it sufficiently serious to justify his instituting proceedings for damages against a defendant who did not dispute liability and was able to satisfy a judgment. (8)  The other facts referred to in subsection (6)(b) above are - (a)  that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence; and (b)  the identity of the defendant; and (c)  if it is alleged that the act or omission was that of a person other than the defendant, the identity of that person and the additional facts supporting the bringing of an action against the defendant.     (9)  Knowledge that any acts or omissions did or did not, as a matter of law, involve negligence is irrelevant for the purposes of subsection (5) above.     (10)  For the purposes of this section a person's knowledge includes knowledge which he might reasonably have been expected to acquire -     (a)  from facts observable or ascertainable by him; or     (b)  from facts ascertainable by him with the help of appropriate expert advice which it is reasonable for him to seek;     but a person shall not be taken by virtue of this subsection to have knowledge of a fact ascertainable only with the help of expert advice so long as he has taken all reasonable steps to obtain (and, where appropriate, to act on) that advice."     The claim in outline   In the present case the three claimants are Mr Haward, W. J. Haward Limited, a family firm of building contractors established in 1902 and under Mr Haward's control since his father's death in 1992, and W. J. Haward Family Trust No. 1, a family trust of which the trustees were Mr Haward and, until 1999, Mr Trevor Austreng of the defendants, Fawcetts. The focus for limitation purposes is on Mr Haward's knowledge, which it is agreed the other two claimants are to be treated as sharing. The claimants allege that Fawcetts, accountants acting as their advisers, were negligent in relation to advice given or not given both in late 1994 and at subsequent dates. They allege that, in reliance on such advice, on 9th December 1994 Mr Haward acquired for £60,000 a 60% shareholding in Kings Stag Engineering Limited (which changed its name in 1995 to Haward Agriculture Limited and which I shall call HAL throughout), and the Trust No. 1 acquired for £100,000 the leasehold of HAL's premises, and at later dates Mr Haward made substantial further investments in or loans to HAL, using monies advanced to him by the second claimant company.   A business plan for 1995 was prepared before the acquisition of HAL, upon which plan it is alleged that Fawcetts were instructed to advise. The plan included this optimistic assessment: "The Profit and Loss and Balance Sheet Forecasts look extremely promising, and have been carefully prepared in order to give an accurate picture for 1995. All the categories have been studied and I feel the end result is more than satisfactory".     The plan contemplated that only £106,745 would need to be advanced to HAL during 1995. In the event, the sums advanced by the end of 1995 totalled £431,000. The business plan contemplated a loss in that accounting year of £5,520, whereas the loss in the event totalled £266,340. Further loans were made in 1996 totalling £102,985 and in 1997 totalling £509,525, and HAL made net losses in those years of £27,276 and £400,062. The general picture therefore during this period was one of repeated, unexpected requirements for cash injections. The annual directors' reports for HAL, prepared for signature by Mr Austreng, remained nevertheless optimistic that the company would turn round. The report for 1995, signed on 29th October 1996, said that: "Following the re-structuring at the end of 1994 - and throughout 1995 - significant investment has been undertaken in order to put the company in a position from which it can expect to benefit from anticipated increases in turnover. This has resulted in a large trading loss in 1995 but profits are anticipated to be earned from the middle of 1996 and onwards." That for 1996, signed on 20th October 1997, read: "The re-structuring of the company … has continued during 1996. Losses continued until mid-1996 at which time the directors are pleased to report that monthly profits were achieved, albeit not sufficient to cover the previous losses. Trading conditions remain difficult and further losses are now anticipated throughout much of 1997. However the company has adequate resources to continue trading and the longer term outlook remains optimistic." As this report records, HAL had been afflicted by difficult trading conditions, which included a general market decline, the BSE crisis and the strong pound. In mid-1998 issues also emerged about the conduct of its affairs by its day-to-day manager, Mr Brunt. By 6th December 1998, the judge found, Mr Haward knew that "the payments already made had gone" and had become effectively or at least largely a loss. This loss represents the damage which the claimants now claim to have been attributable to negligent advice on Fawcetts' part regarding investment in HAL.   The agreed Statement of Facts and Issues put before the House records in paragraph 18 that "The essence of the [claimants'] case was that Fawcetts gave advice that led to the original purchase or subsequent expenditure, alternatively failed to give advice when advice was needed, in consequence of which the original purchase or subsequent expenditure resulted".     However, the Statement goes on to identify as critical issues in this case: "What did Mr Haward need to know in order to know, per s.14A(8)(a) of the Act, that 'the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence'?" and, secondly, "what in this case is/are the acts or omissions which is/are alleged to constitute negligence?". From this, it is clear that the claimants put in issue whether knowledge of the bare matters asserted in paragraph 18 (of which Mr Haward on any view knew, at least as regards advice actually given) was to be equated with knowledge of the acts or omissions now alleged by them to constitute negligence.   Consistently with this, both before the judge in argument at first instance and before your Lordships, the claimants' submissions have referred to complaints that Fawcetts did not do their "homework" before advising the claimants in favour of the acquisition of, and the further investments in, HAL and/or in failing to advise them against further investments. In a note written to the judge with the consent of counsel for Fawcetts after the oral hearing, counsel for the claimants argued that, in addition to knowing that advice had been given or not given, Mr Haward "must at least have known that the advice or absence of advice was on the basis of inadequate investigation", although counsel accepted that it was not necessary to know "the detailed allegations with regard to what due diligence exercises or audits should have been undertaken". Finally, the claimants' written Case before your Lordships describes the complaint in paragraph 14 as being that there was "inadequate consideration of the underlying state of the Business by [Fawcetts] both prior to and following the purchase". Eliminating as far as possible any suggestion of negligence or fault, the claimants' claim may on this basis, in my view, be broadly categorised as being for loss flowing from advice or absence of advice in circumstances where Fawcetts had not done certain preparatory work or given any or full consideration to information available to them, and as a result did not identify (or therefore advise about) problems in HAL's affairs and accounts, affecting the soundness from the outset of HAL and investments made in HAL. In short, omissions on Fawcetts' part led them to an unsound assessment and inappropriate advice.   The amended particulars of claim include detailed allegations of negligence which are to similar effect. Thus, they complain in paragraph 18 that Fawcetts failed "properly to carry out due diligence" in respect of HAL prior to 9th December 1994, in that they "(1)  failed to carry out a stock-take …, (2)  failed to consider at all/adequately the 1995 Business Plan, Profits Loss and Balance Sheet and failed to advise the Claimants at all/adequately as to its inaccuracies and Profits Loss and Balance Sheet forecasts; (3)  failed to advise the Claimants at all/adequately as to the prospect of [HAL] making a profit as anticipated in the 1995 Business Plan; and (4)  failed properly to advise in respect of financial and other information considered by Fawcetts". There are also complaints that Fawcetts failed to advise the claimants as to the prospective acquisition generally and more specifically as to the prudence of acquiring a controlling interest in HAL and subsequent investment therein (paragraph 19); that they failed to advise as to the correct basis for an evaluation of HAL, as to its proper value and as to the proper consideration for a 60% controlling shareholding (paragraph 20), that they failed to advise as to the tax advantages of incorporating HAL as a subsidiary of the second claimant, so that HAL losses could be set against the second claimant's profits (paragraph 21) and that they failed to advise Mr Haward and the second claimant that the latter could (then) have planned its developments and disposals in a tax advantageous manner (paragraph 22). In paragraph 29 it is further alleged that "Fawcetts failed to advise the Claimants in any Board Meeting or on any other occasion …:- (1)  that there were fundamental errors in the accounting procedures utilised by the Company in the production of the Management Accounts; (2)  that the monthly Management Accounts showed considerable and unacceptable swings in direct cost percentages; (3)  that the Company was not operating as anticipated/in an "orderly and controlled manner"/at all; or (4)  that the Company was running at a loss not anticipated upon 9 December 1994 or in the 1995 Business Plan."   The first three points go to matters which it is said that Fawcetts should have discovered from materials available to them. The final point must have been obvious, and must no doubt be read in conjunction with the previous complaints about Fawcetts' failure to ascertain HAL's real financial position from work they should have done and material they saw or should have seen and on the basis of which, it is said, they should have advised the claimants or advised them differently. It is said that, had Fawcetts fulfilled their duties of skill and care, and as a result advised the claimants properly, HAL would not have been acquired or acquired on the same basis and further investments and loans would not have been made in HAL and to HAL after its acquisition. The proceedings to date   The basic six year period for any claim for damages in tort in respect of the acquisition of, or any subsequent investment in, HAL expired six years after such acquisition or investment (cf Forster v. Outred [1982] 1 WLR 86). Any claim in contract would also be time-barred by then, if not earlier. Proceedings were issued on 6th December 2001. So, in response to the claim, Fawcetts pleaded that any claims for breaches of contractual duty occurring, and any tortious claims for losses accruing, prior to 6th December 1995 were statute barred. In reply, the claimants pleaded that the earliest date on which they had the knowledge referred to in subsection (5) of s.14A of the 1980 Act was 17th December 1999 (a date modified in oral submissions to May 1999). Pursuant to an order made on 26th November 2002 by Master Leslie, the issues of limitation were tried as preliminary issues before HHJ Playford QC, who decided them in favour of Fawcetts on 15th April 2003. The Court of Appeal (Potter LJ, Jonathan Parker LJ and Charles J) allowed the claimants' appeal on 11th March 2004, and the House gave leave to appeal on 14th July 2004.   On one view, HHJ Playford considered that the only knowledge required of the claimants was knowledge that (a) sums were invested; (b) that the investments were made either with or without the defendants' advice; and (c) that the investments so made had become lost; and that all such matters were patent, while everything else was either a mere particular of negligence (as he described the allegation of failure to do the necessary homework) or a matter of law irrelevant under subsection (9) of s.14A. HHJ Playford said that it was "unwarranted, especially in cases of financial advice given to persons under no disability, to put a gloss on the Statute so that what is required is "knowledge that there is a real possibility that the damage sustained was caused by the acts or omissions said to constitute negligence, sufficient to make it reasonable to investigate whether or not there is a case against the defendant", … and I do not understand Brooke LJ to be saying that in Spargo v. North Essex District Health Authority (1977) PIQR 235)." Earlier in the same paragraph in his judgment HHJ Playford said: "Mr Black [counsel for the claimants] submits that 'the essence of a causally relevant act cannot simply be the giving or the not giving of advice'. With that I agree. The Act requires knowledge that the damage was attributable to the act or omission and that means knowledge that he damage is capable of being attributed to the act or omission. But the causal connection between the advice or non-advice and the damage in this case is patent and obvious, especially to a mature businessman and company director". He did not however elaborate on what he meant by the "causal connection" which he thought was "patent". If (as I am inclined to think) all he meant was that it was clear that, but for whatever advice was or was not given, the investments would never have been made and so would never have been lost, that involved, as I shall show, a significant error regarding the statutory test for limitation. At the end of his judgment, HHJ Playford went on "for the sake of completeness only" to consider the claimants' factual case that they had no knowledge that they had any claim against Fawcetts until 1999, and found that the claimants had not discharged the burden on them to establish this. He also recorded that no question of constructive knowledge had been argued before him.   The Court of Appeal took a different view on the law and the facts. After a full review of authority, Jonathan Parker LJ concluded that s.14A is concerned with knowledge of facts, rather than law, that the claimants' allegations of negligence were relevant under subsection 8(a) as identifying the acts or omissions claimed to have caused the loss or damage in respect of which damages are sought, and that "knowledge" in s.14A means "know with sufficient confidence to justify embarking on the preliminaries to the issue of a writ", while "attributable … to" in subsection 8(a) means "capable of being attributed to". On the facts, Jonathan Parker LJ pointed to other "possible causes for the failure of the company", notably uncertainties over the future of farm income, the effect of BSE and the strong pound, as well as the alleged activities of a director, Mr Brunt. He took as a finding of fact, and himself also endorsed, a statement by HHJ Playford in his judgment that the claimants' investigation into a possible causal link between their losses and Fawcetts' advice or lack of it "did not even commence until May 1999". On that basis, he concluded that Mr Haward and hence the other claimants "did not acquire the requisite actual knowledge prior to 6 December 1998" (paragraph 170). He recorded at paragraphs 86 and 143-4 that Fawcetts had sought, by respondents' notice and in oral submissions, to raise issues of constructive knowledge on Mr Haward's part under s.14A(10), but he refused at paragraphs 170-171 to entertain any such issue, because it was not investigated and no cross-examination was directed to it at trial before HHJ Playford. Potter LJ agreed with Jonathan Parker LJ's analysis of authority and conclusion. Charles J also agreed, adding that in his view the act or omission alleged to constitute Fawcetts' negligence was not simply their advice, but rather that there were causes of the continuing losses and increasing deficit "which existed and should have been identified by Fawcetts at the times that the relevant purchase and investments were made", but of which the claimants did not become aware until May 1999.   Before your Lordships Fawcetts as appellants have not sought to rely on any suggestion of constructive knowledge under s.14A(10). The case is thus a special, and I would think unusual, one, concerned only with the issue of Mr Haward's actual knowledge of the matters referred to in s.14A.     The law   Under s.14A the onus is on a claimant to plead and prove that he first had the knowledge required for bringing his action within a period of three years prior to its bringing. Subsection (6) of s.14A distinguishes two aspects of the knowledge required. The first aspect relates to the seriousness of the damage, the second to "the other facts relevant to the current action" including in particular that such damage was attributable in whole or part to the act or omission alleged to constitute negligence and the identity of the defendant. The seriousness of the damage is relevant because there may be cases where, although it is known that loss has been suffered due to the negligence of another person, the loss may appear for a time so minor that no-one would contemplate instituting proceedings. That is I think more likely in the area of personal injuries and fatal accidents, covered by s.14 on which s.14A(7) to (10) were modelled, than in the area covered by s.14A itself. In both areas, the statutory language assumes that it is known that there has been some injury (under s.14) or damage (under s.14A). But this too can give rise to difficulty. If a doctor advises that it is necessary to operate, or to remove a breast, in order to remove a malignant tumour, one would not usually speak of the patient sustaining an injury until one knew that the diagnosis was misconceived and there was no such tumour. Similarly, if a financial adviser advises in favour of an investment, one would not describe the making of the investment itself as "damage" until one discovered that it had been a bad or unsound investment from the outset.   In such cases, there is an inter-play between knowledge of what would ordinarily be regarded as injury or damage and knowledge regarding the factual circumstances in which the operation or investment occurred. Yet, the first aspect of the knowledge required relates to damage of sufficient seriousness "to justify [the claimant] instituting proceedings", whereas the knowledge required regarding the attributability of such damage to some act or omission of the defendants is, as will appear, not necessarily such knowledge as to justify proceedings. To maintain a coherent scheme, the better view therefore appears to be to treat the first aspect of knowledge as relating solely to matters of quantum and all questions regarding the evaluation or classification of damage as such as falling within the second aspect of the knowledge required. This is also the view taken in authority: see Dobbie v. Medway Health Authority [1994] 1 WLR 1234, 1241G-1242A, per Sir Thomas Bingham MR. In the present case, the judge said that Mr Haward knew by 6th December 1998 that at any rate part of the large investments which had been made in HAL would not be recovered and had become lost, whatever happened to HAL. But that is not the same as saying that he knew that the investments were bad from the outset.   The second aspect of knowledge required under s.14A is that the damage was attributable in whole or part to the act or omission which is alleged to constitute negligence. It is clear from both the heading and language of s.14A that this aspect deals with difficulties facing a claimant separate from those which are presented by cases where the fact or quantum of damage itself is latent. The background to s.14A confirms this. The 20th Report of the Law Reform Committee of May 1974 (Cmnd. 5630) led to the definition of knowledge in personal injury cases in the Limitation Act 1975, which became by consolidation s.14 of the Limitation Act 1980. In paragraphs 42, 49 and 54-55, the Law Reform Committee treated the two aspects as independent. In particular in paragraph 49 it said: "It has not been suggested to us, and in our view could not reasonably be suggested, that the plaintiff's date of knowledge should arrive until he has knowledge (actual or constructive) both of his injured condition and of its having been caused by an act or omission of the defendant."   The Committee went on to consider whether there should be any further requirement that the plaintiff should know that he had a worthwhile cause of action, or (taking an intermediate possibility suggested, uniquely, by Lord Pearson in Central Asbestos v. Dodd [1973] AC 518) that he should at least be aware that his injury was attributable to some fault of the defendant. They rejected both possibilities. At paragraph 55, they therefore accepted as (they believed) "a date capable of precise definition and not presenting any particular difficulties of proof" the date "when the plaintiff has knowledge, actual or constructive, both of his injured condition and of its having been caused by acts or omissions of the defendant". In the later Law Reform Committee's 24th Report (Latent Damage) of November 1984, which led to the insertion by the Latent Damage Act 1986 of s.14A, applying to cases of negligence not involving personal injury, the Committee at paragraph 4.7 preferred to model s.14A on s. 14, rather than on s.11(3) of the Prescription and Limitation Act (Scotland) Act 1973, because it was arguable that s.11(3) "does not cover lack of knowledge of its [the damage's] causation, or the identity of the person (or persons) liable. By comparison awareness of such matters, which could sometimes be difficult to ascertain in a latent damage context, is specifically included in the definition of knowledge contained in section 14 of the 1980 Act".   The reference in parenthesis to awareness of causation being "sometimes … difficult to ascertain in a latent damage context" cannot mean that the Committee intended that it should only be where damage remained latent that knowledge of causation was to be relevant. Indeed, so long as damage remains latent, knowledge regarding causation cannot really arise as a problem. Another point in this Report which it is of interest to note is the Committee's recognition at the end of paragraph 4.7 - in contrast with the optimism of the 1974 Report - that an approach adapted from s.14 "does have its disadvantages too" and "is a complicated formulation".   Under the terms of s. 14A (8)(a), it is relevant to consider what is meant by (i) "knowledge", (ii) "the act or omission which is alleged to constitute negligence" and (iii) knowledge that damage was "attributable" to such an act or omission. For the moment, I confine myself to actual knowledge.   The degree of certainty of knowledge required under s.14 was considered by Purchas LJ giving the judgment of the Court of Appeal in Nash v. Eli Lilly (at p. 792C-D and also p. 796C-D. At p 791G-H Purchas LJ also quoted the conclusion of Lord Donaldson of Lymington MR in Halford v. Brookes [1991] 1 WLR 428, 443, that knowledge here "clearly does not mean 'know for certain and beyond possibility of contradiction'". Purchas LJ proceeded at p 792 C-D "on the basis that knowledge is a condition of mind which imports a degree of certainty and that the degree of certainty which is appropriate for this purpose is that which, for the particular plaintiff, may reasonably be regarded as sufficient to justify embarking upon the preliminaries to the making of a claim for compensation such as the taking of legal or other advice". In Broadley v. Guy Clapham & Co. [1993] 4 Med LR 328, 334, Hoffmann LJ re-phrased the purpose of s.14(1) as being "to determine the moment at which the plaintiff knows enough to make it reasonable for him to begin to investigate whether or not he has a case against the defendant". This was taken up by Brooke LJ in another case under s.14, Spargo v. North Essex District Health Authority [1997] PIQR P235, P242, where he said: "(3)  A plaintiff has the requisite knowledge when she knows enough to make it reasonable for her to begin to investigate whether or not she has a case against the defendant. Another way of putting this is to say that she will have such knowledge if she so firmly believes that her condition is capable of being attributed to an act or omission which she can identify (in broad terms) that she goes to a solicitor to seek advice about making a claim for compensation. (4)  On the other hand she will not have the requisite knowledge if she thinks she knows the acts or omissions she should investigate but in fact is barking up the wrong tree; or if her knowledge of what the defendant did or did not do is so vague or general that she cannot fairly be expected to know what she should investigate; or if her state of mind is such that she thinks her condition is capable of being attributed to the act or omission alleged to constitute negligence, but she is not sure about this, and would need to check with an expert before she could be properly said to know that it was." All such formulations seem to me relevant also under s.14A, provided that it is remembered that under subs.(8)(a) the requisite knowledge must be of the attributability in whole or part of the damage suffered to the act or omission alleged to constitute negligence. The passage from HHJ Playford's judgment cited in paragraph 103 above was therefore, in my view, incorrect in law.   Turning to the phrase "the act or omission which is alleged to constitute negligence", the word "constitute" is in my view significant. It indicates that the claimant must know the factual essence of what is subsequently alleged as negligence in the claim. Once such knowledge has been acquired, it is under subs. (9) irrelevant whether or not the claimant knew that the relevant act or omission "did or did not, as a matter of law, involve negligence". So, there must be knowledge of the act or omission allegedly constituting negligence, but there need not be knowledge that, as a matter of law, such act or omission involved negligence. Whether an act or omission involves negligence is a matter of law for the court, even though a court may of course hear a good deal of evidence (e.g. about accountancy principles and practices) in order to determine it. Evidence of relevant accountancy principles or practices will commonly be deployed on the issue whether, as a matter of law, such act or omission involved negligence. The difficulty is that knowledge of such principles or practices may also in some cases be said to bear on the question whether a person suffering loss would attribute such loss to accountants who had advised or not advised him.   As Charles J rightly observed, there are tensions arising from the inter-action of subs.(8)(a) and subs.(9) of s.14A. Under subs.(9) if a claimant knows the relevant circumstances, it is irrelevant that he does not appreciate that they, as a matter of law, involve negligence. And the history of the legislation, which I have already recited, shows that the aim was also to eliminate awareness of fault from the knowledge required. Yet in everyday life we may only be prepared to attribute responsibility if and when we appreciate what ought normally or properly to have happened, and so it is not surprising the authorities contain not only clear statements in line with the Law Reform Committee's intention in its 20th report, but also statements showing the difficulty of avoiding terminology which has some flavour of fault-based thinking.   This problem, which can arise most acutely in relation to omissions in professional negligence cases, is closely examined by Janet O'Sullivan in Limitation, latent damage and solicitors' negligence (2004) 20 Journal of Professional Negligence 218, 233-244. It is, as she shows, most acute in a case of alleged negligence on the part of a solicitor or other adviser, where the negligence consists simply in omitting to do something which it was the adviser's duty in law to do (or in doing something that it was his duty not to do) and where the only reason why the client does not attribute any resulting damage to the adviser is that he does not know that the adviser would have been expected so to do (or not to do). Even in such a case, Hart & Honoré, in Causation in the Law (2nd Ed.) p. 38, demonstrate that the concepts of causation (dependent on knowing what is factually usual) and reprehensibility (central to the concept of breach of duty) are conceptually distinct, although on the particular facts coincident.   Whatever the position in such case, it is in any event not on all fours with a case where an adviser causes or allows a client to enter into a transaction but the client has no reason to attribute loss suffered in the transaction to his adviser until he discovers that the transaction was from the outset intrinsically unsound. In such a case there is authority that knowledge that the transaction was from the outset unsound (giving rise to a prima facie right to complain) may be distinguished from the (under s.14A(9) irrelevant) knowledge that the adviser was negligent: see Hallam-Eames v. Merrett Syndicates [2001] Ll.R. Prof. Neg. 178, decided by a Court of Appeal consisting of Sir Thomas Bingham MR and Hoffmann and Saville LJJ (as they then were). The distinction may in such a case be narrow, as Hoffmann LJ giving the judgment of the court himself recognised at p.181 (right column) in that case and as Janet O'Sullivan points out in her article at p.236, but it is an important, and I think a just, one.   I add that I do not consider that the focus of subss.(6)(b) and (8)(a) on facts and the irrelevance under subs.(9) of knowledge, as a matter of law, that such facts involve negligence mean that the decision in HF Pension Trustees Ltd. v. Ellison [1999] Ll.R. Prof. Neg. 489 was correct. The court there treated the impermissibility of transfers, which resulted from advice given by the defendants, as a matter of law. In my view, this impermissiblity should, in context, have been regarded as an (unknown) fact - an aspect of the acts or omissions alleged to constitute negligence - or possibly (as my noble and learned friend Lord Walker has suggested) as unknown damage resulting from such acts or omissions. In either case, it should not have been until the impermissibility was known to the claimants that time started running against them. The distinction between fact and law has never been that rigid (cf e.g Cooper v. Phibbs (1867) LR 2 HL 149 and, in the present field, the decision of Judge Raymond Jack QC, as he then was, in Perry v. Moysey [1998] PNLR 657), while subs.(9) of s.14A goes no further than to make irrelevant knowledge that acts or omissions involved negligence.   For present purposes what matters is that it is, in my opinion, wrong to suggest that all a claimant needs to know is that he has received professional advice but for which he would not have acted in a particular way which has given rise to loss, or that he has not received advice when, if he had received it, he would have acted in a way which would avoided such loss. The defendants' primary contention to that effect was, I think, accepted by the judge at first instance (cf paragraph 103 above), and was advanced again before the House by counsel for Fawcetts. But it is, in my view, untenable, and could lead to unjust results. Mere "but for" causation is insufficient. This was pointed out by Hoffmann LJ in Hallam-Eames v. Merrett Syndicates [2001] Ll.R. Prof. Neg. 178, 181. The decision in that case illustrates the point, since it was not the writing of the run off policies or of the reinsurances to close ("RITCs") or the certification by the auditors of the accounts which were alone regarded as the acts or omissions alleged to constitute the negligence. Rather it was those facts plus the fact that they exposed the Names to potentially huge liabilities (and in the case of the accounts also attributed values to incurred but not reported losses - "IBNRs") none of which were capable of reasonable quantification: see especially at p.181 (top right and the whole left column). A claimant who has received apparently sound and reliable advice may see no reason to challenge it unless and until he discovers that it has not been preceded by or based on the investigation which he instructed or expected. A claimant who has suffered financial loss in a transaction entered into in reliance on such advice may not attribute such loss to the advice unless and until he either makes the like discovery about the inadequacy of the work done, or at least discovers some respect in which the transaction was from the outset unsound giving him (as Hoffmann LJ said) prima facie cause to complain. Such a scenario may well occur where there are other causes of loss which appear to him capable of explaining the whole loss.   On the other hand, as counsel for the claimants accepted in his note to the judge (paragraph 99 above), a claimant cannot postpone the running of time almost indefinitely by reference to detailed factual points which often only become known in the course of investigation of a possible claim, or during litigation itself. The Court of Appeal was right in Broadley v. Guy Clapham & Co. to disapprove a test adopted by Hirst J in Bentley v. Bristol & Weston Health Authority [1991] 2 Med LR 359, in so far as it would have required a claimant to know all factual matters necessary to establish negligence or to draft a fully and comprehensively particularised claim.   The authorities have thus adopted as the relevant test when the claimant acquired "knowledge of the essence of the act or omission to which the injury is attributable": see Nash v. Eli Lilly & Co. [1993] 1 WLR 782, 799C per Purchas LJ and Hallam-Eames v. Merrett Syndicates [2001] Ll.R. 178, 181. The Court of Appeal in Hallam-Eames thus distinguished between, on the one hand, "elaborating the detail by requiring knowledge of precisely how he had come to do the act complained of" (which is irrelevant) and, on the other, knowledge of facts which are "part of the essence of [the] complaint". An example given of the latter was the fact in Dobbie v. Medway Health Authority [1994] 1 WLR 1234 that the breast removed by the surgeon had been healthy. In Hallam-Eames, the essential facts of which knowledge was required were of a reverse character - viz that the run-off policies and reinsurances to close and the certified accounts were in effect unsound (or "unhealthy"). Hoffmann LJ explained: "… the act or omission of which the plaintiff must have knowledge must be that which is causally relevant for the purposes of an allegation of negligence. There may be many acts, omissions or states which can be said to have a causal connection with a given occurrence, but when we make causal statements in ordinary speech, we select on common sense principles the one which is relevant for our purpose. … . It is this idea of causal relevance which various judges of this court have tried to express by saying that the plaintiff must know the 'essence of the act or omission to which the injury is attributable' (Purchas LJ in Nash v. Eli Lilly [1993] 1 WLR 782, 799) or 'the essential thrust of the case' (Sir Thomas Bingham MR in Dobbie [v. Medway Health Authority] [1994] 1 WLR 1234, 1238) or that 'one should look at the way the plaintiff puts his case, distil what he is complaining about and ask whether he had in broad terms knowledge of the facts on which that complaint is based' (Hoffmann LJ in Broadley [v. Guy Clapham & Co.] [1993] 4 Med LR 328, 332). …     He [the claimant] must have known the facts which can fairly be described as constituting the negligence of which he complains. …"   Hoffmann LJ continued: "What, on these principles, are the facts which constitute the negligence of which the Names complain? It would in our view be incomplete to say that it was the writing of the run-off reinsurance policies or the RITCs or the certification of the syndicate accounts. These facts in themselves do not amount to acts of which the Names would even prima facie be entitled to complain. It is necessary to add the allegation that the run-off policies and RITCs exposed the Names to potentially huge liabilities and that the certified accounts attributed values to IBNRs [incurred but not reported losses], none of which were in fact capable of reasonable quantification."   The third element is what is meant by damage being "attributable" in whole or part to the act or omission allegedly constituting negligence. The authorities establish that the word "attributable" means here "capable of being attributed", rather than "caused by": Guidera v. N.E.I. Projects (India) Ltd. (30 January 1990, CA Tr. No. 60 of 1990) per Sir David Croom-Johnson, Nash v. Eli Lilly at pp.797-8, per Purchas LJ and Dobbie v. Medway Health Authority at p.1240, per Sir Thomas Bingham MR. Consistently with the clear wording of the statutory language, the authorities also emphasise that s.14A is concerned with knowledge in this sense of the attributability of the damage suffered to the act or omission allegedly constituting negligence: see e.g. Halford v. Brookes [1991] 1 WLR 428, 443D per Lord Donaldson MR, Dobbie v. Medway Health Authority [1994] 1 WLR 1234, 1240E-H per Sir Thomas Bingham MR and Spargo v. North Essex District Health Authority [1997] PIQR P235, P242, per Brooke LJ in the passages quoted in paragraph 112 above. This is, of course, of particular relevance in cases where there is another possible cause (cf Irshad Ali v. Courtaulds Textiles Ltd. [1999] Lloyd's Rep. Medical 301), though it must always be remembered that all that s.14A requires is knowledge that loss is "capable" of being attributed in whole or "in part" to the act or omission alleged to constitute a particular defendant's negligence. It has indeed been held that a claimant may have the requisite knowledge although he faces alternative possible defendants, one or other but not both of whom may be liable (cf Halford v. Brookes [1991] 1 WLR 428, 443G-H).   The singularity of the present case is, as I have indicated, that it concerns only actual knowledge. The authorities show the importance of the constructive knowledge which may arise under s.14(3) and s.14A(10): see e.g. Nash v. Eli Lilly at pp.796F-G and 799E-801A, Broadley v. Guy Clapham & Co. at pp.333 per Leggatt LJ and 333-4 per Hoffmann LJ and Hallam-Eames at pp.180-2. In Broadley the claimant went into hospital for the removal of a foreign or loose body in her knee, but came out with what she was, within a relatively short period, told was permanent foot drop. Leggatt LJ said at p.333 that knowledge of the mechanics of damage to a nerve was not required, and that she had "constructively" within just over a year of the operation "such specific knowledge of an act or omission which might amount to negligence as would have enabled her to investigate it timeously". Hoffmann LJ said at pp.333-4 that: "In this case Mrs Broadley knew, or could have known with the help of the medical advice reasonably obtainable, that her injury had been caused by damage to the nerve resulting from something which Mr Lowy had done or not done in the course of the operation. In my judgment that was all the knowledge or imputed knowledge which she needed to have. …" He considered that the relevant knowledge was either possessed by Mrs Broadley, or could have been ascertained by her from any doctor whom she chose to consult, "within a few months of the operation", and that was "quite enough to make it reasonable for her to commence an investigation into whether or not the acts in question gave rise to a cause of action". A similar explanation of Broadley was given in Hallam-Eames where Hoffmann LJ said at p.180 that "A patient who goes into hospital for an operation on her knee and comes out with something wrong with her foot can reasonably be expected to ask her doctor why this should be so. If she had asked, she would have been told that the operation must have caused damage to the nerve."   In Hallam-Eames, the Court also responded to a submission that "requiring knowledge of whether potential liabilities were capable of reasonable quantification was to introduce dangerously imprecise criteria" by pointing out (at p.182) that "under subs.(10) the Names will be deemed to have the necessary knowledge if on the facts known to or ascertainable by them, it would have been reasonable for them to instruct an expert who could have discovered the circumstances in which the run off policies and RITCs were concluded and the syndicate accounts certified." Whether the Names knew sufficient to put them over this threshold was, Hoffmann LJ pointed out, a question of degree. On the facts, the Court concluded that the issue "of what the plaintiffs knew or could reasonably have ascertained" could not be decided on a summary basis, because, although the accounts showed that "over successive years, the RITC premium was on each occasion substantially larger than in the year before": "We do not however think that this should necessarily have led a Name to infer that the estimate in the previous year was wrong: it could have been because of business written in the pure year or for other reasons. And in any case, even if the previous estimates had been wrong, the fact that until 1985 was left open, RITCs continued to be written on the basis of certified accounts would have led Names to believe that IBNRs were regarded as reasonably quantifiable."   As regards the run off policies, a letter written by the underwriting agents had described them as "outside the traditional scope of our business" and as representing "in hindsight … poor underwriting judgment"; the court in Hallam-Eames said that it was "well arguable" that this should have prompted Names to investigate, but was ultimately unwilling on a summary judgment application to hold that "it amounted to constructive knowledge that the risks reinsured were not reasonably quantifiable".   The language of s.14A thus recognises a range of different states of mind: (a) actual knowledge of the material facts about the damage and other facts relevant to the action (including therefore knowledge that the loss was capable of being attributed to an act or omission alleged to constitute negligence); (b) knowledge that a claimant might reasonably have been expected to acquire (from facts observable by himself or ascertainable by him or with the help of appropriate expert advice which it would have been reasonable for him to seek); and (c) ignorance. Actual knowledge within (a) involves knowing enough to make it reasonable to investigate whether or not there is a claim against a particular potential defendant: see paragraph 112 above. Constructive knowledge within (b) involves a situation where, although the claimant does not yet know sufficient for (a) to apply, he knows sufficient to make it reasonable for him (by himself or with advice) to acquire further knowledge which would satisfy (a).   Because the present case is concerned only with actual knowledge, the claimants have to do no more than negative actual knowledge on Mr Haward's part that the damage suffered was capable of being attributed to the act or omission now alleged to constitute negligence on Fawcetts' part. I therefore turn to the facts to consider the difference in analysis and result between the judge and the Court of Appeal on this essentially factual point.     The facts and the evidence   I have in paragraph 96 above summarised in very broad outline the history of the years 1995 to 1998, during which the claimants made the initial and subsequent unexpectedly large investments and it eventually became apparent that they had become lost. The question is when Mr Haward actually knew both enough of the acts or omissions now alleged to constitute negligence and that the loss suffered was capable of being attributable thereto to make it reasonable for him to begin to investigate whether or not the claimants had a claim against Fawcetts. That would be the case, taking the reasoning in Hallam-Eames, once he realised that he had prima facie cause to complain of unsoundness from the outset of the investments; this would in turn suggest unsoundness in the advice given or not given by Fawcetts. In relation to the issue raised by this question, the onus was on the claimants. It was for the claimants to displace the basic limitation period by showing, if they could, that Mr Haward did not have the requisite knowledge prior to 6th December 1998.   Mr Haward's witness statement and evidence were however focused on a different matter, which was when he was first made aware that he might have "a claim for damages in negligence" against Fawcetts and when he "might first have been in a position to commence proceedings in respect of such a claim". Mr Haward's statement merely recited the losses sustained by HAL from A1995 to 1997, before moving to detailed discussion of events from February 1998 when - "faced with ever mounting losses", as he put it - he instructed a business adviser, Mr Peter Hughes. It was, he said, not until Mr Peter Hughes suggested it in May 1999 that he became aware of the possibility of pursuing a claim against Fawcetts; some time thereafter investigations into Fawcetts' advice were begun, leading eventually to a positive opinion from counsel in February 2001. In response, it was suggested on Fawcetts' behalf in cross-examination and submissions that serious thoughts were being given to pursuing a claim in negligence against Fawcetts at earlier dates pre-dating 6th December 1998. It was to this issue, as I see it, that the findings made by HHJ Playford at the end of his judgment "for the sake of completeness only" were directed, Like HHJ Playford, but for the different reasons I have already explained, I think that these findings were not directed to the right test. However, so far as they may be material, I see the force of, and would for my part accept, the criticisms directed by Mr Pooles QC on behalf of Mr Haward at the judge's finding that the claimants had not even established that it was only after 6th December 1998 that Mr Haward actually thought of pursuing a claim in negligence against Fawcetts. I can in the circumstances state my reasons briefly.   First, the judge himself said, as part of his recital of the background, that "It was not until May 1999 that Mr Hughes first suggested to Mr Haward that a claim might lie against Fawcetts for negligence …" and, later, that "That investigation [viz "to isolate the causal link between the acts and omissions alleged against Fawcetts and the losses"] did not even commence until May 1999 - apparently as a consequence of Mr Hughes' involvement …" These statements are, as the Court of Appeal thought, in apparent tension with the judge's later conclusion that the claimants had not established that they first knew that they had any claim against Fawcetts after 6th December 1998.   Secondly, bearing in mind evidence about Mr Hughes's litigiousness, impetuosity and disinclination to hold back, it is hard to think that, if Mr Hughes had formed adverse views about Fawcetts' conduct of the affairs of Mr Haward and the other claimants in relation to HAL at an earlier date, Mr Hughes would not given these clear expression in documents, investigation and a claim. The judge placed weight on the fact that Mr Hughes would have told Mr Haward at once of any such views. Not only did Mr Haward deny that he was ever told of any such views, but, if he had been, one would have expected him to have told Mr Taylor, a solicitor with whom he shared an office who had also been introduced to and was acting for Mr Haward. Yet Mr Taylor gave detailed evidence about how the idea of a claim in negligence against Fawcetts in respect of HAL first occurred to him in the context of discovery in the claim involving Mr Brunt in May 1999, and how - far from Mr Hughes mentioning it to him - he mentioned it to Mr Hughes.   Thirdly, Mr Hughes prepared some instructions to counsel in February 2001, which purported to record a meeting in March 1998 at which Mr Austreng admitted not carrying out a full and proper audit of HAL's "stock or its overall financial position". But this account was not supported by the oral evidence given by Mr Haward and was contradicted by that given by Mr Taylor. It seems implausible that a professional man in Mr Austreng's position would react as he is reported to have done, or would admit, at least without saying something by way of excuse or explanation, "that he had at no time carried out a full and proper audit of either the company's stock or its overall financial position". The absence of any follow up by way of investigation, if any such statement was made, would also be striking. Mr Haward and Mr Taylor gave evidence that Mr Hughes' advice leading Mr Haward to move from Fawcetts to another accountant, Mr Patel, in Spring 1998 was not based on any concern about Fawcetts' conduct in relation to HAL, but rather (Mr Taylor said) because Mr Patel was a tax specialist.   Fourthly, the judge's treatment of a draft letter dated 8th December 1998, also prepared by Mr Hughes, failed to take account of the unchallenged evidence regarding both its background (consisting in the discussions and fears about the potential tax penalties relating to the Form IHT 200) and the absence of any relevant follow up to it, save in relation to tax penalties and Mr Austreng's position as trustee. Mr Hughes' impetuousness is evident in the language of the draft, in the inability of Mr Haward's then solicitor, Mr Quinney, to see any basis on which to send such a letter and in the fact that none was sent.   Accordingly, if the issue had been when Mr Haward first considered the possibility of pursuing a claim in negligence against Fawcetts, I would not disagree with the Court of Appeal's decision. But that is not the critical issue, which is identified in paragraph 128 above.     The critical issue   Mr Haward was described in an unchallenged part of Mr Taylor's witness statement as "not very sophisticated in complex financial matters, and … very trusting of his professional advisers". Even so, there was a very remarkable discrepancy between the very limited cash injections contemplated as necessary by the 1995 business plan and the actual investments required in 1995 and succeeding years, and concomitantly between the expected profit and loss position and the actual outturn in such years. Mr Haward in his statement did not address his state of mind in the years 1995 to early 1998 regarding the causes of HAL's losses. In cross-examination he was unable to give a coherent account of his thinking or of any discussion which he might have had with Mr Austreng in these years. He said that he could not remember whether he had asked Mr Austreng about the unanticipated position which emerged. He recalled only saying to Mr Austreng at one stage, in the light of the continuing losses, "I can't keep going on like this", as well as being "very surprised" at a board meeting at Mr Austreng's optimism; so, Mr Haward added, they "went on a bit more, but it was only a matter of time before you …. ran out of money". Mr Haward did briefly mention, as causes which "all contributed to making losses", the recession, the consideration that "farmers are bad payers" and the problem with Mr Brunt. But he did not say that he, at any point, believed that all or any of these factors accounted for the whole or even the greater part of HAL's unanticipated losses and the extra injections of cash thereby necessitated. In re-examination he described the situation in 1997 in these terms: "…basically, Mrs Vauxhall would say, 'John, I want some money, you know, to pay the bills'. And ….. either you paid the cheque or you just got the company closed down, and you thought all that money you've put in you've lost. You thought you might, there might be a chance of trading out of it so you, you paid them the money."   Mr Palmer QC for Fawcetts submits that Mr Haward must have realised that the investment losses he sustained by 6th December 1998 were capable of being attributed to some unsoundness in the venture, particularly in the business plan on which Fawcetts advised, or in Fawcetts' advice, giving prima facie cause for complaint, or at least that Mr Haward's evidence failed to establish the contrary. Friendship or loyalty, or indeed ignorance of the law of negligence, would not, as such, matter if this was Mr Haward's state of mind. There is in the answer quoted at the end of the preceding paragraph a possible indication that, despite the obvious discrepancy between the expected position allegedly confirmed by Fawcetts' advice and the loss-making outcome, Mr Haward was prepared to hope for the best, and why he might thus have been prepared to overlook, or at least not to pursue for the time being, obvious question-marks over the advice allegedly received from Fawcetts. Fawcetts were after all long-standing family accountants and financial advisers and he was on friendly terms with Mr Austreng.   In response to such points, Jonathan Parker LJ drew attention to the other problems which affected HAL's business. However there are difficulties about this response. First, I have already drawn attention to Mr Haward's very limited evidence about such other problems and their impact on HAL and on his thinking. Secondly, Jonathan Parker LJ referred to "a number of possible causes for the failure of the Company", but possible additional causes of damage would not be relevant, if one contributing cause was, to the claimants' knowledge, also the defendants' act or omission. Thirdly, and more fundamentally, the present claim is not for damage resulting from failure of HAL. Rather, it proceeds on the basis that, whatever happened to HAL, the claimants were induced by Fawcetts' negligence to invest monies which they would not otherwise have invested and which were before 6th December 1998 known to be lost; and that this process started with the initial acquisition in December 1994 and continued thereafter from year to year, on the basis of Fawcetts' original advice and (as Mr Haward put it in his evidence) their failure to advise to the contrary thereafter. Fourthly, while "the best-laid schemes o'mice an' men gang aft agley", it is hard to see that the undoubtedly difficult trading conditions which HAL experienced during the relevant period could have been regarded as explaining the hugely and on its face disastrously different position - when compared with that projected by the 1995 business plan - which emerged as soon as Mr Haward had taken over HAL and continued thereafter. One would have thought that there was, on its face, something unsound with the whole venture, and almost inevitably therefore, on the claimants' case, something unsound about any advice given with regard to its viability and advisability. On this basis, Mr Palmer submits that the present case is comparable to Dobbie, where, once Mrs Dobbie knew that a healthy breast had been removed, then, as Hoffmann LJ said in Hallam-Eames, she knew sufficiently that the operation was an act of which she would seem prima facie entitled to complain.     Conclusion   I have not found this an easy appeal to resolve on the facts, bearing in mind that all that is in issue is actual knowledge. The difficulty I have found would have been unlikely to exist had the issue of constructive knowledge been squarely raised before the judge. The House was not invited to depart from the Court of Appeal's conclusion that it was not open to Fawcetts to assert constructive knowledge within s.14A(10). Ultimately however, bearing in mind the limitations and weakness of Mr Haward's evidence, the obviousness of the company's problems from the outset in contrast with the optimism of the 1995 business plan and of Fawcetts' alleged advice and attitude, I would decide the appeal on the simple basis that the claimants failed to discharge, or even satisfactorily to address, the onus on them of proving that Mr Haward did not have the requisite knowledge identified in paragraph 128 above. On that basis I agree that the appeal succeeds.

Judgment of the Court of First Instance (Second Chamber, extended composition) of 25 June 1998. - British Airways plc, Scandinavian Airlines System Denmark-Norway-Sweden, Koninklijke Luchtvaart Maatschappij NV, Air UK Ltd, Euralair international, TAT European Airlines SA and British Midland Airways Ltd v Commission of the European Communities. - State aid - Air transport - Airline company in a critical financial situation - Authorisation for an increase in capital. - Joined cases T-371/94 and T-394/94. European Court reports 1998 Page II-02405 Summary Parties Grounds Decision on costs Operative part Keywords 1 State aid - Planned aid - Examination by the Commission - Inter partes procedure - Rights of concerned parties to participate and to be informed - Restricted - Not at variance with the Commission's obligation to provide reasons for its decision which address the essential complaints raised by concerned parties (EC Treaty, Arts 93(2), 190 and 214) 2 State aid - Planned aid - Examination by the Commission - Obligation to comply with a fixed period - No such obligation - Obligation to seek assistance from external experts - No such obligation (EC Treaty, Art. 93(2)) 3 Procedure - Intervention - Plea in law not raised by the applicant - Inadmissible (EC Statute of the Court of Justice, Art. 37, fourth para.; Rules of Procedure of the Court of First Instance, Art. 116(3)) 4 State aid - Planned aid - Examination by the Commission - Obligation to forward to the other Member States observations received from the Government of the State seeking authorisation to grant aid - No such obligation (EC Treaty, Art. 93) 5 State aid - Prohibition - Derogations - Aid which may be regarded as compatible with the common market - Discretion of the Commission - Judicial review - Limits - Assessment of legality on the basis of the information available when the decision was adopted (EC Treaty, Arts 92(3) and 173) 6 Acts of the institutions - Statement of reasons - Obligation - Scope - Commission decision authorising State aid (EC Treaty, Arts 93(2), 173 and 190) 7 State aid - Prohibition - Derogations - Aid which may be regarded as compatible with the common market - Discretion of the Commission (EC Treaty, Art. 92(3)) 8 Commission - Principle of collegiate responsibility - Scope - Statement of reasons for a decision - Amendment following adoption - Unlawful (EC Treaty, Art. 190; Merger Treaty, Art. 17) 9 State aid - Prohibition - Derogations - Aid which may be regarded as compatible with the common market - Examination of the restructuring measures envisaged by the undertaking receiving the aid - Comparison with the measures adopted by other undertakings in the same sector - Not relevant (EC Treaty, Art. 92(3)) 10 State aid - Prohibition - Derogations - Aid which may be regarded as compatible with the common market - Aid intended for the development of a sector of economic activity - Restructuring of one of the three largest European airline companies (EC Treaty, Art. 92(3)(c)) 11 Acts of the institutions - Statement of reasons - Obligation - Scope - Commission decision on whether aid is compatible with the common market (EC Treaty, Art. 92(1) and (3) and Art. 190) 12 State aid - Prohibition - Derogations - Aid which may be regarded as compatible with the common market - Discretion of the Commission - Reference to the Community context - Competence to attach conditions to the decision authorising the aid - Legal and practical utility of those conditions - Non-compliance with the conditions - No bearing on the lawfulness of the decision (EC Treaty, Art. 92(3)(c)) 13 Actions for annulment - Pleas in law - Plea alleging infringement of Article 155 of the Treaty - Inadmissible (EC Treaty, Arts 155 and 173) Summary 1 Far from enjoying the same rights to a fair hearing as those which individuals against whom a procedure has been instituted are recognised as having, concerned parties, within the meaning of Article 93(2) of the Treaty, have only the right to be involved in the administrative procedure to the extent appropriate in the light of the circumstances of the case. There may be two reasons for restricting the extent of the right to participate and to be informed which such parties enjoy. First, where a Member State notifies the Commission of planned aid and submits supporting documentation, and the relevant Commission departments subsequently hold a series of meetings with officials from the Member State in question, the amount of information in the Commission's possession may already be relatively extensive, leaving outstanding only a small number of doubts which information supplied by the parties concerned may dispel. In so far as they relate to the details of the planned aid, to the economic, financial and competitive position of the recipient undertaking and to its internal operations, the discussions between the Member State and the Commission will inevitably be more thorough than those conducted with the parties concerned. While providing such parties with general information on the essentials of the planned aid, therefore, the Commission may confine itself to concentrating its communication in the Official Journal on those aspects of the planned aid concerning which it still harbours doubts. Second, the Commission is required, under Article 214 of the Treaty, not to disclose to interested parties information of the kind covered by the obligation of professional secrecy, in particular information relating to the internal operations of the recipient undertaking. The limited nature of the rights of concerned parties to participate and to be informed, in so far as they relate solely to the administrative procedure, is not at variance with the Commission's duty under Article 190 of the Treaty to provide, in its final decision authorising planned aid, sufficient reasons which must address all the essential complaints which parties directly and individually concerned by that decision have made either on their own initiative or as a result of information supplied by the Commission. Thus, even on the assumption that the Commission may validly prefer to use other sources of information and thereby reduce the significance of the participation of concerned parties, it is not thereby released from its obligation to include an adequate statement of reasons in its decision. 2 There is nothing in the Treaty or in Community legislation requiring decisions on State aid adopted at the conclusion of the procedure under Article 93(2) of the Treaty to comply with a fixed period. On the assumption that the Commission acted with excessive haste and did not give itself sufficient time to examine proposed aid, such conduct could not, by itself, justify annulment of the decision authorising that aid. To entail annulment, such conduct would have to involve a breach of specific rules governing procedure, the duty to provide reasons or the internal legality of the decision in question. Nor is there anything in the Treaty or in Community legislation which requires the Commission to seek assistance from external experts in order to draft a decision relating to State aid. 3 In view of the fact that interveners must, under Article 116(3) of the Rules of Procedure of the Court of First Instance, accept the case as they find it at the time of their intervention and that their submissions in an application to intervene are, under the fourth paragraph of Article 37 of the EC Statute of the Court of Justice, limited to supporting the submissions of one of the main parties, an intervener is not entitled to raise a plea in law that was not raised by the applicant. 4 The text of Article 93 of the Treaty does not require the Commission to forward to the other Member States observations which it has received from the Government of the State seeking authorisation to grant aid. On the contrary, it follows from the third subparagraph of Article 93(2) of the Treaty that the other Member States may be involved in a specific case of aid only where that case has, at the request of the State concerned, been submitted to the Council. 5 The Commission enjoys a broad discretion in the application of Article 92(3) of the Treaty. Since that discretion involves complex economic and social appraisals, the Court must, in reviewing a decision adopted in that context, confine itself to verifying whether the Commission complied with the rules governing procedure and the statement of reasons, whether the facts on which the contested finding was based have been accurately stated and whether there has been any manifest error in the assessment of those facts or misuse of powers. In that regard, in the context of an action for annulment under Article 173 of the Treaty, the legality of a Community measure falls to be assessed on the basis of the elements of fact and of law existing at the time when the measure was adopted and cannot depend on retrospective considerations as to its efficacy. In particular, the complex assessments made by the Commission must be examined solely on the basis of the information available to the Commission at the time when those assessments were made. 6 The statement of reasons required by Article 190 of the Treaty must disclose in a clear and unequivocal fashion the reasoning followed by the Community authority which adopted the contested measure in such a way as to make the persons concerned aware of the reasons for the measure and thus enable them to defend their rights and the Community judicature to exercise its supervisory jurisdiction. The question whether the statement of the grounds for a decision meets the requirements of Article 190 of the Treaty must be assessed with regard not only to its wording but also to its context and all the legal rules governing the matter in question. While the Commission, in the statement of reasons for a decision, is not required to discuss all the issues of fact and law raised by interested parties during the administrative procedure, it must none the less take account of all the circumstances and all the relevant factors of the case in question. In regard to a decision authorising State aid, the persons, undertakings or associations whose interests might be affected by the grant of the aid, in particular competing undertakings and trade associations, are to be regarded as concerned parties within the meaning of Article 93(2) of the Treaty and considered, in that capacity, to be directly and individually concerned by that decision. Since the requirement of a statement of reasons must be assessed on the basis, in particular, of the interest which those to whom the measure is addressed or other parties to whom it is of direct and individual concern, within the meaning of Article 173 of the Treaty, may have in receiving explanations, it cannot be determined solely on the basis of the interest which the Member State to which that decision is addressed may have in obtaining information. Where a Member State has obtained from the Commission that which it was seeking, namely authorisation for its planned aid, its interest in having a reasoned decision addressed to it may be greatly reduced, in contrast to that of competitors of the beneficiary of the aid, in particular where it has received sufficient information during the negotiations with the Commission through, inter alia, exchange of correspondence with that institution before the authorising decision was taken. 7 Since, according to well-established case-law of the Court of Justice and a consistent administrative practice on the part of the Commission, investment in normal modernisation intended to maintain an undertaking's competitiveness should be carried out using the undertaking's own financial resources, and not through State aid, and investment intended for the renovation and technical modernisation of a production line, which has to be carried out periodically, cannot be regarded as designed to facilitate the development of certain economic activities within the meaning of Article 92(3)(c) of the Treaty, the Commission must, when replying to the observations of concerned parties regarding specific planned aid during the administrative procedure and relating to that case-law and administrative practice, provide precise indications as to whether the criteria established by that case-law and practice can be regarded as having been satisfied or whether it is appropriate, for specific reasons, to derogate from them. 8 The operative part and the statement of reasons of a decision, which must be reasoned under Article 190 of the Treaty, constitute an indivisible whole, with the result that it is for the college of Commissioners alone, in accordance with the principle of collegiate responsibility, to adopt both the one and the other, any alteration to the statement of reasons going beyond simple corrections of spelling or grammar being the exclusive province of that college. 9 In regard to State aid, while there can be no grounds for denying that the Commission is entitled to compare the restructuring measures envisaged by the recipient undertaking with those taken by other undertakings operating in the same economic sector, the fact remains that the restructuring of an undertaking must be targeted at its own specific problems and that the experiences of other undertakings, in different economic and political contexts and at other times, may be irrelevant. 10 The Commission was entitled to form the view that genuine restructuring of one of the three largest European airline companies, which was the recipient of State aid, would have the effect of facilitating the economic development of the European civil aviation sector. 11 Information as to the situation on the markets in question, in particular the position of the undertaking benefiting from the aid and of competing undertakings, constitutes an essential element in the reasoning of a decision relating to the compatibility of planned aid with the common market within the meaning of Article 92 of the Treaty, both where the decision has been taken pursuant to Article 92(1) and where it has been taken pursuant to Article 92(3)(c) of the Treaty and Article 61(3)(c) of the Agreement establishing the European Economic Area in regard to the question whether the aid adversely affects trading conditions to an extent contrary to the common interest. 12 Economic assessments pursuant to Article 92(3)(c) of the Treaty, in respect of which the Commission enjoys a broad discretion, must be made in a Community context. The Commission is for that reason under an obligation to examine the impact of the aid on competition and intra-Community trade. In order to determine whether aid adversely affects trading conditions to an extent contrary to the common interest, it is necessary to consider, in particular, whether there is an imbalance between the charges imposed on the undertakings concerned on the one hand and the benefits derived from the aid in question on the other. The Commission is under an obligation, when examining the impact of State aid, to weigh the beneficial effects of the aid against its adverse effects on trading conditions and the maintenance of undistorted competition. The Commission may in principle make a decision authorising aid under Article 92(3)(c) of the Treaty subject to conditions for ensuring that authorised aid does not alter trading conditions to an extent contrary to the general interest. The legal and practical utility of such conditions of authorisation lies in the fact that, if the recipient undertaking were to fail to observe them, it would be for the Member State concerned to ensure proper implementation of the authorisation decision and for the Commission to assess whether it was appropriate to demand that the aid be repaid. If the State were not to comply with the conditions imposed by the Commission in a decision approving aid, the Commission would be entitled, under the second subparagraph of Article 93(2) of the Treaty, to refer the matter directly to the Court of Justice by way of derogation from Articles 169 and 170 of the Treaty. Having regard to the way in which the conditions underlying a decision to authorise aid thus operate, the mere assertion that one of those conditions will not be complied with cannot cast doubt on the legality of that decision. In general, the legality of a Community act cannot depend on the possible existence of opportunities for circumvention or on retrospective considerations as to its efficacy. 13 Since the purpose of Article 155 of the Treaty is to provide a general definition of the Commission's powers, it cannot be argued that each time the Commission infringes a specific Treaty provision such infringement involves an infringement of the general provision of Article 155 of the Treaty. Parties In Joined Cases T-371/94 and T-394/94, British Airways plc, a company incorporated under English law, established in Hounslow, England, Scandinavian Airlines System Denmark-Norway-Sweden, a company incorporated under the laws of Denmark, Norway and Sweden, established in Stockholm, Koninklijke Luchtvaart Maatschappij NV, a company incorporated under the laws of the Netherlands, established in Amstelveen, the Netherlands, Air UK Ltd, a company incorporated under English law, established in Stansted, England, Euralair International, a company incorporated under French law, established in Bonneuil, France, TAT European Airlines, a company incorporated under French law, established in Tours, France, represented by Romano Subiotto, Solicitor, with an address for service in Luxembourg at the Chambers of Elvinger, Hoss & Prussen, 15 Côte d'Eich, applicants in Case T-371/94, and British Midland Airways Ltd, a company incorporated under English law, established in Castle Donington, England, represented by Kevin F. Bodley, Solicitor, and Konstantinos Adamantopoulos, of the Athens Bar, with an address for service in Luxembourg at the Chambers of Arsène Kronshagen, 12 Boulevard de la Foire, applicant in Case T-394/94, supported by Kingdom of Sweden, represented by Staffan Sandström, acting as Agent, Kingdom of Norway, represented by Margit Tveiten, acting as Agent, with an address for service in Luxembourg at the Royal Norwegian Consulate, 3 Boulevard Royal, Maersk Air I/S, a company incorporated under Danish law, established in Dragøer, Denmark, and Maersk Air Ltd, a company incorporated under English law, established in Birmingham, England, represented by Roderic O'Sullivan and Philip Wareham, Solicitors, having an address for service in Luxembourg at the Chambers of Arendt & Medernach, 8-10 Rue Mathias Hardt, interveners in Case T-371/94, Kingdom of Denmark, represented by Peter Biering, Head of Division in the Ministry of Foreign Affairs, acting as Agent, with an address for service in Luxembourg at the Danish Embassy, 4 Boulevard Royal, and United Kingdom of Great Britain and Northern Ireland, represented by John E. Collins, of the Treasury Solicitor's Department, acting as Agent, and Richard Plender QC, with an address for service in Luxembourg at the British Embassy, 14 Boulevard Roosevelt, interveners in both cases, v Commission of the European Communities, represented by Nicholas Khan and Ben Smulders, of its Legal Service, acting as Agents, assisted by Ami Barav, of the Bar of England and Wales and of the Paris Bar, with an address for service in Luxembourg at the office of Carlos Gómez de la Cruz, of the Commission's Legal Service, Wagner Centre, Kirchberg, defendant, supported by French Republic, represented by Marc Perrin de Brichambaut, Director of Legal Affairs in the Ministry of Foreign Affairs, and by Edwige Belliard, Catherine de Salins and Jean-Marc Belorgey, respectively Deputy Director, Head of Subdirectorate and Chargé de Mission in the Legal Affairs Directorate of that Ministry, acting as Agents, with an address for service in Luxembourg at the French Embassy, 8B Boulevard Joseph II, and Compagnie Nationale Air France, a company incorporated under French law, established in Paris, represented by Olivier d'Ormesson, of the Paris Bar, with an address for service in Luxembourg at the Chambers of Jacques Loesch, 11 Rue Goethe, interveners, APPLICATION for the annulment of Commission Decision 94/653/EC of 27 July 1994 concerning the notified capital increase of Air France (OJ 1994 L 254, p. 73), THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Second Chamber, Extended Composition), composed of: C.W. Bellamy, President, K. Lenaerts, C.P. Briët, A. Kalogeropoulos and A. Potocki, Judges, Registrar: J. Palacio González, Administrator, having regard to the written procedure and further to the hearing on 6 and 7 May 1997, gives the following Judgment Grounds Facts and procedure Administrative procedure 1 By letter of 18 March 1994, the French authorities informed the Commission, pursuant to Article 93(3) of the EC Treaty, of their plan to inject FF 20 billion into the capital of Compagnie Nationale Air France (`Air France'). Enclosed with that notification was a restructuring plan entitled `Projet pour l'Entreprise' (`the Plan'). 2 Following a meeting and an exchange of correspondence with representatives of Air France and the French Government, the Commission opened the procedure under Article 93(2) of the Treaty. It informed the French authorities to that effect by letter of 30 May 1994, which was the subject of a communication published in the Official Journal of the European Communities, C 152 of 3 June 1994, p. 2 (`the communication of 3 June 1994'). 3 In that communication, the Commission took the view that the planned capital injection constituted State aid, while pointing out that it had to examine whether the aid plan would affect trade to an extent contrary to the common interest. In that regard, the Commission took the view in particular that: - economic reality required that account should be taken of the economic situation and prospects of the entire Air France group; - it had to examine the effects which the aid would have on the competitive situation of Air France on its international and domestic routes competing with other European carriers. 4 The French authorities subsequently sent the Commission a series of letters and, together with representatives of Air France, took part in several meetings organised by the Commission. By 4 July 1994, the Commission had received observations from 23 interested parties, among them the Kingdom of Denmark, the United Kingdom of Great Britain and Northern Ireland, the Kingdom of Sweden, the Kingdom of Norway, the Association des Compagnies Aériennes de la Communauté Européenne (Association of Airline Companies of the European Community, hereinafter `ACE') and a large number of European air companies, including the applicants. 5 Most of the interested parties shared the Commission's doubts regarding the legality of the aid in question. The following were among their principal objections: - the aid would benefit not only Air France but also the entire group; - the aid would lead to overcapitalisation of the Air France group; - the purchase of 17 new aircraft at a cost of FF 11.5 billion would be unacceptable; - the compatibility of the aid with the common market ought not to be assessed solely from the standpoint of the development of its beneficiary; - in the event of authorisation of the aid, a massive reduction in Air France's capacity ought to be imposed. 6 The views of the interested parties were communicated to the French authorities, which responded to them by letter of 13 July 1994 to the relevant Commission department. On 14 July 1994, the French Prime Minister sent a letter to the Member of the Commission responsible for such matters, outlining his Government's commitments in the event that the Plan should be approved. On 18 July 1994, the French Government sent a note containing two further commitments. Finally, on 26 July 1994, the French authorities provided the Commission with additional information. The contested decision 7 On 27 July 1994, the Commission adopted Decision 94/653/EC concerning the notified capital increase of Air France (OJ 1994 L 254, p. 73) (`the contested decision'), which may be summarised as follows. 8 After describing the structure of the Air France group (which is involved in air transport, the hotel industry, tourism, catering, maintenance and pilot training), the Commission noted that it was, together with British Airways and Lufthansa, one of the three biggest European air carriers. Since early 1990, it had been pursuing a strategy of acquiring shareholdings in other airline companies (UTA, Air Inter, Sabena and CSA), with a view in particular to consolidating its influence on the domestic market and meeting competition on international routes. The Air France group had begun a policy of modernisation and expansion of its fleet financed through borrowings, the financial charges on which had negatively affected the group's final result, leading to an initial loss of FF 717.2 million in 1990. To counter this situation, the group had adopted a number of restructuring plans, none of which, however, was successful. 9 In summary, the Commission found that the Air France group was in a state of very serious financial and economic crisis: after a FF 3.2 billion loss in 1992, it recorded its fourth consecutive annual loss, amounting to FF 8.4 billion, in 1993. The group's situation had deteriorated constantly over the previous three years. The gap between the Air France group and its competitors had increased because of the poor results in 1993, which were due mainly to poor productivity, high operating costs and heavy financial charges. 10 The Commission went on to outline the Plan, which was intended to `make Air France a real company' (`faire d'Air France une véritable entreprise'), an aim to be attained between 1 January 1994 and 31 December 1996 through a reduction in costs and financial expenses, through a different conception of the product and better utilisation of resources, through reorganisation of the company and through employee participation. 11 In that context, the Commission noted in particular that the number of new aircraft to be delivered during the restructuring period was to be reduced from 22 to 17 and that the corresponding investment would thus amount to FF 11.5 billion. The operating fleet (145 aircraft) was to be increased by just one plane; the number of seats offered was to be slightly reduced. Air France was also to rationalise its fleet by disposing of a number of aircraft. The mixed nature of its fleet (24 different types or versions) was one of the factors contributing to its high operating costs. In addition, Air France was to simplify its network, increase frequencies on profitable routes, develop long-haul routes, abandon marginal routes and focus on routes where growth prospects were good. As regards personnel, the Plan envisaged in particular staff reductions of 5 000, a wages freeze (subject to re-examination) and a block on promotions. Air France was also to be restructured into 11 operating centres responsible for their own financial results, each centre having its own assets. Implementation of the Plan was to be financed by an increase in capital and by the sale of non-core assets. 12 The Commission noted that, during its negotiations with the French Government, the latter had made a number of commitments regarding implementation of the Plan and the use of the capital granted to Air France, with the capital injection to be made in three tranches: FF 10 billion in 1994, FF 5 billion in 1995 and FF 5 billion in 1996. Those commitments were set out, in the form of conditions, in the operative part of the contested decision. 13 On the basis of the foregoing, the Commission took the view that the capital injection in question constituted State aid within the meaning of Article 92(1) of the Treaty and Article 61(1) of the Agreement on the European Economic Area (`the EEA Agreement'), which, taking into account Air France's large European network and the intense competition existing on most of its routes, distorted competition within the EEA. In addition, the aid affected trade between the EEA countries, given the international character of the civil aviation industry. 14 After excluding the application of other derogating provisions of the Treaty and the EEA Agreement, the Commission examined to what extent the aid met the criteria laid down in Article 92(3)(c) of the Treaty and Article 61(3)(c) of the EEA Agreement. 15 Examining the current situation in the civil aviation industry, the Commission took the view that the sector appeared to have overcome the serious economic crisis which had prevailed since 1990. Despite positive results (increases in passenger traffic), some European airlines were still loss-making because of market overcapacity. However, the prospects for the European aviation industry were quite positive in the medium term. In the light of those forecasts, overcapacity appeared to be a phenomenon of temporary duration. The Commission accordingly took the view that the European air-transport market was not affected by a structural overcapacity crisis and that the state of the aviation industry did not require general capacity cutbacks. 16 After assessing the Plan, the Commission formed the view that its successful implementation was capable of restoring the economic and financial viability of Air France and that a genuine restructuring of the company would contribute to the development of the European air transport industry by improving its competitiveness and was therefore in the common interest. In that connection, a footnote referred to the Commission's action programme `The way forward for civil aviation in Europe' (COM(94) 218). 17 In assessing whether the proposed aid was proportionate to Air France's restructuring needs, the Commission considered that it was both necessary and proportionate to enable the company successfully to accomplish its restructuring plan and return to viability. In that connection, the Commission reviewed the various financial instruments issued by Air France between 1989 and 1993 and concluded that the gearing (debt/equity) ratio would be 1.12:1 at the end of 1996. The structure of the Air France group balance sheet should then be as follows: equity (capitaux propres) = FF 18.65 billion; debt = FF 20.85 billion. That ratio would be above average for the civil aviation industry, in which 1.5:1 was considered to be an acceptable debt/equity ratio. The Commission then stated that, apart from the aid, Air France could improve its financial standing through its own efforts by, inter alia, postponing aircraft orders and selling assets. As regards the first possibility, the Commission noted that Air France had already delayed a number of aircraft orders; further postponement would take the average fleet age beyond 10 years, which was too high for an airline aiming at regaining its competitive strength. So far as the sale of assets was concerned, the Commission noted that there was only a limited number of assets, such as Méridien, Sabena and Air Inter, whose sale could bring in significant amounts of money. Sabena and Air Inter were two important core assets for Air France's aviation business. The sale of the remaining assets was already part of the Plan and would not in any event lead to a significant reduction in the amount of the aid. 18 In verifying that the aid would not affect trade to an extent contrary to the common interest, the Commission referred to the commitments made by the French Government during the administrative procedure - in particular, the commitment that Air France would be the only beneficiary of the aid - and concluded that they limited its concern as to the possible effects of the aid in so far as they virtually prevented Air France from using the aid to cross-subsidise Air Inter's activities. The Commission therefore limited its analysis of the effects of the aid on trade to Air France, the actual beneficiary of the aid. 19 The Commission took the view that those commitments involved severe limitations on capacity, supply and pricing freedom for Air France and prevented it from pursuing an aggressive price policy on all the routes which it operated within the EEA. Further, during the first four months of 1994, Air France had already reduced its supply on the European market by 6.4% in relation to the corresponding period in 1993, whereas that of European airlines as a whole had increased on average by 3.8%. If Air France's supply were limited even below market growth, its market share within the EEA would decrease, to the benefit of its competitors. This would prevent the aid from affecting trade to an extent contrary to the common interest. 20 The Commission pointed out that, for the purpose of analysing the effects of the aid within the EEA, it had also to take into account the increased liberalisation in the air transport sector in the Community following the adoption in 1992 of a number of Council regulations referred to as the `third package'. In that context, it considered that the removal of constraints protecting Air France from competition represented an appropriate compensatory justification for the granting of aid compatible with the common interest. 21 Finally, the Commission considered that the negative effects of the aid were not reinforced through the use of exclusive rights or through privileged treatment for Air France, since the French authorities had undertaken both to modify the traffic distribution rules for the Paris airport system in order to make them non-discriminatory and to ensure that the works necessary to adapt the two air terminals at Orly South and Orly West should not affect conditions of competition to the detriment of the airlines operating at Orly Airport. The Commission also pointed out that, on 27 April 1994, it had adopted a decision requiring France to authorise Community carriers to exercise traffic rights on the routes from Paris (Orly) to Toulouse and Marseille by 27 October 1994 at the latest. 22 The Commission concluded that the commitments made by the French authorities together adequately met the concerns which it had expressed in opening the administrative procedure. 23 Article 1 of the contested decision stated that the aid to be granted in the period 1994 to 1996 in favour of Air France, in the form of a FF 20 billion capital increase to be paid in three tranches, and aimed at its restructuring in accordance with the Plan was compatible with the common market and the EEA Agreement by virtue of Article 92(3)(c) of the Treaty and Article 61(3)(c) of the EEA Agreement, provided that the French Government complied with 16 commitments set out as part of that article. 24 Article 2 of the contested decision made payment of the second and third tranches of the aid subject to fulfilment of those commitments and to the actual implementation of the Plan and achievement of the planned results, in order to ensure that the amount of aid remained compatible with the common market. Before release of the second and third tranches of aid in 1995 and 1996, the French Government was required to submit to the Commission a report on the progress of the restructuring programme and on the economic and financial situation of Air France. The Commission was to have the proper implementation of the Plan and the fulfilment of the conditions laid down for the approval of aid verified by independent consultants. Procedure before the Court of First Instance 25 The applicants then brought the present actions, which were registered at the Court of First Instance on 21 November 1994 and 22 December 1994 respectively. 26 The written procedures followed the normal course. 27 By orders of the President of the First Chamber (Extended Composition) of the Court of First Instance of 10 March 1995, 8 May 1995 and 12 June 1995, the Kingdom of Denmark, the United Kingdom, the Kingdom of Sweden, the Kingdom of Norway, Maersk Air I/S and Maersk Air Ltd (`the Maersk companies' or `Maersk') were granted leave to intervene in support of the forms of order sought by the respective applicants. 28 By orders of the President of the First Chamber (Extended Composition) of the Court of First Instance of 12 June 1995, the French Republic was granted leave to intervene in support of the forms of order sought by the defendant. 29 By orders of the Court of First Instance (First Chamber, Extended Composition) of 12 June 1995, Air France was granted leave to intervene in support of the forms of order sought by the defendant and to plead in French during the oral procedures. 30 By decision of the Court of First Instance, the Judge-Rapporteur was transferred to the Second Chamber (Extended Composition), to which the cases were accordingly allocated. 31 Upon hearing the report of the Judge-Rapporteur, the Court of First Instance (Second Chamber, Extended Composition) decided to open the oral procedures without any preparatory inquiry. It did, however, request the parties to amplify their submissions on a number of issues. 32 The parties presented oral argument and replied to the Court's questions at the hearing on 6 and 7 May 1997. 33 On that occasion, the Court adopted a measure of organisation of procedure under Article 64 of its Rules of Procedure, inviting the applicants and the interveners supporting them to lodge with the Registry the observations which they had submitted to the Commission during the administrative procedure, to the extent that they were not yet included on the case-file. The observations of British Airways plc (`British Airways'), TAT European Airlines (`TAT'), Scandinavian Airlines System Denmark-Norway-Sweden (`SAS'), Euralair International (`Euralair') and Air UK Ltd (`Air UK') were thus lodged with the Registry on 8 May 1997, those of the Kingdom of Denmark, the United Kingdom, the Kingdom of Sweden and the Kingdom of Norway having already been lodged during the hearing. 34 Having heard the parties' arguments on this point during the hearing, and in the absence of any objection on their part in that regard, the Court of First Instance (Second Chamber, Extended Composition) takes the view that the two cases should be joined for the purpose of giving judgment. Forms of order sought 35 The applicants claim, in both cases, that the Court should: - annul the contested decision; and - order the Commission to pay the costs. The applicant in Case T-394/94 further requests the Court to prescribe measures of organisation of procedure and measures of inquiry, in accordance with Articles 64 and 65 of the Rules of Procedure, and order production of all the relevant files and documents available to the Commission. 36 The United Kingdom claims that the Court should: - annul the contested decision; and - order the Commission to pay the costs, including those of the United Kingdom. 37 The Kingdom of Denmark, the Kingdom of Sweden and the Kingdom of Norway claim that the Court should: - annul the contested decision. 38 The Maersk companies claim that the Court should: - annul the contested decision; and - order the Commission to pay the costs of their intervention in so far as such a decision lies within the discretion of the Court. 39 The Commission contends that the Court should: - dismiss the applications; - order the applicants to pay the costs; and - order the Kingdom of Denmark, the United Kingdom, the Kingdom of Sweden, the Kingdom of Norway and the Maersk companies to contribute to the Commission's costs. 40 The French Republic contends that the Court should: - dismiss the applications. 41 Air France contends that the Court should: - dismiss the applications; and - order the applicants to pay the costs, including those incurred by Air France. Substance 42 In support of their applications the applicants raise several pleas in law, which may be classed in two groups. In the pleas in the first group (I), they claim that the Commission breached the rules relating to the administrative procedure provided for under Article 93(2) of the Treaty by failing to obtain sufficient information and/or to provide the parties concerned, including the applicants, with sufficient information to enable them to be properly heard and effectively exercise the rights conferred on them by Article 93(2) of the Treaty and Article 62(1)(a) of the EEA Agreement. They also criticise the Commission for not having called on independent experts to assess whether the contested aid was compatible with Article 92(3)(c) of the Treaty and Article 61(3)(c) of the EEA Agreement and claim that it failed to take all necessary steps to verify whether the information provided by the French authorities and Air France was well founded. 43 In the pleas in the second group (II), the applicants claim that the Commission committed a number of errors in the application of Article 92(3)(c) of the Treaty and Article 61(3)(c) of the EEA Agreement. It is claimed in this connection that the Commission breached the principle of proportionality applicable in matters of State aid by (A) wrongly authorising Air France to purchase 17 new aircraft, (B) wrongly authorising the financing of operating costs and operational measures of Air France, (C) incorrectly classifying the securities issued by Air France between 1989 and 1993, (D) misconstruing Air France's debt/equity ratio and (E) wrongly failing to require the sale of disposable assets of Air France. The applicants further claim that the Commission wrongly formed the view that the aid was intended to facilitate the development of an economic activity without affecting trading conditions to an extent contrary to the common interest. Their criticism in this connection is principally directed at 12 of the 16 conditions of authorisation imposed by the decision authorising the aid. Finally, the applicants question, in several respects, whether Air France's restructuring plan is appropriate and submit that the Commission wrongly concluded that the Plan was such as to restore the economic viability of Air France. In those various contentions, the applicants also argue that the Commission provided inadequate reasoning for the contested decision. Finally, the applicant in Case T-394/94, British Midland Airways Ltd (`British Midland'), claims that there has been a breach of Article 155 of the Treaty. I - The pleas alleging irregularities in the conduct of the administrative procedure Summary of the parties' arguments 44 The applicant in Case T-394/94 argues, in substance, that the administrative procedure under Article 93(2) of the Treaty is adversarial and that the Commission ought therefore to have provided the parties concerned with sufficient information to enable them to appreciate fully the potential effect that the aid might have on them. In the circumstances, the Commission's communication of 3 June 1994 was inadequate. In particular, the Commission: - did not explain how the sum of FF 20 billion was calculated; - failed to indicate, in regard to the acquisition of 17 new aircraft, what types of aircraft would be acquired or what types of aircraft the fleet would comprise; - did not provide a copy of the restructuring plan; - predicted a 30% or 33.3% increase in productivity without explaining the basis of such calculation; - did not provide details of the cost of the proposed voluntary redundancies; - failed to provide details of Air France's assets and to explain the breakdown between core and non-core assets; - did not give any valuation of the Méridien hotel chain; - did not give details of the value of Air France's shareholding in Air Inter, Sabena or others, or explain why these were not considered to be non-core assets; - did not provide details of Air France's proposed route network so as to enable its possible effects on competition to be calculated; - did not give details of proposed `new products' referred to by Air France, so as to enable an assessment of their effect on competition; - did not have Air France's annual accounts at the time when the contested decision was taken; - failed to explain why it did not insist on the disclosure of essential information necessary for the adoption of a reasoned decision on the compatibility of the aid with the common market; - did not take subsidiaries - in particular Air Inter - into account, as the restructuring plan concentrated solely on Air France; and - did not explain how the proposals for Air France to continue expansion plans could be reconciled with the aims of the Treaty, particularly in the light of the failure of the two earlier capital injections of FF 5.8 billion. 45 In the observations which it submitted to the Commission during the administrative procedure, British Midland had already raised most of the abovementioned points when it requested the Commission inter alia to show it the restructuring plan submitted by Air France, on the ground that it would otherwise not have sufficient information to comment meaningfully on the planned aid. 46 The applicants in Case T-371/94 also take the view that the information in the communication of 3 June 1994 was inadequate. Greater precision in the communication regarding Air France's intention to increase frequencies on profitable routes, develop long-haul routes, abandon marginal routes and focus on routes where growth prospects were good would have enabled the applicants to assist the Commission in assessing this aspect of the restructuring plan. In particular, they claim, the Commission did not set out Air France's justification for the need to purchase 17 new aircraft, so that the applicants could not submit the necessary information which would have enabled the Commission to consider that aspect of the case carefully and impartially. 47 They also point out that the communication makes no mention of the unit of measurement referred to as `equivalent revenue passenger kilometre' (`ERPK'). The contested decision confronted them for the first time with this unit, which was tailor-made for Air France and applied to the calculation of their own presumed current and forecast productivity. 48 The applicants further submit that the Commission ought to have verified the French version of the communication regarding the passage relating to the possible overcapitalisation of Air France. The transfer of ORAs (obligations remboursables en actions - bonds redeemable into shares) and TSDIs (titres subordonnés à durée indéterminée reconditionnés - repackaged perpetual floating-rate notes) `from the side of the debts into the equity', in the English version, was rendered in French by a transfer `du passif vers l'actif'. This translation error must have made it more difficult for third parties using the French version to submit pertinent comments. 49 Finally, they consider that, in view of the complexity of this case, the Commission ought to have been assisted by independent experts in airline economics, finance and business. As is clear from Article 2 of the contested decision, which provides for the involvement of independent consultants before the second and third tranches of the aid are released, the Commission itself recognises the indispensability of having outside experts to verify the proper implementation of the restructuring plan. It thus accepts implicitly that it has insufficient expertise to do so on its own. 50 The applicants in both cases take the view that the Commission, in adopting the contested decision, demonstrated an unseemly degree of haste, incompatible with proper respect for their fundamental rights or for those of the other parties concerned. The contested decision was taken only 16 working days after the date by which interested parties had to submit their comments, an exceptionally short time in which to examine, deliberate upon and resolve the complex issues raised by the planned aid in issue. The period between the date on which the procedure under Article 93(2) of the Treaty was opened (3 June 1994) and the date on which the contested decision was adopted (27 July 1994) was 37 working days and thus much shorter than the average period in similar cases. 51 The Kingdom of Denmark pointed out at the hearing that it had unsuccessfully requested the Commission, during the administrative procedure, to send the French Government's response to the communication of 3 June 1994 to the other Member States, so as to enable them to submit their observations before the Commission took its decision. 52 The Commission counters by stating that the procedure under Article 93(2) of the Treaty is not adversarial vis-à-vis interested third parties. Such parties are not entitled to be treated identically to the addressee of the final decision. The Commission refers to the case-law on competition, according to which the procedural rights of complainants are not as far-reaching as the right to a fair hearing enjoyed by the companies which are the object of the Commission's investigation. 53 With regard to the communication opening the procedure under Article 93(2), the Commission stresses that its sole aim is to obtain from persons concerned all information required for its guidance with regard to future action. In the present instance, the communication of 3 June 1994 stated all the aspects in regard to which it wished to receive observations in order to be able to state its views with regard to the planned aid notified by the French authorities. In that communication, it provided all the information necessary to enable the parties concerned to express their views. 54 More generally, the Commission considers that it can only provide the information which is in its possession at the time the communication is issued, which is not irrelevant and which is not covered by the obligation of professional or commercial secrecy. Moreover, the purpose of a communication under Article 93(2) is not to express a concluded view but to raise questions. As regards the comprehensive information which, in the applicants' view, ought to have been included in the communication of 3 June 1994, the Commission states that most of the points raised were either covered by the obligation of commercial secrecy or did not raise doubts in regard to which it would have required additional information. 55 As regards the time taken for consideration of the case, the Commission points out that the aid plan in issue was notified on 18 March 1994 and that the contested decision was taken on 27 July 1994, 131 days later. The time which elapsed between those two dates was approximately the same as in similar cases (Commission Decision 91/555/EEC of 24 July 1991 on aid to be granted by the Belgian Government in favour of the air carrier Sabena (OJ 1991 L 300, p. 48) (`the Sabena decision'), Commission Decision 94/118/EC of 21 December 1993 concerning aid to be provided by the Irish Government to the Aer Lingus group (OJ 1994 L 54, p. 30) (`the Aer Lingus decision') and Commission Decision 94/698/EC of 6 July 1994 concerning increase in capital, credit guarantees and tax exemption in favour of TAP (OJ 1994 L 279, p. 29) (`the TAP decision')). Moreover, Article 10(3) of Council Regulation (EEC) No 4064/89 of 21 December 1989 on the control of concentrations between undertakings (OJ 1989 L 395, p. 1) (`Regulation No 4069/89'), according to which a decision declaring a notified concentration to be compatible with the common market should be made within four months, confirms that such a period is reasonable. 56 Finally, the Commission considers that there is no legal obligation on it to have recourse to outside experts before reaching its decisions. Findings of the Court General aspects 57 As a preliminary consideration, it must be borne in mind that the disputed aid plan was officially notified by the French authorities to the Commission, which, once it had decided to open the procedure provided for under Article 93(2) of the Treaty, was under an obligation to give `notice to the parties concerned to submit their comments' before it reached a decision on the matter. 58 The purpose of that provision of Article 93(2), it should be pointed out, has been held by the Court of Justice to be to oblige the Commission to take steps to ensure that all persons who may be concerned are notified and given an opportunity of putting forward their arguments (Case 323/82 Intermills v Commission [1984] ECR 3809, paragraph 17) and to allow the Commission to be fully informed of all the facts of the case before taking its decision (Case 84/82 Germany v Commission [1984] ECR 1451, paragraph 13). 59 With more particular regard to the Commission's duty to inform interested parties, the Court of Justice has ruled that the publication of a notice in the Official Journal of the European Communities is an appropriate means of informing all the parties concerned that a procedure has been initiated (Intermills v Commission, cited above, paragraph 17), while also pointing out that `the sole aim of this communication is to obtain from persons concerned all information required for the guidance of the Commission with regard to its future action' (Case 70/72 Commission v Germany [1973] ECR 813, point 19). This Court has followed that case-law, which confers on the parties concerned essentially the role of information sources for the Commission in the administrative procedure instituted under Article 93(2) of the Treaty (Case T-266/94 Skibsværftsforeningen and Others v Commission [1996] ECR II-1399, paragraph 256). 60 It follows that, far from enjoying the same rights to a fair hearing as those which individuals against whom a procedure has been instituted are recognised as having (see, to that effect, Joined Cases 142/84 and 156/84 BAT and Reynolds v Commission [1987] ECR 4487, paragraphs 19 and 20, concerning competition, and Case C-142/87 Belgium v Commission [1990] ECR I-959, paragraph 46), interested parties have only the right to be involved in the administrative procedure to the extent appropriate in the light of the circumstances of the case. 61 There may be two reasons for restricting the extent of the right to participate and to be informed which interested parties enjoy in the context of the administrative procedure instituted under Article 93(2) of the Treaty. 62 First, where - as in the present instance - a Member State notifies the Commission of planned aid and submits supporting documentation, and the relevant Commission departments subsequently hold a series of meetings with officials from the Member State in question, the amount of information in the Commission's possession may already be relatively extensive, leaving outstanding only a small number of doubts which information supplied by the parties concerned may dispel. In so far as they relate to the details of the planned aid, to the economic, financial and competitive position of the recipient undertaking and to its internal operations, the discussions between the Member State and the Commission will inevitably be more thorough than those conducted with the parties concerned. While providing such parties with general information on the essentials of the planned aid, therefore, the Commission may confine itself to concentrating its communication in the Official Journal on those aspects of the Plan concerning which it still harbours doubts. 63 Second, the Commission is required, under Article 214 of the Treaty, not to disclose to interested parties information of the kind covered by the obligation of professional secrecy, in particular information relating to the internal operations of the recipient undertaking. In that regard, the position of interested parties is not distinguishable from that of complainants in competition cases who, according to the case-law of the Court of Justice, may not receive documents containing business secrets (BAT and Reynolds v Commission, cited above in paragraph 60, paragraph 21). 64 The limited nature of the abovementioned rights to participate and to be informed, in so far as they relate solely to the administrative procedure, is not at variance with the Commission's duty under Article 190 of the Treaty to provide, in its final decision authorising planned aid, sufficient reasons which must address all the essential complaints which parties directly and individually concerned by that decision have made either on their own initiative or as a result of information supplied by the Commission. Thus, even on the assumption that the Commission may, in a particular case, validly prefer to use other sources of information and thereby reduce the significance of the participation of interested parties, it is not thereby released from its obligation to include an adequate statement of reasons in its decision (see paragraph 96 below). 65 It is in the light of the principles set out above that the Court must examine the alleged irregularities which are claimed to have vitiated the course of the administrative procedure, it being understood and undisputed that the applicants, the interveners supporting them and ACE, which all opposed authorisation of the disputed aid plan during the administrative procedure before the Commission, must be treated as parties concerned for the purposes of Article 93(2) of the Treaty, as construed by the Court of Justice in paragraph 16 of Intermills v Commission, cited above in paragraph 58. The communication of 3 June 1994 66 With regard, first, to the allegedly inadequate nature of the communication of 3 June 1994, it must be noted that the communication deals with: - Air France's economic and financial situation prior to the drafting of the aid plan, in particular the previous restructuring plans and capital injections and its accumulated losses; - the `particular ... topics' on which the new restructuring plan focuses; - the projected aid amount of FF 20 billion; and - the main doubts expressed by the Commission at that stage of the procedure concerning in particular the productivity gains of Air France, the structure of the Air France group, the competitive position of Air France and the possibility of its being overcapitalised. The Court takes the view that such information was sufficient to enable the parties concerned to present their arguments effectively before the Commission. 67 As regards the view taken by the applicants in Case T-371/94 that the ERPK unit of measurement, Air France's air network and its future development and the reasons justifying the acquisition of 17 new aircraft ought also to have featured in the communication, the Commission's reply to the effect that it did not entertain any doubts on those specific points is sufficient to justify the absence in that communication of any reference to those matters; that, however, does not mean that the applicants may not ask the Court to examine whether the Commission's final decision is adequately reasoned in regard to those matters or whether it contains manifest errors of assessment or of law. 68 With regard to the complaint raised by the applicant in Case T-394/94 that there was no notification of the numerous details mentioned above (see paragraph 44 above), the Commission is justified in invoking the obligation of business secrecy which prohibited it from disclosing commercially sensitive information on Air France to that airline's competitors. In particular, the restructuring plan - at the stage prior to its approval by the Commission and to the start of its implementation - contained such information, and it was clearly not a matter for competitors to evaluate, and compare with their own management measures, each of the restructuring measures envisaged by Air France. Were the position otherwise, competitors would be able to interfere in the internal restructuring of Air France and to attempt to `dictate' the measures which they might see fit for that company, after having obtained valuable information on their competitor. Such an analysis is not gainsaid by the fact that other interested parties, such as ACE (p. 27, final paragraph, of its observations), have apparently been able to obtain this restructuring plan. That fact cannot lead the Commission to infringe Article 214 of the Treaty. 69 It should be added that Air France's annual accounts for 1993 were published in the Bulletin des Annonces Légales Obligatoires of 17 June 1994, at p. 10207 (point 319 of Air France's statement in intervention in Case T-371/94), and were thus available to the parties concerned. Those parties cannot therefore criticise the Commission for not having disclosed the definitive figures in its communication of 3 June and cannot argue that it took its final decision without knowledge of that information. 70 Finally, the allegations that the Commission failed to obtain essential information before adopting its final decision and did not sufficiently check all relevant aspects of the case amount to no more than general assertions and assumptions unsupported by any concrete evidence. The Commission was thus entitled simply to reply that it had indeed obtained all useful and necessary information which was the subject of detailed verification on its part. Furthermore, those allegations in fact concern not the stage of the communication of 3 June 1994 but the later stage of the contested decision. The same is true of the final two heads of complaint raised by the applicant in Case T-394/94 (see paragraph 44 above), which are in reality directed against the legality of the contested decision and concern the statement of reasons and the assessment of the merits therein. They will for those reasons be examined below in a separate context. The time taken for consideration of the case 71 The applicants take the view that, given the complexity of the disputed aid plan, the period which the Commission gave itself for examining that plan before adopting the contested decision was too short. It must first be pointed out in this regard that there is nothing in the Treaty or in Community legislation requiring decisions on State aid adopted at the conclusion of the procedure under Article 93(2) of the Treaty to comply with a fixed period. Furthermore, assuming that the Commission acted with excessive haste and did not give itself sufficient time to examine the disputed plan, such conduct could not, by itself, justify annulment of the contested decision. To entail annulment, such conduct would have to involve a breach of specific rules governing procedure, the duty to provide reasons or the internal legality of the contested decision. Consequently, without its being necessary to express a view on the relevance of the Commission's decision-making practice in regard to concentrations, this contention must be rejected. The need for external experts 72 The complaint that the Commission failed to seek assistance from external experts when drafting the contested decision is manifestly lacking any foundation, since no provision of the Treaty or of Community legislation imposes any such obligation on it. It should be added that the Commission was, in any event, relatively well informed on the air transport sector before it adopted the contested decision. In that connection, it had already familiarised itself with the air transport situation, which was dealt with, in particular, in the report entitled `Expanding Horizons' published at the beginning of 1994 by the `Comité des Sages' (Committee of Wise Men), in the programme `The way forward for civil aviation in Europe', and in the publications of the International Air Transport Authority (IATA) and the Association of European Airlines (AEA). In addition, the Commission had adopted other decisions within the air transport sector, such as the Sabena, Aer Lingus and TAP decisions (cited above in paragraph 55). Finally, nothing in the present case indicates that the Commission had need of external expert assistance. The translation error 73 The error in the French text of the communication of 3 June 1994, pointed out by the applicants in Case T-371/94, is so obvious that those familiar with the air sector would readily have been aware of it. It is clear that loan bonds cannot, according to accounting principles, be transferred `du passif vers l'actif' (`from the side of the debts into the equity' in the English text of the communication), but must be classified, exclusively on the liabilities side, either as equity or as debt. 74 In any event, the Commission expressly pointed out, in the relevant passage of its communication, that it had still to examine in detail the classification of the bonds in question. Its assessment was thus not yet definitive in that passage, including the point distorted by the abovementioned error. That error cannot therefore affect the legality of the administrative procedure, since the crucial question in that regard is solely whether the final decision was also affected by that error and the applicants have not even alleged that to have been the case. The participation of other Member States 75 The plea submitted by the Kingdom of Denmark, that the Commission should have forwarded to the other Member States the French Government's reply to the communication of 3 June 1994, must be dismissed as inadmissible since it was not raised by the applicants. In view of the fact that interveners must, under Article 116(3) of the Rules of Procedure, accept the case as they find it at the time of their intervention and that their submissions in an application to intervene are, under the fourth paragraph of Article 37 of the EC Statute of the Court of Justice, limited to supporting the submissions of one of the main parties, the Kingdom of Denmark is not, as an intervener, entitled to raise that plea in law (see, to the same effect, Case C-313/90 CIRFS and Others v Commission [1993] ECR I-1125, paragraphs 19 to 22). 76 In any event, the text of Article 93 of the Treaty does not require the Commission to forward to the other Member States observations which it has received from the Government of the State seeking authorisation to grant aid. On the contrary, it follows from the third subparagraph of Article 93(2) that the other Member States may be involved in a specific case of aid only where that case has, at the request of the State concerned, been submitted to the Council. Conclusion 77 In the light of the foregoing, the procedure under Article 93(2) of the Treaty followed in the present case was not vitiated by any defect and the pleas in law relating thereto must therefore be dismissed. II - The pleas alleging errors of assessment and errors of law committed by the Commission in breach of Article 92(3)(c) of the Treaty and Article 61(3)(c) of the EEA Agreement General aspects 78 In the contested decision, the Commission examined the legality of the disputed aid in the light of Article 92(3)(c) of the Treaty and Article 61(3)(c) of the EEA Agreement. In that examination, it found that a genuine restructuring of Air France would be in the common interest, that the amount of aid did not appear to be excessive and that the aid would not affect conditions of trade to an extent contrary to the common interest. 79 It has consistently been held that the Commission enjoys a broad discretion in the application of Article 92(3) of the Treaty (see, for instance, Case 730/79 Philip Morris v Commission [1980] ECR 2671, paragraphs 17 and 24, Case 310/85 Deufil v Commission [1987] ECR 901, paragraph 18, and Case C-301/87 France v Commission [1990] ECR I-307, paragraph 49). Since that discretion involves complex economic and social appraisals, the Court must, in reviewing a decision adopted in this context, confine itself to verifying whether the Commission complied with the rules governing procedure and the statement of reasons, whether the facts on which the contested finding was based have been accurately stated and whether there has been any manifest error of assessment or misuse of powers (Case C-56/93 Belgium v Commission [1996] ECR I-723, paragraph 11, and the case-law cited therein). In particular, it is not for the Court to substitute its own economic assessment for that of the author of the decision (Case C-225/91 Matra v Commission [1993] ECR I-3203, paragraph 23). The Court takes the view that this case-law is equally relevant to the examination under Article 61(3)(c) of the EEA Agreement. 80 In the present cases, the Commission points out that the applicants' contentions are in part based on events occurring after the contested decision was adopted. In reply, the applicants argue that some of those subsequent events form part of a continuing and uninterrupted succession of facts of which the Commission should have been aware. Furthermore, certain subsequent facts illustrate clearly the comments submitted by the applicants during the administrative procedure. 81 Here, it must be borne in mind that, in the context of an action for annulment under Article 173 of the Treaty, the legality of a Community measure falls to be assessed on the basis of the elements of fact and of law existing at the time when the measure was adopted (Joined Cases 15/76 and 16/76 France v Commission [1979] ECR 321, paragraph 7, and Case T-77/95 SFEI and Others v Commission [1997] ECR II-1, paragraph 74) and cannot depend on retrospective considerations of its efficacy (Case 40/72 Schroeder v Germany [1973] ECR 125, paragraph 14). In particular, the complex assessments made by the Commission must be examined solely on the basis of the information available to the Commission at the time when those assessments were made (Case 234/84 Belgium v Commission [1986] ECR 2263, paragraph 16, and Case C-241/94 France v Commission [1996] ECR I-4551, paragraph 33). 82 It is in the light of the above principles that the substantive pleas and arguments here raised by the applicants - which challenge the assessments as to whether the aid was proportionate, as to the impact of that aid on the civil aviation sector within the EEA, and as to the appropriateness of the restructuring plan accompanying the disputed aid - must be examined. The contentions based on breach of the principle of proportionality applicable in regard to State aid 83 In these contentions, the applicants and the interveners supporting them claim that the Commission authorised aid in an amount exceeding the restructuring requirements of Air France. These contentions are based essentially on the judgment in Philip Morris v Commission (paragraph 17, cited above in paragraph 79), in which the Court of Justice ruled that Member States could not be permitted to make payments which would improve the financial situation of the recipient undertaking `although they were not necessary for the attainment of the objectives specified in Article 92(3)'. A - The contention that the Commission was wrong to authorise the purchase by Air France of 17 new aircraft Summary of the parties' arguments 84 The applicants consider that it was disproportionate to approve aid the purpose of which was to permit Air France to purchase 17 new aircraft. The Commission, they claim, was clearly wrong in concluding that the amount of aid could not be reduced by cancelling or postponing the orders placed by Air France for a value of FF 11.5 billion. The costs of the periodically necessary renovation of the fleet, being an investment in capital assets, in principle form part of an airline's operating costs. Such renovation must be carried out without State intervention. In any event, the acquisition of new aircraft was not essential for Air France. 85 The applicants in Case T-371/94 also claim that the Commission provided an inadequate statement of reasons in that regard, even though it had been informed during the administrative procedure that the purchase of 17 new aircraft was not an essential element in Air France's restructuring plan and ought therefore to be cancelled. The Commission failed to consider seriously the third-party comments filed in response to its communication of 3 June 1994. The applicant in Case T-394/94 and the Maersk companies, in intervention, argue generally that the Commission neglected to provide a proper statement of reasons by failing, in particular, to deal properly with the detailed submissions made to it by third parties during the administrative procedure. 86 The Commission stresses that it was necessary for Air France to acquire the 17 new aircraft. It refers to the wording of the contested decision, which states that Air France's high operating costs were partly due to the considerable diversity of its fleet, rationalisation of which was envisaged within the framework of the restructuring plan (contested decision, OJ pp. 75 and 76). Far from rejuvenating the fleet, the Plan merely slows down its ageing. New jet aircraft are significantly more fuel-efficient, comply with environmental protection regulations and have low repair and maintenance costs. Finally, they have a greater passenger appeal. 87 So far as its obligation to state reasons is concerned, the Commission takes the view that the contested decision is in accordance with Article 190 of the Treaty. It is sufficient for the decision to set out the principal issues of law and fact upon which it is based and which are necessary in order that the reasoning which led the Commission to its decision may be understood (Case 24/62 Germany v Commission [1963] ECR 63, at p. 69). It is not required to discuss all the issues of fact and law which have been raised by every party during the administrative procedure (see, for example, Joined Cases 209/78 to 215/78 and 218/78 Heintz Van Landewyck and Others v Commission [1980] ECR 3125, paragraph 66). Finally, the requirements to be satisfied by the statement of reasons depend on the circumstances of each case, in particular the content of the measure in question, the nature of the reasons given and the need for information of the undertakings to whom the measure is addressed. In the Commission's view, the conditions laid down in the case-law referred to above were fully complied with in the contested decision, which, in 17 pages of the Official Journal, sets out all the relevant issues of fact and law surrounding this case and summarises the objections raised by third parties during the administrative procedure. In particular, the Commission denies that it failed to take account of the observations submitted during that procedure. Those observations were duly considered and conveyed to the French authorities for their comments. Findings of the Court 88 In view of the arguments put forward by the applicants, it is first necessary to ascertain whether the contested decision contains an adequate statement of reasons in regard to the authorisation of Air France's purchase of 17 new aircraft. It must first of all be pointed out in this regard that, in the light of the settled case-law to the effect that any absence of a statement of reasons may be raised by the Court itself of its own motion (Case 18/57 Nold v High Authority [1959] ECR 41, at p. 52, Case C-166/95 P Commission v Daffix [1997] ECR I-983, paragraphs 24 and 25, and Case T-61/89 Dansk Pelsdyravlerforening v Commission [1992] ECR II-1931, paragraph 129), the Court invited the applicants and the interveners supporting them to lodge the observations which they had submitted to the Commission during the administrative procedure in their capacity as parties concerned within the meaning of Article 93(2) of the Treaty, to the extent that those observations were not yet included in the case-file (see paragraph 33 above). 89 In line with the settled case-law of the Court of Justice, the statement of reasons required by Article 190 of the Treaty must disclose in a clear and unequivocal fashion the reasoning followed by the Community authority which adopted the measure in question in such a way as to make the persons concerned aware of the reasons for the measure and thus enable them to defend their rights and the Court to exercise its supervisory jurisdiction (Case C-350/88 Delacre and Others v Commission [1990] ECR I-395, paragraph 15, and the case-law there cited). 90 So far as concerns the notion of `persons concerned' within the meaning of the above case-law, the Court of Justice has ruled, in a case involving a Commission decision refusing to authorise an aid plan drawn up by a Member State for the benefit of a State-controlled undertaking, that the requirement of a statement of reasons must be assessed on the basis, in particular, of the interest which those to whom the measure is addressed `or of other parties to whom it is of direct and individual concern', within the meaning of Article 173 of the Treaty, may have in receiving explanations (Joined Cases 296/82 and 318/82 Netherlands and Leeuwarder Papierwarenfabriek v Commission [1985] ECR 809, paragraph 19). 91 The Court of Justice has subsequently ruled that an undertaking in competition with an undertaking receiving State aid must be regarded as a `party concerned' within the meaning of Article 93(2) of the Treaty and must, in that capacity, be considered to be directly and individually concerned by the Commission decision authorising payment of the aid in question. In so doing, the Court of Justice also pointed out that the parties concerned within the meaning of Article 93(2) had already been defined as the persons, undertakings or associations whose interests might be affected by the grant of the aid, in particular competing undertakings and trade associations (Case C-198/91 William Cook v Commission [1993] ECR I-2487, paragraphs 24 to 26, and the case-law there cited). 92 The requirement to provide reasons for a decision taken in regard to State aid thus cannot be determined solely on the basis of the interest which the Member State to which that decision is addressed may have in obtaining information. Where a Member State has obtained from the Commission what it was seeking, namely authorisation for its planned aid, its interest in having a reasoned decision addressed to it may be greatly reduced, in contrast to that of competitors of the beneficiary of the aid, in particular where it has received sufficient information during the negotiations with the Commission through, inter alia, exchange of correspondence before the authorising decision was taken. 93 In the present instance, it is common ground that the applicants, the Maersk companies, as interveners, and ACE are parties concerned within the meaning of Article 93(2) of the Treaty and that the contested decision is of direct and individual concern to them within the meaning of the fourth paragraph of Article 173 of the Treaty, given that their market position is significantly affected by the aid measure which it authorises (Case 169/84 Cofaz and Others v Commission [1986] ECR 391, paragraph 25). 94 According to settled case-law, the question whether the statement of the grounds for a decision meets the requirements of Article 190 of the Treaty must be assessed with regard not only to its wording but also to its context and all the legal rules governing the matter in question (Delacre and Others v Commission, cited above in paragraph 89, paragraph 16 and the case-law there cited). While the Commission, in the statement of reasons for a decision, is not required to discuss all the issues of fact and law raised by interested parties during the administrative procedure (Case C-360/92 P Publishers Association v Commission [1995] ECR I-23, paragraph 39), it must none the less take account of all the circumstances and all the relevant factors of the case (Joined Cases C-329/93, C-62/95 and C-63/95 Germany and Others v Commission [1996] ECR I-5151, hereinafter `the Bremer Vulkan judgment', paragraph 32) so as to enable the Court to review its lawfulness and make clear to the Member States and the persons concerned the circumstances in which the Commission has applied the Treaty (Publishers Association, cited above, paragraph 39). 95 It should be added that the Commission adopted the contested decision pursuant to Article 92(3) of the Treaty, in an area in which it enjoys a broad discretion (see paragraph 79 above). Since the Court of Justice has ruled that the Commission's discretion carries with it a duty to examine carefully and impartially all relevant aspects of the individual case (Case C-269/90 Hauptzollamt München-Mitte v Technische Universität München [1991] ECR I-5469, paragraph 14), review of that obligation requires a sufficiently precise statement of reasons in order to enable the Court to be satisfied that it has been complied with. 96 It is thus necessary to ascertain whether the statement of reasons in the contested decision indicates clearly and unequivocally the Commission's reasoning, particularly in view of the essential complaints concerning the assessment of the contested aid plan put to the Commission during the administrative procedure by British Airways, TAT, Koninklijke Luchtvaart Maatschappij (`KLM'), SAS, Air UK, Euralair, British Midland and by ACE, in particular on behalf of Euralair and Maersk, by the Kingdom of Denmark, the United Kingdom, the Kingdom of Sweden and the Kingdom of Norway (the `parties concerned'). 97 On an overall reading of the observations lodged with the Court, it transpires that some of those parties had, in particular, insisted before the Commission on the unacceptable nature of the acquisition of 17 new aircraft for FF 11.5 billion, as provided for in the restructuring plan. Since, in the face of the crisis generated by overcapacity, all airline companies not in receipt of subsidies were compelled to cancel or postpone orders for new aircraft at the beginning of the 1990s, Air France, it was argued, could not escape such an obligation. The decision to invest FF 11.5 billion in acquiring aircraft would increase additional capital requirements and consequently Air France's debts. In view of its disastrous financial situation, it would not be justified in using receipts from the sale of other assets for the purpose of such financing. In order to ensure uniformity within the Air France fleet, provided for in the restructuring plan, it would have been more appropriate to modify existing aircraft. 98 In particular, TAT (p. 18 of its observations) and the United Kingdom (p. 6 of its observations) stressed that the investment represented by the acquisition of 17 new aircraft concerned Air France's short-term operational activities, not its restructuring. It was normal modernisation designed to maintain the company's competitiveness. Such a measure should be financed through an undertaking's own resources and not through State aid. In this case it was inevitable that, contrary to the requirements of the case-law and the Commission's decision-making policy, the contested aid would be used to finance the purchase of those aircraft. Such aid should be classified as operational aid, not compatible with the requirements of Article 92(3)(c) of the Treaty. In that context, reference was made to the judgments in Deufil (cited above in paragraph 79) and in Joined Cases 62/87 and 72/87 Exécutif Régional Wallon and Glaverbel v Commission [1988] ECR 1573, and to Commission Decision 90/70/EEC of 28 June 1989 concerning aid provided by France to certain primary processing steel undertakings (OJ 1990 L 47, p. 28). 99 In that regard, the Court notes that the Commission pointed out, in the contested decision, that one of the factors affecting the Air France group's operating performance was its fleet mix, which comprised too many different types of aircraft (24 different types or versions), contributing to the high operating costs (for example, particularly high maintenance costs resulting from the large number of different spare parts and different qualifications for flying and ground personnel). As of 31 December 1993, the group's fleet consisted of 208 aircraft (Air France's operating fleet consisted of 145 aircraft), with an average age of 8.6 years (contested decision, OJ, p. 75). 100 With regard to the `particular ... topics' on which the restructuring plan focused, the Commission pointed out that it was intended to adjust the number of new aircraft to be delivered during the restructuring period from 22 to 17. The corresponding investment would thus be FF 11.5 billion (contested decision, OJ, p. 75). As for the capital necessary for this investment, the Commission noted the postponement of aircraft orders, which, at the end of the restructuring period, would increase the average fleet age to some 9.3 years. Any further delay in fleet investment would simply mean a further deterioration of this figure which could harm Air France's competitiveness and endanger the viability of the restructuring (contested decision, OJ, p. 82). 101 In examining whether the aid was proportionate to the needs of restructuring (contested decision, OJ, p. 83), the Commission took the view that, apart from the aid, Air France had three ways of improving its financial standing through its own efforts, one of which was to postpone its aircraft orders. Since the company had already postponed a number of orders, further postponement would take the average fleet age beyond 10 years, which was too high for an airline aiming at regaining its competitive strength (contested decision, OJ, p. 85). 102 The reasoning, as thus stated, indicates clearly and unequivocally why the Commission considered that it was vital, in the specific case of Air France, to proceed with the purchase of 17 new aircraft. It includes the grounds of justification regarded by the Commission as being fundamental, namely the need for Air France to have a fleet of a reasonable average age, the fact that the number of aircraft to be acquired was only a fraction of that originally envisaged and the fact that the planned investment would serve to make Air France's fleet more uniform and thus lead to a reduction in operating costs. The Commission thereby provided an adequate response to the first branch of the observations submitted by the parties concerned during the administrative procedure. 103 In the second branch of their observations, the parties concerned classified part of the contested aid as operating aid prohibited by the case-law in so far as it was intended to finance purely operational activities of Air France, namely refurbishing of its fleet aircraft as operating assets. 104 It must be noted in that regard that, in Deufil (cited above in paragraph 79), the Court of Justice approved the Commission's reasoning that investment in normal modernisation intended to maintain an undertaking's competitiveness should be carried out using the undertaking's own financial resources, and not through State aid (paragraphs 16 to 19). In Exécutif Régional Wallon (cited above in paragraph 98), the Court of Justice treated the Commission's line of reasoning - to the effect that investment intended for the renovation and technical modernisation of a production line, which had to be carried out periodically, could not be regarded as designed to facilitate the development of certain economic activities within the meaning of Article 92(3)(c) of the Treaty - as comprehensible and falling within its power of appraisal (paragraphs 31, 32 and 34). 105 Referring to that case-law, the parties concerned pointed out the risk that the amount of aid authorised might become excessive if part of it was not used for Air France's restructuring stricto sensu. In Philip Morris (cited above in paragraph 79, paragraph 17), the Court of Justice ruled that Member States were not entitled to make payments which would improve the financial situation of the recipient undertaking `although they were not necessary for the attainment of the objectives specified in Article 92(3)'. 106 The parties concerned thus raised the possibility of an error of law, namely a breach of the principle of proportionality laid down, with specific reference to State aid, by Article 92(3) of the Treaty. This Court takes the view that it was essential to consider that contention when assessing the aid plan in issue. The Commission was thus under an obligation to reply to it in the grounds of the contested decision. 107 In this connection, the Commission took the view, in the contested decision, that investment in fleet renewal was necessary for the viability of Air France's restructuring (contested decision, OJ, p. 82) and that postponement of orders for new aircraft would take Air France's average fleet age beyond 10 years, a level too high for an airline company aiming at regaining its competitive strength (contested decision, OJ, p. 85). Investment in fleet renewal in an amount of FF 11.5 billion, which features among the `particular ... topics' on which the restructuring plan focused (contested decision, OJ, p. 75), was thus regarded by the Commission as forming an integral part of Air France's restructuring. 108 The Commission confirmed that point of view before the Court by declaring that the acquisition of 17 new aircraft was justified `within the framework of the implementation of the Plan' (point 40 of the rejoinder in Case T-371/94). Moreover, according to the Ernst & Young report submitted by the Commission (Annex 2 to the defence in Case T-371/94), the purchase of the aircraft constituted `... an integral element of its plan to rationalise its fleet ... This investment is a key element of [the] Plan' (point 22 on page 22 of the Report). GROUNDS CONTINUED UNDER DOC.NUM: 694A0371.1 109 Regarding the detailed arrangements for financing that investment, the contested decision indicates that the implementation of the restructuring plan was to be financed through the increase in capital and sale of non-core assets, from which Air France hoped to realise some FF 7 billion, in particular the sale of a number of aircraft expected to generate some FF 4.1 billion, the sale of spare parts (FF 1.2 billion), a building (FF 0.4 billion) and the Méridien hotel group (contested decision, OJ, p. 76). The contested decision adds that the French authorities gave an undertaking to ensure that, for the duration of the Plan, the aid would be exclusively used by Air France for the purposes of restructuring the company (contested decision, OJ, pp. 78 and 79). 110 In its assessment of the viability of the restructuring plan, the Commission stated that the aid in question was aimed at financing the implementation of the Plan and restructuring the finances of Air France (contested decision, OJ, p. 82). In summary, it was satisfied that the aid granted to Air France was both necessary and proportionate to enable the company to accomplish successfully its restructuring plan and return to viability (contested decision, OJ, p. 86). Finally, condition of authorisation No 6 required the French authorities to ensure `that ... the aid is used exclusively by Air France for the purposes of restructuring the company' (contested decision, OJ, p. 89). 111 As is clear from that reasoning, the contested decision took the view that, while it would serve to reduce Air France's indebtedness, the State aid in dispute was also intended to finance the achievement of the restructuring plan, also financed by the disposal of assets. At the same time, the Commission also considered that investment in fleet renewal was in itself a vital factor in restructuring Air France. It thus appears that the contested decision acknowledged that the aid was intended to finance the fleet investment involving the acquisition of 17 new aircraft. In any event, the decision did not preclude the possibility that the aid might be used, at least in part, for the purpose of financing such investment. The only independent financial means at Air France's disposal designed to contribute to financing this investment, namely the disposal of assets, was expected to realise only FF 7 billion, whereas the costs of the investment in question amounted to FF 11.5 billion. 112 Although such a purchase, accompanied by the disposal of old aircraft, clearly constitutes a modernisation of Air France's fleet, the contested decision did not comment on the relevance, asserted by the parties concerned, of the Deufil and Exécutif Régional Wallon judgments (cited above in paragraphs 79 and 98). The Commission thus failed to specify whether it would tolerate, exceptionally, the financing in question because it considered that case-law to be irrelevant in the specific circumstances of the present context or whether it intended to depart from the actual principle laid down therein. 113 A statement of position by the Commission was all the more necessary in the light of its own decision-making practice reflecting its opposition in principle to all operating aid intended to finance normal modernisation of installations. The Commission considers that investments intended for such modernisation cannot be treated as restructuring and must for that reason be financed out of the own resources of the companies concerned, without any State intervention (Commission Decision 85/471/EEC of 10 July 1985 on an aid granted by the Federal German Government to a producer of polyamide and polypropylene yarn situated in Bergkamen (OJ 1985 L 278, p. 26, at p. 29); Commission Decision 89/228/EEC of 30 November 1988 on Decree-Law No 370/87 of 7 September 1987 of the Italian Government, subsequently converted into Law No 460 of 4 November 1987 on production and marketing, including new standards for the production and marketing of wine sector products (OJ 1989 L 94, p. 38, at p. 41); Commission Decision 92/389/EEC of 25 July 1990 concerning the State aid provided for in Decree-Laws No 174 of 15 May 1989 and No 254 of 13 July 1989 and in draft Law No 4230 regularising the effects produced by the abovementioned Decree-Laws (OJ 1992 L 207 p. 47, at p. 51)). 114 It follows that the grounds of the contested decision do not make it clear that the Commission did in fact examine whether, contrary to the above case-law and its own decision-making practice, the modernisation of the Air France fleet could be partially financed by aid earmarked for restructuring of the company - and, if so, for what reasons. 115 That finding is not invalidated by the details produced before the Court by the French Republic and Air France with regard to the investments in aircraft of FF 11.5 billion envisaged in the restructuring plan. In so far as those interveners have indicated that the amount of FF 11.5 billion was divided into three tranches - FF 7.6 billion for the purchase of 17 aircraft, FF 3 billion for the purchase of spare parts, and FF 0.9 billion for aeronautical work - it is clear that the aeronautical work and the spare parts serve, in the same way as the new aircraft, to modernise the company. 116 Admittedly, the Commission did subsequently argue, during the present proceedings, that the contested aid was intended solely to reduce Air France's indebtedness and not for the purchase of the 17 new aircraft, since fleet investment was to be financed exclusively by Air France's operating profits. However, that reasoning, developed by the Commission's agents before the Court, not only does not feature in the contested decision but is even contradicted by the reasoning therein to the effect that the aid was intended to finance, at least in part, the implementation of the restructuring plan featuring the modernisation of Air France's fleet. As the Court of Justice ruled in its judgment in Case C-137/92 P Commission v BASF and Others [1994] ECR I-2555, paragraphs 66 to 68, the operative part and the statement of reasons of a decision - which must be reasoned under Article 190 of the Treaty - constitute an indivisible whole, with the result that it is for the college of Commissioners alone, in accordance with the principle of collegiate responsibility, to adopt both the one and the other, any alteration to the statement of reasons going beyond simple corrections of spelling or grammar being the exclusive province of that college. 117 Those considerations based on the principle of collegiate responsibility are equally relevant to the decision here under challenge, which also had to be reasoned pursuant to Article 190 of the Treaty and by which the college of Commissioners exercised the discretion reserved to it, to the exclusion of any other body, in the application of Article 92(3) of the Treaty. The arguments presented by the Commission's agents before the Court therefore cannot be upheld (see also, in this connection, Bremer Vulkan, cited above in paragraph 94, paragraphs 47 and 48). 118 The same applies, a fortiori, with regard to the explanations provided before the Court by Air France and the French Republic, intervening in support of the Commission, which argue (i) that it was impossible to cancel or postpone the orders for the 17 new aircraft because they were firm contractual commitments, failure to comply with which would have involved the imposition of penalties, (ii) that, of the 34 aircraft whose resale was envisaged in the restructuring plan, seven were new machines and that the proceeds from their resale would correspond to seven new aircraft not yet acquired, (iii) that of the 17 new aircraft, seven would be immediately resold without being commissioned, and (iv) that the total operating resources of Air France were fixed at FF 19.2 billion in the restructuring plan, thus sufficing to cover the investment expenses involved in fleet renewal. Those assertions are not covered by collegiate responsibility and therefore cannot mitigate the defective reasoning by which the contested decision is vitiated. 119 It might be added, should any further reasoning be necessary, that, assuming them to be admissible, the explanations presented to the Court, to the effect that application of the measures envisaged by the restructuring plan were intended to produce a cash flow enabling Air France to meet its operating and investment costs, are in any event contradicted by the reasoning in the contested decision, from which it is clear that the financial stability and profitability of Air France were not expected to be restored until the end of 1996 (contested decision, OJ, p. 75). 120 It follows from all of the foregoing that the reasons given in the contested decision do not satisfy the requirements of Article 190 of the Treaty in so far as the purchase of 17 new aircraft is concerned. B - The contention that the Commission wrongly authorised the financing of operating costs and operational measures of Air France Summary of the parties' arguments 121 The applicants in Case T-371/94 submit that the Commission failed to consider whether the aid was indispensable for the restructuring of Air France, rather than simply necessary to finance the expansion of its operations and the modernisation of its equipment. In their opinion, Article 92(3)(c) of the Treaty does not permit operational aid intended to modernise the operations of its beneficiary. 122 They submit that the only structural costs that will arise from the implementation of the restructuring plan relate to the 5 000 voluntary redundancies, the precise amount attributable to which remains open to debate since the contested decision does not contain any information on that point. The costs which may arise from the other measures envisaged by the restructuring plan should be considered as operating costs, in particular the marketing policy to win back customers and the launching of Euroconcept and Première Club. It seems probable that Air France will also use the aid to finance other operational measures not expressly contemplated in the restructuring plan. In particular, it is significantly undercutting fares on routes between the EEA and non-member countries. 123 Those applicants state that they have evidence that Air France's introduction of a new class on medium-haul routes and its introduction of the new class on long-haul routes by the autumn of 1995 were costing it FF 150 million and approximately FF 500 million respectively, as is apparent from two press articles published in March 1995. They accordingly take the view that the operating costs incurred before the end of 1996, for example through the introduction of the two new classes, will have been financed from the contested aid. 124 The applicant in Case T-394/94 also takes the view that the aid would be used to make massive investments in Air France's new products, such as its `Club Class' operation. In that context, the applicants in Case T-371/94 point out that Air France enjoys a `margin of safety' (contested decision, OJ, p. 85) which it could use in order to support and modernise its operations. The aid is sufficiently excessive to allow Air France to consider recapitalising its subsidiary Jet Tours or transferring part of the aid to its subsidiary Air Charter. 125 The applicants in both cases take issue with the Commission's argument that the contested aid is intended solely to reduce Air France's financial charges by lowering its rate of indebtedness and is not intended to finance its operating costs. They submit that the mere possibility of the aid's being used to sustain and modernise Air France's operations is sufficient to render it incompatible with Article 92(3)(c) of the Treaty. In support of that argument, they refer to the judgment in Case C-303/88 Italy v Commission [1991] ECR I-1433, paragraphs 10 and 14, to the effect that it is not necessary to establish that the State funds granted are specifically and expressly intended to attain a precise objective; it is sufficient to observe that, in any event, the receipt of those funds enables other resources to be released in order to arrive at the same result. 126 The applicants in Case T-371/94 add that the Commission failed to explain the difference between the amount of the contested aid and the amount which would have been required to implement the previous `PRE 2' programme or the amount of FF 8 billion which, before the adoption of the contested decision, had been indicated as necessary for implementing the restructuring plan. The Commission, they argue, also failed to consider whether and to what extent the restructuring undertaken by other airlines without financial assistance from the State showed that the free operation of the market would have led Air France to restructure its operations without intervention by the public authorities. 127 At the hearing, those applicants pointed out that the restructuring aid had to be linked to each measure envisaged. The Commission ought to have imposed conditions as to the manner in which the aid was to be used. It is, they argue, unacceptable to admit a general balance as to the aid granted overall `for the requirements of Air France'. 128 The Commission states that it assessed the coherence and effectiveness of the restructuring plan and evaluated the appropriateness of the amount of aid needed to allow Air France to implement it successfully. In doing so, it does not have to address issues alien to the intrinsic features of the Plan, even less other airlines' experiences. 129 It adds that the aid authorised was intended solely to reduce Air France's financial charges through reduction in its level of indebtedness. Contrary to the applicants' allegation, it was not to be used to finance Air France's operating costs. Implementation of the drastic measures provided for in the restructuring plan, including the sale of assets, was expected to produce a cash flow enabling Air France to meet its operating and investment costs. However, that would not have sufficed to meet Air France's financial charges. Without reduction of its level of indebtedness, Air France could not survive. At the end of 1996, Air France was expected to be able to meet all its costs, both operational and financial. 130 The Commission points out that the restructuring plan's operational improvements were expected to generate FF 5 billion over its course. That amount should enable Air France to meet its operating costs, but not payment of principal and interest. With the aid, Air France's financial charges were expected to decrease from FF 3.2 billion in 1993 to FF 1.8 billion in 1996 (contested decision, OJ, p. 75). Referring to the Ernst & Young report (Annex 2 to the defence in Case T-371/94), the Commission states that Air France's debt was to be reduced by FF 18.9 billion and adds that, without the aid, Air France's net loss forecast for 1996 would have been FF 694 million, whereas with the aid it was expected to record a net profit of FF 457 million. The risk of overcapitalisation was to be averted by the fact that the approved aid was payable in three tranches. 131 The judgment in Italy v Commission (cited above in paragraph 125), the Commission considers, lends no support to the applicants' argument. In that case, the Court of Justice held that capital injection by the State could constitute aid, given the continuous operating losses by the undertaking in question which were made up by the State concerned, and in the absence of any restructuring programme. The Court of Justice was there concerned with the contention advanced by the government involved that the funds in question did not constitute State aid. The passages cited by the applicants address only that issue, whereas the applicants here rely on the Court's dictum in order to support their very different allegation that the Commission applied an incorrect legal test to establish that the aid to Air France was indispensable. 132 The French Republic and Air France dispute the view that the contested aid - although designed to reduce Air France's debt burden and not to cover part of its operating costs - none the less benefits its operation. To accept such a position would be tantamount to prohibiting all aid for restructuring purposes because it would always be possible to argue that aid targeted at a particular reorganisation objective takes the place of operating resources which would have been used for that purpose were it not for the aid. It is, they argue, necessary to draw a clear distinction between aid for restructuring which contributes to improving the operating conditions of the undertakings concerned, and which may be perfectly compatible with the common market, and mere operating aid or prolonged rescue aid which as a rule cannot be compatible. Findings of the Court 133 In so far as the applicants claim that the Commission has enabled Air France to transfer aid to certain of its subsidiaries and consider it likely that Air France will globally finance its operating costs, their arguments are too vague to be upheld, being limited to mere surmises unsupported by specific facts. 134 Nor can the argument based on the previous `PRE 2' restructuring plan be accepted. That plan encountered opposition from the unions and staff of Air France and for that reason could not be put into effect. In those circumstances, there was no obligation on the Commission to take account, for purposes of comparison, of aspects of a restructuring plan that had been unsuccessful. The same applies with regard to the amount of FF 8 billion mentioned before the contested decision was adopted. Since this was not the figure officially forwarded by the French authorities to the Commission under the restructuring plan formally submitted, the Commission was under no obligation to take it into account. 135 While there can be no grounds for denying that the Commission was entitled to compare the restructuring measures envisaged by Air France with those taken by other airline companies, the fact remains that the restructuring of a company must be targeted at its own specific problems and that the experiences of other undertakings, in other economic and political contexts and at other times, may be irrelevant. 136 In so far as the applicants further contend that the aid ought to have been divided into different tranches, each linked to an individual restructuring measure, the Court finds that such an approach would necessarily have revealed the cost of each measure and thereby divulged Air France's internal operational structures. Such information is, at least for a certain time, confidential and must be kept secret from the public - in particular, from Air France's competitors. In those circumstances, the mechanism of subsequent checks established by Article 2 of the contested decision, particularly in conjunction with condition of authorisation No 6, must be regarded as adequate to ensure that Air France would not be overcapitalised through using the aid for purposes other than its restructuring. 137 As regards the applicants' argument that the only true restructuring measure in the disputed plan is that relating to reductions in Air France's staff (5 000 voluntary redundancies) and that all the other measures are in reality of a purely operational nature, it must be borne in mind that, as has been found above in paragraphs 110, 111, 116 and 117, the contested aid is intended to finance, at least in part, the restructuring of Air France and the assertion that the aid was used exclusively to settle its debts must, in the absence of any mention in the text of the contested decision, be discounted. It is therefore necessary to examine the structural nature of the various measures to which the applicants refer. 138 It must be stressed that, as is evident from the case-file, Air France has no factories or industrial plants involving manufacturing processes capable of being technically restructured. The activities of such a company are centred essentially around the supply of passenger and freight transport and the means used for that supply. Restructuring is thus only validly possible as regards the structure of that supply and of the company organisation on which it is based. 139 That being so, the Commission could reasonably treat the shedding of 5 000 jobs, together with the reorganisation of Air France into 11 operational centres responsible for their financial results, as structural measures. This appears less certain of the commercial initiatives (Euroconcept, Club Class and Première Club) and the alterations to the route network, given that Air France is thereby merely following market trends, without making any change to the actual structures of the company. Such measures therefore appear to be purely operational and to concern solely the running of Air France. 140 However, and without its being necessary to decide whether the case-law and decision-making practice referred to in paragraphs 98 and 113 above are relevant, it should be borne in mind that Air France's restructuring plan was to be financed by an increase in capital, by means of the aid, and by the disposal of assets from which Air France expected `to realise some FF 7 billion' (contested decision, OJ, p. 76). In the light of the relatively modest figures set out in this connection by the applicants in Case T-371/94 (FF 150 million and FF 500 million), the Court takes the view that the Commission was entitled to accept that those measures would be covered by revenue deriving from Air France's sale of its own assets and from current operating revenue. 141 In this context, it is necessary to reject the line of argument based on the judgment in Italy v Commission (cited above in paragraph 125), to the effect that the aid was `fungible' in the sense that its receipt enabled Air France to release other operating resources which, instead of being used to repay its debts, could then serve to finance the measures mentioned above. Since the case in question concerns investment and operating measures on a normal scale which every airline company must reasonably adopt in order to be able to maintain its operational activities in the face of market competition, the French Republic and Air France were right to point out that such a theory of `fungibility' would in fact amount to a prohibition of any restructuring aid and would, in the final analysis, force the beneficiary undertaking to cease its operational activities. 142 It is true that a different conclusion might be reached with regard to the investment of FF 11.5 billion defined in the contested decision as a `fleet investment' (contested decision, OJ, p. 75). The Court is not, however, in a position to examine the issues underlying that problem, because the contested decision is not reasoned on this substantive point (see paragraphs 111 to 120 above). As regards Air France's pricing practice on routes outside the EEA, allegedly financed by the aid, examination of the arguments on this issue presupposes an analysis of the competitive situation of Air France on these routes. That analysis will be made in a different context (see paragraphs 259 to 280 below). 143 It follows that, subject to that final reservation, the contention that the Commission wrongly authorised the financing of operating costs and operational measures must be dismissed. C - The contention that the securities issued by Air France between 1989 and 1993 were misclassified Summary of the parties' arguments 144 The applicants in Case T-371/94 submit that, under the principle of proportionality, State aid cannot be so significant as to grant the beneficiary a better debt/equity ratio than its competitors. In this case, the Commission misclassified the ORAs, TSDIs and TSIP-BSAs (titres subordonnés à intérêts progressifs assortis de bons de souscription d'actions - progressive-rate notes with equity warrants) issued by Air France from 1989 to 1993 in computing Air France's debt/equity ratio in 1996. According to the applicants, a correct classification of those securities would have shown Air France's debt/equity ratio to be far better than that of any other airline. 145 In the contested decision, they claim, the Commission concluded that, for the purpose of calculating Air France's debt/equity ratio, the ORAs represent `quasi-own capital'; however, it wrongfully assumed that the 1993 ORAs - and likewise the TSIP-BSAs - would be replaced by conventional debt because, under its Decision 94/662/EC of 27 July 1994 concerning the subscription by CDC- Participations to bonds issued by Air France (OJ 1994 L 258, p. 26), they had to be reimbursed as constituting prohibited State aid. But Air France was not obliged and had not committed itself to replace the 1993 ORAs by conventional debt. Further, the cash at its disposal pursuant to its receipt of the aid should make it in practice unnecessary for Air France to replace the proceeds of the 1993 ORAs and TSIP-BSAs by additional liquidity. 146 The applicants consider that developments since the adoption of the contested decision illustrate their proposition. According to a press release, on 5 April 1995 the Commission ordered France (not Air France) to deposit the sum of FF 1.5 billion in a blocked account pending the outcome of the proceedings before the Court of Justice and Court of First Instance concerning the annulment of Decision 94/662. As a result, Air France will continue to benefit from the proceeds of the ORAs and TSIP-BSAs issued in 1993 at least until the judgment of the Court of Justice or Court of First Instance, that is to say, during most of the restructuring period. 147 The applicants submit that the ORAs and TSIP-BSAs, along with part of the proceeds from the issue of the TSDIs, should in fact have been included in the equity component of Air France's debt/equity ratio because they represent funds permanently available to it during its existence. 148 With more particular regard to the TSDIs, the applicants stress that subscribers are reimbursed by a trust in which Air France has placed part (25%) of the original proceeds from the issue of the TSDIs, while a significant portion of those proceeds (75%) is permanently retained by Air France. Unlike a debt, which is extinguished by reimbursement by the borrower, the TSDIs continue legally to exist even after reimbursement of the capital sum. The Commission itself has stated, moreover, in its communication of 3 June 1994 (OJ 1994 C 152, at p. 8), that `automatic' repayment of the TSDIs is assured through a bank fund, that a repayment obligation would become effective for Air France only in the event of liquidation of the airline, and that, in the Commission's analysis of Air France's financial situation in 1992, the TSDIs were, with the French Government's consent, included in the equity. In the applicants' view, the TSDIs are funds that are at Air France's permanent disposal and thus provide it with a competitive edge over competing airlines. They add that if only that part of the proceeds from the issue of the TSDIs that is permanently retained by Air France were considered as equity, it would have a significant effect on the debt/equity ratio for 1996, which would then be 0.76:1, as opposed to 1.12:1. 149 The applicants also claim that the Commission misunderstood the financial concepts involved in the classification of the financial instruments at issue. They argue in this regard that, in the case of both the TSDIs and the TSIP-BSAs, interest payments are subordinated to Air France's results and may be suspended. The applicants add that the criterion relating to the convertibility of the instruments is inadequate in so far as the Commission indicates that the TSIP-BSAs will be equity in due course `provided the market conditions enable the owner to exercise the BSA'. The Commission thereby failed to realise that the BSA (equity warrant) is a separate, additional, detachable and independent right, the holder of which may or may not be the holder of the TSIP (progressive-rate note). The latter is not convertible because it is a perpetual subordinated note. The concept of `convertibility' is likewise inapplicable to the TSDIs, since they are perpetual subordinated notes that may be reimbursed in the event of the liquidation of Air France. Finally, the applicants argue that the Commission's consideration of the rights which the ORAs, TSDIs and TSIP-BSAs confer on their holders is without pertinence. 150 The Commission first points out that it emphasised, in the contested decision, the ambiguous financial nature of the instruments themselves (contested decision, OJ, p. 84). It then states that, under Decision 94/662, the amounts paid for subscription to the ORAs and TSIP-BSAs issued in April 1993 were to be repaid by Air France, and that the value of those instruments should therefore be regarded as debt. In respect of the 1991 ORAs, they should be regarded as equity, since they would inescapably be converted, in due course, into shares, whereas the TSDIs issued in 1989 and 1992 should be considered as debt, since they are redeemable after 15 years and no conversion into shares may take place (contested decision, OJ, p. 85). 151 In so far as the applicants refer to its decision of 5 April 1995 (see paragraph 146 above), the Commission points out that this decision, which was subsequent to the date of the contested decision, has no bearing on the classification of the securities in question. It adds that, as long as there is a legal duty to repay the amounts of the ORAs and TSIP-BSAs, it is justified in holding that these amounts are replaced by conventional debt. 152 With regard to the TSDIs, the Commission stresses their repackaged nature. The fact that part of the proceeds from the issue of the TSDIs is retained by Air France has no bearing on their qualification. That view is corroborated by the opinion of the Conseil Supérieur de l'Ordre Français des Experts-Comptables (Governing Board for Certified Public Accountants in France). It is the obligation to repay the principal amount which matters. The Commission points out that the net financial flow between Air France and the Trust with which part of the funds are deposited will be nil at the end of 15 years. The loan represented by the TSDIs is actually repaid by the extinction of the Trust and the resulting extinction of Air France's liability. The entire amount raised by the issue of the repackaged TSDIs will thus be repaid by Air France at the expiry of the 15-year period. The amount of the proceeds from the issue of the TSDIs which is not deposited in the Trust is not permanently retained by the issuer. That amount corresponds to the issuer's liability to pay interest on an annual basis during 15 years on the whole amount of the TSDIs. In the Commission's view, the insistence of the applicants that the issuer permanently retains part of the proceeds from the issue of the repackaged TSDIs is based on a subjective analytical approach which would make any loan capable of being regarded as an equity injection. 153 Even if payment of interest could be postponed in the case of both the TSDIs and the TSIP-BSAs, the Commission takes the view that Air France still remains under an obligation to pay the interest accrued in respect of those amounts. In other words, payment of interest would only be deferred. As for the applicants' submissions regarding the rights which the various financial instruments confer on their holders, the Commission points out that the contested decision did not attribute any particular significance to the nature of the rights which those instruments did or did not confer on holders. Overriding consideration was given to the compulsory conversion of bonds into shares. 154 On the matter of repackaged TSDIs, Air France points out that the accounting profession only turned its attention to identifying their nature at the end of 1991. The French Commission des Opérations de Bourse (Stock Exchange Committee), in a statement released on 6 March 1992, opposed the inclusion of TSDIs as equity (capitaux propres). Practitioners were aware from the end of 1993 of a draft opinion by the Ordre Français des Experts-Comptables classifying the TSDIs as debt. The position of its Governing Board was not finalised until 7 July 1994 along those lines. Findings of the Court 155 It must first be noted that, in the contested decision, the Commission, in assessing whether the aid was proportionate, pointed out that Air France's debt/equity ratio was strongly influenced by the classification of a number of bonds issued by the company, the ratios varying considerably according to whether those bonds were classified as equity or debt (contested decision, OJ, p. 83). The Commission went on to outline the amounts and characteristics of the financial instruments issued by Air France during the five years preceding the contested decision, namely the ORAs issued in December 1991 and April 1993, the TSDIs issued in June 1989 and May 1992, and the TSIP-BSAs issued in April 1993 (contested decision, OJ, pp. 83 and 84). Finally, it set out the criteria distinguishing equity from loan capital on the basis, in particular, of the provisions applicable in French law, of the Fourth Community Directive on the annual presentation of company accounts, and of the opinion of the Comité Professionnel de Doctrine Comptable (Professional Committee on Accounting Policy) (contested decision, OJ, pp. 84 and 85). 156 The parties are all in agreement on the classification of ORAs as equity (`capitaux propres' or `fonds propres'), since these securities will never be reimbursed but must be converted into shares. Moreover, the Commission did in fact make such a classification in the contested decision (contested decision, OJ, p. 85). 157 With more particular regard to the ORAs issued by Air France in April 1993 and subscribed by the company CDC-Participations, it must be recalled that the Commission, in Decision 94/662, ordered these to be repaid on the ground that they constituted illegal State aid. Although the French Republic challenged that decision before the Court of Justice (Case C-282/94) and Air France brought an action before the Court (Case T-358/94), the bringing of these proceedings did not have any suspensory effect requiring the funds corresponding to the ORAs to be repaid by Air France. Furthermore, that Commission decision has become definitive, since the time-limit for an appeal against the judgment of the Court of First Instance of 12 December 1996 in Case T-358/94 France v Commission [1996] ECR II-2109 dismissing the action brought against that decision has expired and Case C-282/94 was removed from the Register of the Court of Justice by order of 17 April 1997. 158 In that context, it is of no relevance that Air France may, until the present judgment has been delivered, have benefited from the value represented by those ORAs. The availability of capital during a certain period does not amount to a criterion distinguishing equity from debt. All capital which an undertaking may have available to it must always be classified in the undertaking's balance sheet, necessarily under `liabilities', either as `debt', when it has to be repaid, or as `equity', when it remains permanently available to the undertaking. In view of the fact that the ORAs in question had to be reimbursed with effect from 27 July 1994, the Commission was correct in classifying them as debt. 159 The same applies with regard to the TSIP-BSAs issued in April 1993, which were also the subject of Decision 94/662. It is consequently unnecessary for the Court to rule on their classification in principle. 160 So far as the repackaged TSDIs are concerned, the parties have submitted a number of specialist financial and accountancy reports concerning their classification. The applicants refer to the report compiled by Professor Pene (Annex 40 to the application and Annex 16 to the observations on the interventions), while the Commission and Air France rely respectively on the reports of Ernst & Young (Annex 2 to the statement of defence, with a note dealing specifically with repackaged TSDIs in Annex A, and the annex to the rejoinder) and of Professor Vermaelen (Annex 7 to Air France's statement in intervention). The Commission also refers to the opinion of the Conseil Supérieur de l'Ordre des Experts-Comptables, approved on 7 July 1994 (pp. 18 and 19 of Annex B to the Ernst & Young report forming Annex 2 to the statement of defence). 161 It follows from the expert reports relied on by each side that classification of the repackaged TSDIs involves complex economic and financial assessments. The Commission has for that reason a broad discretion in such matters and the Court may criticise its decision in that regard only if a manifest error of assessment is identified. It does not appear that the Commission wrongly regarded the mechanism for the reimbursement of the TSDIs as being the decisive factor - apart from the impossibility of converting them into shares - governing their classification as debt. 162 That conclusion is not invalidated by the fact that payment of interest on those TSDIs may be suspended in the event of poor financial results for Air France. The classification of a financial transaction as a loan cannot be called into question by the fact that the conditions of remuneration are, in one particular respect, disadvantageous for the subscriber. 163 Nor, finally, is it gainsaid by the fact that the Commission initially tended to classify the TSDIs as `equity' (communication of 3 June 1994, OJ 1994 C 152, at p. 8). As Air France has pointed out before the Court, this change in approach reflects the changing classification of TSDIs between 1991 and 1994 within the accountancy profession itself. In this context, it should be borne in mind that the Conseil Supérieur de l'Ordre Français des Experts-Comptables, in its opinion of 7 July 1994 - thus, immediately before the contested decision was adopted - took the definitive view that repackaged TSDIs constituted debt. The Court considers that the Commission cannot be criticised for having accepted, for purposes of classifying these French securities, the definitive opinion of the French body representing the profession competent in this area. 164 Since the Commission did not commit any manifest error of assessment in regard to the classification of the securities issued by Air France, the present contention must be rejected. D - The contention that Air France's debt/equity ratio was misconstrued Summary of the parties' arguments 165 The applicants in Case T-371/94 take the view that Air France's forecast debt/equity ratio for 1996 showed that its debt burden would be reduced to a level far below that of its competitors. In calculating that ratio at 1.12:1 and stating that it was above the average for civil aviation, in which the figure of 1.5:1 was regarded as acceptable, the Commission misinterpreted the report compiled by KPMG - an international consultancy firm - and IATA referred to in the contested decision (contested decision, OJ, p. 85). That report shows, in fact, that the projected debt/equity ratio for Air France was below the ratio considered optimal and considerably below the actual average mentioned therein for 1992 (2.3:1 or 2.1:1, depending on the method of calculation). The excessive nature of the aid is all the more evident if one contrasts Air France's debt/equity ratio (1.12:1) with the average debt/equity ratios (2.57:1 in 1992 and 3.17:1 in 1993) recorded in the IATA publication `Airline Economic Results and Prospects' (Annex 12 to the reply). 166 The excessive nature of the aid granted to Air France cannot, they argue, be rendered proportionate simply by reference to other financial ratios such as the interest cover ratio. The Commission's finding, in the contested decision, that Air France's interest cover ratio for 1996 was expected to be 2.44:1, and thus very close to the average ratio of 2.42:1 achieved by its competitors in 1993 (contested decision, OJ, p. 85), is therefore irrelevant. Furthermore, that ratio is incomplete, limited as it is to reflecting an undertaking's ability to use its operating profits to pay interest charges; in addition, the criterion retained by the Commission for the selection of the panel of airlines used to compare Air France's 1996 ratio remains unclear. 167 The applicants add that the Ernst & Young report (Annex 2 to the statement of defence), on which the Commission relies, itself states that Air France could have achieved the theoretically optimal debt/equity ratio of 1.5:1 with aid amounting to only FF 15.25 billion at maximum. It is therefore surprising that the same report attempts to justify Air France's receipt of FF 20 billion on the ground that there is no particular reason for Air France to have an `average' debt/equity ratio. 168 Furthermore, any comparison between debt/equity ratios is of questionable value. In that regard, the report compiled by KPMG and IATA states that there is significant variation in how debt/equity ratios are calculated and that it is therefore difficult to make meaningful comparisons between airlines. Finally, it is not clear whether the Commission's calculation of Air France's debt/equity ratio is based on gross or net figures and there is no explanation as to how those figures are constituted. 169 Moreover, the Commission wrongly limited its analysis to a snapshot in 1996, a year in which aid was still to be given, without considering its effects on Air France's financial status after the aid period, by which time the aid would have helped to make Air France vastly stronger, in financial terms, than its competitors. In the applicants' view, the Commission should have made a dynamic analysis of the effect of the aid, beyond the restructuring period, on Air France's competitive position in relation to its competitors when determining whether the aid was not excessive. The applicants' projections indicated that the aid would contribute to place Air France in a far stronger financial position in relation to its competitors than that suggested by the ratios on which the Commission relies in the contested decision. 170 Referring to the Ernst & Young report, the Commission considers that the contested capital injection was calculated to be the minimum amount sufficient for Air France to restore its financial equilibrium. So far as concerns the debt figure used to calculate the debt/equity ratio, the Commission confirms that, according to a consolidated trend in financial analysis, it used a net figure. The debt/equity ratio was therefore not inflated by the use of a gross debt figure. 171 The Commission points out that the debt/equity ratio of 1.12:1 was not the only factor taken into consideration in the contested decision in assessing the proportionality of the aid to the needs of Air France's restructuring, since the interest cover ratio was also important. There was no requirement that Air France's 1996 debt/equity ratio should have been the average ratio in the civil aviation sector. It was, the Commission argues, sufficient that it should have been within reasonable range of 1.5:1. 172 The Commission notes that it did not use the interest cover ratio in order to render proportionate aid which Air France's debt/equity ratio allegedly showed to be disproportionate. The relevance of the interest cover ratio cannot be doubted. It is a measure of the company's ability to pay its financial charges, the purpose of the disputed aid being specifically to redress Air France's burden of financial charges. The Commission adds that the reference, in the contested decision, to the 1993 interest cover ratio of Air France's competitors is merely illustrative of a ratio sustained by healthy airlines. 173 The Commission finally stresses that it also considered other financial ratios. With regard to return on equity, the Commission points out that the Ernst & Young report suggested only that this ratio provided an additional indicator of the level of aid required to allow Air France to restore its economic viability. That the amount of aid authorised was the minimum required was established on the basis of various projected financial ratios. 174 Air France refers to the Sabena and Aer Lingus decisions (cited above in paragraph 55) and to Commission Decision 94/696/EC of 7 October 1994 on the aid granted by Greece to Olympic Airways (OJ 1994 L 273, p. 22) (`the Olympic Airways decision'), by which the Commission authorised State aid in the civil aviation sector. It points out that the debt/equity ratios of those companies on completion of their restructuring plans were expected to be similar to or even better than that of Air France. They therefore reflected a proportion of equity equal to or even greater than Air France's. The Commission thus accepted ratios of 1.25:1 (Sabena), 0.75:1 and 0.41:1 (Aer Lingus) and 0.78:1 (Olympic Airways). Findings of the Court 175 It should be stressed that the problems relating to Air France's financial ratios, in particular its debt/equity ratio, give rise to highly technical financial and accounting questions, as is corroborated by the parties' references to seven expert reports in support of their contentions, namely those of Ernst & Young (Annex 2 to the statement of defence and the annex to the rejoinder), of Professor Pene (Annex 40 to the application and Annexes 9 and 10 to the reply), of Professor Vermaelen (Annex 7 to the statement in intervention of Air France), and of Doctor Weinstein (Annex 1 to the statement in intervention of the United Kingdom). 176 In that connection, it must be noted that the consultants Lazard Frères fixed the amount required to recapitalise Air France, within the context of its restructuring, on the basis of its forecast revenues and costs and in regard to its future profitability (contested decision, OJ, p. 75) and that this amount was accepted by the Commission in the exercise of its discretion. It should be added that this latter information was, at least while the restructuring plan was being drawn up and during its implementation, extremely sensitive and confidential, particularly in regard to airline companies competing with Air France. Consequently, it is not for the applicants, nor indeed for the Court, to question the actual principle of the need for Air France to obtain FF 20 billion to attain the objectives of restructuring and settlement of debts that were laid down. 177 Since the calculation of FF 20 billion must be accepted as the starting-point for reviewing whether the amount of aid was proportionate, the question whether that financial injection had any bearing on Air France's financial ratios may be reduced, in principle, to a simple mathematical operation. 178 It should be noted in that regard that the consultants Lazard Frères analysed the impact which the disputed aid would have on Air France's financial ratios, stressing the need to take account of capital structure ratios, capacity to service debts, and return on equity (contested decision, OJ, p. 84). It was after examining those figures that the Commission arrived at the debt/equity ratio of 1.12:1, stating that `this ratio appears to be above average for the civil aviation industry, where 1.5 is considered to be an acceptable debt-equity ratio' (contested decision, OJ, p. 85). 179 That comparison between the two debt/equity ratio figures is based on a study carried out by KPMG in association with IATA. That study (Annex 45 to the application in Case T-371/94), drawn up in August 1992, includes the following passage (pp. 26 and 27): `Debt-to-equity ratios ... Airline executives were asked their views on an optimal debt-to-equity ratio for an airline. Responses range from 0.5:1 to 4:1; however, it is unclear whether these responses include or exclude long-term operating leases in the debt amounts. The average of the responses received indicate an optimal debt-to-equity ratio of 1.5:1. Airline executives were then asked to provide their airlines' debt-to-equity ratios, both on the bases of including and excluding long-term operating leases in debt. The average debt-to-equity ratio of airlines responding is 2.3:1 including long-term operating leases in debt and 2.1:1 excluding long-term operating leases from debt. ... There is significant variation in how debt-to-equity ratios are calculated and it is therefore difficult to make meaningful comparisons between airlines. ...' 180 As is clear from that text, the figures established by the investigation conducted within the civil aviation industry are not very representative. Having regard to the `significant variation' seen in the method of calculating debt/equity ratios, the discrepancy between the figures 1.12:1, 1.5:1, 2.1:1 and 2.3:1 cannot per se be described as significant for the purpose of establishing that the Commission failed to understand correctly the relationship between Air France's financial situation and the average in civil aviation. 181 That being so, it does not appear that the 1.12:1 ratio forecast for the end of 1996 was disproportionate, having regard to the above figures ranging from 0.5:1 to 4.1:1 and to the ratios of 1.25:1, 0.78:1, 0.75:1 and 0.41:1 approved by the Commission in its Sabena, Olympic Airways and Aer Lingus decisions (cited above in paragraphs 55 and 174). The same applies with regard to Air France's interest cover ratio, which the Commission indicated would amount in 1996 to 2.44:1, thus very close to the 2.42:1 average ratio achieved by its competitors in 1993 (contested decision, OJ, p. 85). 182 For the reasons given in paragraph 176 above, the contention that the Ernst & Young report itself considered that FF 15.25 billion would be sufficient for Air France to reach the optimum debt/equity ratio of 1.5:1 cannot be upheld. It might be added, should any further reasoning be necessary, that, as the Commission has pointed out, the passage in that report cited by the applicants (p. 21, footnote 21) merely corrects their calculation of the amount required to arrive at the ratio of 1.5:1, that amount being, according to Ernst & Young, FF 15.25 billion and not FF 13.9 billion. The Ernst & Young report continues, moreover, by pointing out that there is in any event no particular reason why Air France's debt/equity ratio should be 1.5:1. 183 The Commission rightly states that the IATA Report entitled `Airline Economic Results and Prospects', to which the applicants refer, reproduces the average debt/equity ratios of more than 30 airline companies worldwide, including Iran Air, Royal Air Maroc and Tunis Air, which are hardly similar to Air France in terms of industrial and financial structure, and which are not in real competition with it. The Commission was therefore not obliged to compare Air France's debt/equity ratio with those of the airline companies covered by that report. 184 In so far as the applicants expressed uncertainty, in their application, as to whether the calculation of Air France's debt/equity ratio was based on gross or net figures, it need merely be noted that the Commission pointed out, in its defence, without being contradicted by the applicants, that what it took into account was a net figure, so that the debt/equity ratio was not inflated by the inclusion of gross debt. Finally, the Commission was under no obligation to calculate Air France's debt/equity ratio beyond the restructuring period, which was the only reference period for compliance by the French Republic and Air France with the greater part of the conditions governing authorisation of the aid. 185 Since the Commission did not commit any manifest error of assessment in the calculation and consideration of the financial ratios mentioned in the contested decision, the present contention must be rejected. E - The contention that the Commission wrongly failed to require Air France to sell disposable assets Summary of the parties' arguments 186 The applicants argue that the Commission was manifestly wrong in concluding that the level of the contested aid could not be reduced by Air France's disposing of any assets other than those provided for under the restructuring plan. The principle of proportionality, they submit, requires an undertaking intending to restructure to use all its own resources before it can rely on State aid. The Commission ought therefore to have required Air France to create liquidity by disposing of all its non-core assets, regardless of the amounts thus raised. Had it done so, the amount of the aid could have been much lower. 187 The applicants stress in that regard that the Air France group includes 103 companies involved in travel-related activities distinct from air transport, such as leisure travel, catering, aircraft maintenance, information systems and freight forwarding, including companies as important as Groupe Servair and Jet Tours, which achieved turnovers in 1993 of FF 2.6 billion and FF 2.4 billion respectively. Its interests also cover activities as unrelated to air transport as cheese manufacturing. More than 20% of Air France's turnover, they argue, is attributable to activities unrelated to air transport. In addition, Air France has shareholdings in 20 airlines. 188 The sale of a number of Air France's shareholdings in other companies, in particular Air Inter and Sabena, might, the applicants believe, have been sufficient to obviate the need for much of the aid. Without the disputed aid, Air France would, like any loss-making parent company, have looked to its subsidiaries, including Air Inter, to contribute to limiting its losses. To illustrate their point, the applicants have derived values for Air France's interests in eight airlines (Air Charter, Air Inter, Sabena, MEA, Austrian Airlines, Tunis Air, Air Mauritius and Royal Air Maroc) and one other company (Servair). In aggregate, they value those shareholdings at between FF 3.1 billion and FF 6 billion. 189 So far as Air Inter is concerned, the applicants pointed out during the hearing that its claimed utility to Air France was in fact very circumscribed. Air Inter's role, they submitted, was limited to attracting passengers from the French provinces to Air France's `hub' at Charles de Gaulle Airport for international flight departures. Air France could have achieved the very same result either by using its own aircraft or by concluding cooperation agreements with other companies, including Air Inter. The applicants accordingly take the view that Air Inter is not an indispensable asset for Air France's operations. 190 The applicants state that Air France's 37.5% shareholding in Sabena could be valued at BFR 6 billion. That shareholding was purchased in 1992, which, in the applicants' view, suggests that it could hardly be considered vital for Air France, which had operated without it for many years. Moreover, Sabena's chairman declared in public in September 1994 that Air France should dispose of its shareholding. The applicants point out that they informed the Commission at the administrative procedure stage of the existence of significant evidence that there was no longer any basis for an alliance between Air France and Sabena. They refer in that connection to a press article which appeared in June 1994 (Annex 46 to the application), suggesting that the Belgian company wanted Air France to relinquish its holding. 191 Moreover, Air France paid one-quarter of the sum due for its holding in Sabena, they claim, within days of the contested decision's being adopted. It was clear that Air France would rely on the aid to compensate for that payment, given its shortage of liquidity. The Commission should have prevented Air France from paying that outstanding amount, since aid authorised for restructuring purposes may not be used for the acquisition of shareholdings in other companies. Had it been prevented from making that payment, Air France would doubtless have found it necessary to dispose of its shareholding in Sabena as part of its restructuring effort. 192 The applicants stress that they are not requiring Air France to dispose of assets which are undeniably part of its core business. They do, however, submit that Air France should have been compelled to sell, in particular, assets which it itself described as non-core assets in its 1993 Annual Report. Referring to a press article, the applicants add that Air France was apparently considering, in September 1994, the sale of some assets which, one month earlier, the Commission had considered ineligible for disposal, such as its shareholding in Groupe Servair or in Amadeus, a computerised reservation system. That fact alone must vitiate the Commission's finding that Air France did not need to sell other assets because none could have raised significant sums of money. 193 In reply to the Commission's assertion that the identity of other assets of which Air France intended to dispose could not be revealed on grounds of confidentiality, the applicants contend that the Commission's practice is in fact to make such disclosure when it requires undertakings to sell assets as a condition to, for example, its approval of concentrations under Regulation No 4064/89, cited above in paragraph 55. Thus, the Commission required the sale of identified assets in Decision 91/403/EEC of 29 May 1991 declaring the compatibility of a concentration with the common market (Case No IV/M043 - Magneti Marelli/CEAc) (OJ 1991 L 222, p. 38) and in Decision 92/553/EEC of 22 July 1992 relating to a proceeding under Council Regulation (EEC) No 4064/89 (Case No IV/M.190 - Nestlé/Perrier) (OJ 1992 L 356, p. 1). Furthermore, even if Air France's non-core assets could not have been sold prior to authorisation of the aid, the Commission could have required the placing of assets to be sold with a trustee, for instance an investment bank, which could have arranged for their sale. The applicants refer, by way of example, to the Crédit Lyonnais case (OJ 1995 C 121, p. 4), in which a new structure was created, namely the Consortium de Réalisations, a wholly-owned subsidiary of Crédit Lyonnais, which was to buy Crédit Lyonnais' assets intended to be sold off or liquidated. Likewise, in the present context, Air France's shareholding in Sabena could have been transferred to a bank, which would have been able to advance money pending sale to a third party. 194 At the hearing, the applicants also stressed that, so long as the contested decision did not require specific assets to be sold, Air France had no interest in selling assets during the restructuring period because such a sale would have involved a reduction in the aid granted. That view, they argued, has been confirmed by subsequent developments, which have allowed Air France to `counterbalance' the sale of its shareholding in Sabena with the loss of income resulting from the fact that it had sold fewer aircraft than had been envisaged. This, the applicants submitted, proved that the sale of non-core assets ought to have been evaluated by the Commission from the outset. 195 The Kingdom of Denmark states that, in its Aer Lingus decision (cited above in paragraph 55), the Commission required Aer Lingus to dispose of its non-transport assets in order to contribute to its restructuring in an amount greater than that of the aid received. The Kingdom of Denmark also points out that Air France did in fact sell its shareholding in the Czech company CSA. It does not understand why Air France could not also sell its shareholdings in Sabena or Air Inter. 196 The United Kingdom argues that the Commission should have seriously considered the possibility that Air France could dispose of its interest in Sabena. Such a sale would not necessarily have precluded the continuance of the joint marketing arrangement between the two companies. Many airlines have joint marketing arrangements without its being considered necessary for each airline to have a substantial minority shareholding in the other. Nor does the Commission explain why Air France could not dispose of its interest in Air Inter, a fortiori since Air France's control of Air Inter is the result of a relatively recent acquisition. Finally, some of the companies belonging to the Air France group, such as Groupe Servair, are very profitable and could therefore have realised a substantial price on sale. Others are loss-making, so that their sale or winding-up could be expected to provide a substantial reduction in the losses of the Air France group and a corresponding reduction in the need for aid. 197 The Kingdom of Norway considers that the Commission failed to require Air France to sell all of its non-core assets. Such disposal is an important element in a restructuring plan not only because of its contribution to the liquidity of the company concerned, but also in order to reduce its costs, restore its corporate identity and realign its activities. In this case, it argues, many of Air France's activities are peripheral to the essential activities of an airline. British Airways, SAS, KLM and other international airlines have adopted measures to contract out services that could be obtained more cheaply from independent third parties. Those airlines have disposed of numerous non-core assets, even though the proceeds of each individual sale may have been insignificant. 198 The Commission denies that it failed to take account of the opportunities available to Air France for divesting itself of certain of its interests. After examining Air France's various shareholdings, it reached the conclusion that sale of the assets as contemplated by the Plan would be adequate within the framework of its restructuring. However, no evaluation was made of Air France's interests in Sabena or Air Inter since their sale was not part of the restructuring plan and those interests could be regarded as core assets of Air France. 199 At the hearing, the Commission pointed out that, since the essential element in the activities of Air France and Air Inter was air transport, there could be no shadow of a doubt that Air Inter represents an essential asset of Air France. Air Inter's significance for Air France stems from the fact that, in contrast to other airlines, Air France does not have a national network. That is why the Commission accepted that Air Inter was indeed an essential asset for Air France, which ought not to run the risk of seeing Air Inter pass under the control of competitors. Air France added that the commercial synergism with Air Inter was vital for its survival, control over a domestic network being essential for a major airline. Air France needed Air Inter in order to benefit from flight connections within the domestic network to feed its long-haul flights. Moreover, all major European airlines control their domestic networks and thus prefer to have a majority shareholding in those networks rather than enter into commercial agreements with them. 200 The Commission emphasises that Air France's disposal of assets was considered with due regard to its overall interests and strategy. It was thus satisfied that the disposal of assets contemplated by Air France was adequate. In that context, the sale of assets by other airline companies in other circumstances and at other times is not relevant to addressing the issue of which assets had to be disposed of by Air France. The nature and extent of various airline companies' interests render comparisons futile. 201 The Commission adds that the identity of other assets and interests which Air France intended to dispose of could not be revealed, since such disclosure would have interfered with, and could have been detrimental to, the conduct of negotiations then taking place in respect of such assets. Moreover, the contested decision did not prohibit the disposal of other assets. Market conditions may change and create incentives to dispose of assets and interests not envisaged by the restructuring plan or affect the price of those whose disposal was provided for therein. In verifying whether the aid was proportionate to the needs of restructuring, the Commission emphasised (contested decision, OJ, p. 86) that the amounts to be paid could be adjusted, as necessary, in order to take account of the development of Air France's financial situation following, inter alia, the sale of assets. 202 The applicants' reference to the Commission's power under the Merger Regulation is irrelevant since mergers affect the very structure of the market in question. Nor, similarly, is the applicants' case advanced by their reference to the possibility of placing assets to be sold with a trustee charged with arranging their sale. In anti-trust matters the control of a company is the very issue, whereas here it is not. As for the Consortium de Réalisations established by the Crédit Lyonnais plan, the Commission points out that it is a wholly-owned subsidiary, the operation being an exercise in the internal reorganisation of a group. 203 In any event, no part of the contested aid was intended to be used by Air France to pay the last instalment for its shareholding in Sabena. The aid was authorised in order to reduce the burden of Air France's financial charges. It would, moreover, have been unlawful to induce Air France not to honour its contractual obligations vis-à-vis Sabena and thereby encourage a breach of contract. 204 The French Republic and Air France point out that Air France's holding in the share capital of Sabena was one of its essential strategic assets. In July 1994 everything suggested that renegotiation of the agreement to acquire that holding would entail a very serious loss for Air France and would place Sabena in a difficult position. According to the interveners, it was only in October 1994 that the Belgian Government announced its decision to recapitalise Sabena. In July 1994, neither Air France nor the French Government knew what the Belgian Government intended to do in that regard. Since Air France could not meet the increase in capital recommended by the Belgian Government, the latter proposed a purchase of Air France's holding, while a new partnership between Sabena and Swissair was contemplated. 205 Air France states that a number of its non-core assets had already been sold in connection with the first stages in implementing the Plan. Thus, its holding in the Czech airline CSA was sold on 25 March 1994. Similarly, the holding of Servair (75% held by Air France) in the share capital of Saresco, and consequently of its subsidiary engaged in cheese manufacture, was sold off. The sale of the Méridien hotel group, which had actually taken place in the interim, involved 20 out of the 103 companies in the group. It is clear from the contested decision that other sales were contemplated under the Plan. The expected timetable for the sales and the estimated amount to be raised from them were provided to the Commission for all non-core assets with significant value. However, those assets were not explicitly identified in the decision for obvious reasons of confidentiality. 206 Air France stressed at the hearing that, although not an air-transport activity, the Amadeus computerised reservation system was essential for all of the group's core activities. Contrary to the applicants' insinuations, Air France's holding in Amadeus had not been sold and it had no intention of selling it. 207 As for Servair, Air France confirmed, also at the hearing, that its sale was envisaged under the restructuring plan. Receipts from the sale of Servair were included in the financial projections and were thus taken into account for the purpose of reducing the amount of recapitalisation. However, such information had to remain confidential in order for the sale of Servair to be negotiated at the best possible price and in view of the risk of social unrest to which this news would certainly have given rise at Servair, which would have seriously jeopardised the quality of Air France's in-flight service, highly dependent as it was on this essential supplier of airline meals. The follow-up to Servair's sale was examined in detail by the Commission and its experts when the second and third aid tranches were authorised. 208 With regard to the other assets such as Air Charter and Jet Tours, Air France pointed out on the same occasion that they unquestionably form part of its strategic assets. Furthermore, the sales of Jet Tours and Air Charter would have provided Air France with insignificant receipts. Finally, the sales of Air France's minority shareholdings in Royal Air Maroc, Austrian Airlines, Tunis Air, Air Mauritius and Aéropostale were examined in detail by the Commission. Such sales could not have produced significant receipts and would not have had any effect on the amount of the recapitalisation. Findings of the Court 209 In its examination of the disputed aid, the Commission formed the view that the restructuring of Air France, the largest French air carrier and one of the three largest in Europe, would contribute to the development of the European air transport industry by improving its competitiveness and was therefore in the common interest (contested decision, OJ, p. 83). The Commission thus indicated that it was not pursuing a policy of completely dismantling the Air France group, but preferred to maintain Air France in its position as one of the major European airline companies, alongside Lufthansa and British Airways. Since it involves complex assessments of economic policy, the exercise of the discretion which the Commission enjoys under Article 92(3)(c) of the Treaty, and which resulted in the adoption of the contested decision, may be open to censure in the present context only if there was a manifest error of assessment or an error of law, a fortiori in the light of the fact that the Commission took care to ensure, by spreading payment of the aid over three tranches, that developments in Air France's financial situation could be monitored, enabling it, if necessary, to adapt the amounts to be paid (contested decision, OJ, p. 86). 210 It was within the context of the exercise of its discretion that the Commission specified only a limited number of non-core assets - the Méridien hotel group, a building, old aircraft and spare parts (contested decision, OJ, pp. 75 and 76) - which Air France was required to dispose of in order that the amount of aid could be limited to FF 20 billion. 211 Consequently, the argument which the Kingdom of Denmark derives from the Aer Lingus decision (cited above in paragraph 55), in which the Commission required the aid beneficiary to sell all but its core assets, and the Kingdom of Norway's reference to the examples of British Airways, SAS, KLM and other international airlines which, as part of their restructuring, disposed of numerous assets unrelated to air transport, are both irrelevant. The circumstances of restructuring are conditioned by the specific situation of the undertaking in question alone. The fact that the companies referred to may have been persuaded or required, within the factual context of their own restructuring, to dispose of numerous assets cannot therefore in itself cast any doubt on the decision taken by the Commission, in the specific situation prevailing in July 1994, to maintain Air France as one of the three major European airline companies and to authorise it to retain the greater part of its assets. 212 Consequently, the Commission was entitled to treat the following three categories as being assets of which Air France could not dispose: first, those essential to the present and future operation of the company as an air carrier; second, those used in cooperation strategies, control of which it was necessary to prevent falling into the hands of a competitor; finally, those relating to activities closely linked to the operations of a major airline. As is clear from the case-file, the Commission classified such assets - in particular, Air Charter, Air Inter, Sabena, Amadeus and Jet Tours - as non-disposable. 213 Air Charter, it need merely be noted, is, like Air France, active within the air transport sector itself. It thus belongs to one of the core activities of Air France. While it is true that Air Charter has specialised in charter air travel, that is to say, a market distinct from scheduled air transport, these are but two aspects of the same air transport activity, the division of which into two separate companies ultimately reflects no more than an internal allocation of functions. It follows that the Commission was entitled to form the view that Air Charter constituted an essential component of Air France's air transport activity. 214 So far as Air Inter is concerned, it must be borne in mind that, in the contested decision, the Commission indicated that the French Government had undertaken to ensure that Air France would be the sole beneficiary of the aid in question and to set up for that purpose a holding company to control both Air Inter and Air France (commitment No 1). The Commission considered that this commitment lessened its doubts as to the secondary effects of the aid because it prevented Air France from using the aid to subsidise the activities of Air Inter. Basing itself on information received concerning the future structure of the holding company and on the corresponding commitment given by the French authorities, the Commission took the view that the beneficiary of the aid was Air France together with its subsidiaries, including Air Charter (contested decision, OJ, pp. 81 and 86). 215 It is common ground that, in contrast to Lufthansa and British Airways, Air France did not have a domestic network before it assumed control of Air Inter in 1990. The Commission was therefore quite entitled to form the view that this control - exercised, during the restructuring period, by the holding company arrangement described above - was essential for the present and future operations of Air France because its loss could have had a serious effect on Air France's feeder traffic, the responsibility of Air Inter. Air Inter's activities concentrate essentially on air transport within French metropolitan territory. This internal French market provides substantial passenger traffic to Air France's centre of operations at Paris Charles de Gaulle Airport (`Paris (CDG)'). In those circumstances, it is obvious that Air France could not run the risk of seeing Air Inter, following its disposal, come under the influence of a competing company and of thereby losing a substantial portion of its feeder traffic. 216 Nor could Air Inter's direct link to Air France have been validly replaced by its transfer to a bank and the simultaneous conclusion of commercial agreements relating to that feeder traffic with Air Inter or other companies. The applicants have not established that such a solution could have excluded the risk that Air Inter might be absorbed by a competing company, thereby compromising the operation of Air France's feeder traffic. So far as the conclusion of such agreements with other airline companies is concerned, suffice it to note that, in July 1994, Air Inter's competitive position on the domestic French market was so strong that Air France, which was seeking to restructure and recover profitability, could not have been required to replace its well-established relations with Air Inter by contracts with companies still lacking infrastructures on the French market comparable to those of Air Inter. 217 In addressing the applicants' argument that Air France could itself organise its own feeder traffic, particularly within the domestic French network, it is necessary to note that the restructuring plan for Air France envisaged an operating fleet of 146 aircraft and did not specifically earmark that fleet for such feeder traffic. On the contrary, it was particularly on long-haul routes that this plan envisaged growth in Air France's supply, which presupposed intensified use of its fleet in that sector. On that view, the provision of services on the domestic market was essentially a matter for Air Inter, which had to use its own aircraft for that purpose. It was not for the Commission to order Air France to concentrate on the domestic market, since such a measure would have risked weakening its position on international flights. 218 With regard to Air France's shareholding in Sabena, it must be accepted that, at the time, Air France had only a minority (37.58%) holding in the Belgian company. That fact, however, does not mean that its holding did not constitute an important strategic element in Air France's air transport activities. Note should be taken of the decision of 5 October 1992 (Annex 24 to the applicants' observations on the interventions in Case T-371/94), in which the Commission stated that it would not oppose the protocol agreement signed by Air France, Sabena and the Belgian State, which conferred on Air France, via the company Finacta, a 37.58% holding in Sabena (with 37.5% of the voting rights). 219 That decision, which was available to any interested party (see the communication in the Official Journal of the European Communities of 21 October 1992 (OJ 1992 C 272, p. 5)), noted inter alia that: - Finacta, controlled by Air France, was to approve the appointment of the chairman and vice-chairman of Sabena (with a right of veto) and could block decisions of Sabena's governing board involving changes in strategy, business planning, investment plans and industrial cooperation plans; - the chairmen of Air France and Sabena were required to act jointly in the event of major difficulties involving the functioning of their governing bodies or strategy implementation; - the basic lines of Sabena's future strategy had been determined in conjunction with Air France. 220 In that 1992 decision, the Commission classified Sabena, in substance, as a joint venture controlled by the Belgian State and Air France, the latter having rights going considerably beyond those normally conferred on minority shareholders and the possibility of controlling Sabena's market conduct. Regarding the purpose of the agreement, the Commission pointed out that it was designed to develop cooperation between Air France and Sabena and to promote all possible synergism between the two partners, in particular to create an intra-Community network centred on Brussels Airport (Zaventem). 221 In the light of that decision of 5 October 1992, of which the parties concerned are deemed to have been aware, the Commission could reasonably form the view that it was necessary to prevent Air France's holding in Sabena, which constituted an instrument of strategic alliance for Air France, from being relinquished in such a way that a competitor could assume the privileged position previously occupied by Air France. 222 The United Kingdom's view that the shareholding could have been replaced by cooperation agreements, it need merely be noted, fails to take account of the special nature of the holding in question, which, although a minority shareholding, gave Air France controlling power over Sabena's commercial conduct and thus went beyond the influence that a contractual partner might normally exercise. The United Kingdom has failed to demonstrate that Air France could equally have attained such a privileged position without its holding in Sabena. The special nature of the alliance between Air France and Sabena also precludes any comparison with the sale, which in fact took place in March 1994, of Air France's holding in the Czech company CSA. 223 It is true that, shortly after the contested decision was adopted, Air France paid FF 170 million to cover the final instalment of the purchase price for its holding in Sabena. There is, however, nothing to justify the view that the disputed aid was earmarked and used for that purpose. As the French Republic and Air France have indicated, that payment was the result of contractual obligations dating from 1992, and thus prior to the authorisation of the aid (see the Commission's decision of 5 October 1992, cited above in paragraphs 218 and 219). Those obligations, as the French Government has pointed out before the Court, envisaged a schedule for payments to be made by Air France in 1992, 1993 and, for the final instalment, between 15 July and 31 July 1994. The existence of that final payment obligation on Air France could not reasonably have meant, alone, that aid intended to release Air France from its debts and to restructure the company had to be blocked, even only partially. Furthermore, in view of the relatively modest amount, that payment did not exceed normal investment limits. The Commission was consequently entitled to accept that it would be covered by resources deriving from the sale of assets by Air France and by revenue from its current operations (see paragraphs 140 and 141 above). 224 It is also established that Air France's holding in Sabena was subsequently sold for FF 680 million (Commission communication concerning the third tranche of restructuring aid to Air France, approved by the Commission on 27 July 1994 (OJ 1996 C 374, p. 9, at p. 14)). However, as the French Republic and Air France have stressed, without being contradicted, it was not until October 1994 that the Belgian Government, the majority shareholder in Sabena, decided that a recapitalisation of Sabena was necessary, which de facto excluded Air France, unable as it was to follow this recapitalisation. Moreover, Air France's disposal of its holding in Sabena was not finalised until July 1995. The Court therefore finds that, on the date when the contested decision was adopted, the Commission had no indication that Air France was seriously considering ending its alliance with Sabena and disposing of its shareholding. In those circumstances, the Commission was not under any obligation to infer from the press rumours, to which the applicants have referred, of the impending acquisition by Swissair of the shareholding in question, that, by July 1994, Air France no longer regarded its holding in Sabena as an important strategic element in its air transport activity. 225 It should be added that the Commission expressly indicated, in its decision of 21 June 1995 authorising payment of the second tranche of the disputed aid (communication published in OJ 1995 C 295, p. 2 and p. 5), that the financial implications of a sale of this shareholding would be taken into account in the context of its decision on payment of the third tranche of the aid. The legality of those decisions, which are subsequent to that here being challenged, cannot be examined in the context of the present litigation, which concerns solely the legality of the decision of 27 July 1994. 226 With regard to a possible sale of Amadeus, it must be pointed out that this asset constitutes Air France's computerised reservation system. Air France has explained that it had given Amadeus responsibility for all its ticket reservation operations, that it was completely dependent on that system for ticket distribution and that such a system was vital for the development of its air transport activity, which is why the vast majority of airline companies used a similar system. The Court finds that, in those circumstances, the Commission was reasonably entitled to consider that Amadeus was a non-disposable asset of Air France inasmuch as it involved an activity which is closely linked to the operations of any major airline company. 227 The same applies with regard to Air France's holding in Jet Tours, which operates in the tourism sector. Tourism is an economic sector connected, at least in part, to the air transport sector. The Commission could therefore consider Jet Tours as an asset designed to bring tourist customers to both Air France and Air Charter, and was thus entitled to conclude that Air France ought not to be forced to dispose of it. 228 Nor may the applicants criticise the Commission for not having required Air France to sell all of its minority shareholdings in other airline companies such as Tunis Air, Air Mauritius, Royal Air Maroc and Austrian Airlines. In view of the relative insignificance of such sales, a full disposal by Air France of its shareholdings in those companies would not have had any essential direct effect on its restructuring plan. 229 With regard to Air France's statement during the hearing that the disposal of other assets not specifically mentioned in the contested decision, such as that of Groupe Servair, was envisaged in its restructuring plan, and with regard to the possible confidentiality of such information, it must be noted that the proceeds from those sales, although intended to jointly finance implementation of the restructuring plan, were not to be automatically deducted from the amount of aid of FF 20 billion regarded as necessary and authorised by the contested decision. Moreover, even the FF 7 billion which Air France hoped to realise on the sale of Méridien, one building and 34 aircraft served merely to limit the aid to FF 20 billion, and not to reduce this amount. It was only when it came to payment of the second and third tranches of the aid that the Commission reserved the right to take account of Air France's overall financial situation by having regard to sales of assets effected in the interim. The Court takes the view that the financial questions raised in connection with those sales, including questions touching on their proportionality and confidentiality, can therefore be examined only in the light of the decisions dealing with those second and third tranches. The present litigation does not concern the legality of those decisions. 230 The applicants' argument that Air France itself, in its 1993 Annual Report, defined a series of its assets as `non-core activities', put forward in the context of their claim that those assets should have been sold, is factually wrong. It is only the English translation of that report which contains the wording relied on by the applicants (pp. 26 and 27; Annex 4 to the application in Case T-371/94), whereas the French text refers to Air France's `activités non aériennes' (`non-air activities') and thus does not contain any value judgment on the assets in question. Since Air France is a French company, it is obvious that the authoritative version of its annual report is that drafted in French. 231 Since the Commission did not commit any manifest error in refraining from requiring Air France to dispose of the assets designated by the applicants and the interveners supporting them, that contention must be rejected. 232 It follows from all of the foregoing that, subject to paragraphs 84 to 120 above, all of the contentions alleging breach of the principle of proportionality applicable in regard to State aid must be rejected. The applicants and the interveners supporting them have been able to defend their rights and the Court has been able to exercise its power of judicial review. Consequently, apart from the authorisation of the purchase of 17 new aircraft, the contested decision complies in this regard with the requirements of Article 190 of the Treaty, and the claim that the reasoning was inadequate must therefore be rejected. The contentions that the Commission erred in considering that the aid was intended to promote the development of economic activity and would not adversely affect trading conditions to an extent contrary to the common interest A - The contention that the Commission wrongly authorised aid intended for the development, not of an economic activity, but of a particular undertaking Summary of the parties' arguments 233 In its application, the applicant in Case T-394/94 argues that the disputed aid benefits a particular undertaking and does not contribute to the development of an economic activity. In authorising it, the Commission clearly sought to ensure the survival of Air France as a paramount consideration, instead of weighing that objective against the detrimental effects which the aid would have on Air France's competitors and on the Community air transport market. 234 The Commission considers that the applicant's allegations are clearly devoid of any substance. In the contested decision, it emphasised that it had to take into account the development of a sector as a whole and not only that of the recipient of the aid. It then extensively investigated whether the aid could benefit from the derogation provided for by Article 92(3)(c) of the Treaty. Findings of the Court 235 In the case of an undertaking on the scale of Air France, which is one of the three largest European airline companies, genuine restructuring will have the effect of facilitating the economic development of the European civil aviation sector (see, to a similar effect, the Opinion of Advocate General Van Gerven in Case C-305/89 Italy v Commission [1991] ECR I-1603, at p. 1630, point 17). Consequently, this contention cannot be upheld. GROUNDS CONTINUED UNDER DOC.NUM: 694A0371.2 236 Furthermore, the applicant expressly acknowledged, in its reply, that it was not alleging that aid paid to a single undertaking was illegal in itself, adding that numerous instances of aid granted to individual undertakings are justified because they are of benefit to sectors considered as a whole. 237 In so far as the applicant claims that the Commission unilaterally favoured Air France by taking account only of the positive aspects of its restructuring and overlooking its negative aspects, its arguments will be examined below in their appropriate context. B - The contention that the Commission wrongly authorised aid which adversely affected trading conditions to an extent contrary to the common interest Summary of the parties' arguments 238 The applicants take the view that the aid affects trading conditions to an extent contrary to the common interest. It serves to lower Air France's costs artificially and thereby shifts the burden of cost adjustment on to unsubsidised airlines. The applicants point out that the Commission itself took the view, in France v Commission (cited above in paragraph 79, paragraph 44), that the artificial maintenance in existence of a company weakens the competitive position of other producers which have had to carry out the necessary reorganisation of their activities without the benefit of State aid. In its judgment in that case (paragraph 50), the Court of Justice upheld the Commission's decision refusing to authorise State aid on the ground that it had reduced the competitiveness of other manufacturers within the Community, at the risk of forcing them to withdraw from the market even though they had previously been able to continue their activities by virtue of restructuring financed by their own resources. The applicants also refer to the Opinion of Advocate General Sir Gordon Slynn in Germany v Commission (cited above in paragraph 58) and to paragraph 26 of the judgment in Philip Morris (cited above in paragraph 79), to the effect that the Commission, when applying Article 92(3)(c) of the Treaty, must take account of the Community context, in particular the overall position in the sector in question. 239 The applicant in Case T-394/94 emphasises that the contested decision confirms that the aid in question distorts competition within the EEA. It points out that, in its observations submitted to the Commission in the course of the administrative procedure, it had suggested that the Commission should undertake an analysis of each geographical market affected by the aid, namely the individual routes on which the air carriers concerned were in direct competition. It considers that argument to be supported by the judgment in France v Commission, cited above in paragraph 79, at paragraph 50, where the Court of Justice stated that the effect of the aid on all competitors of the beneficiary undertaking had to be examined. The applicant states that it is in competition with Air France on the routes between London and Nice, London and Paris, and Glasgow and Paris. However, the Commission concluded that any adverse effects on trading conditions were acceptable. By so doing, it favoured Air France, a public-sector undertaking, over the applicant, an independent private-sector undertaking. Consequently, the Commission discriminated in such a way as to involve distortion of competition to an extent contrary to the common interest (Case 304/85 Falck v Commission [1987] ECR 871, paragraph 27). 240 In the same context, the applicant in Case T-394/94 alleges that the Commission infringed Article 190 of the Treaty by failing to provide adequate reasoning to support its view that the aid does not affect trade to an extent contrary to the common interest and to reply properly to the observations which the applicant filed during the administrative procedure. The applicants in Case T-371/94 also submit that the Commission failed to consider seriously the third-party comments filed in response to its communication of 3 June 1994. Before the Court, they have produced detailed examples listing individual routes with the estimated market shares of the various airline companies competing on those routes (point 21 and footnotes 33 to 42 in the application in Case T-371/94). 241 Likewise, the Maersk companies take the view that the Commission should have given greater consideration to the effect of the aid on small and medium-sized carriers operating on regional routes. It thus failed, they claim, to address the adverse effect of the disputed aid on competition in regional air services. They state in this regard that they operate the route between Lyon and Birmingham and wished, from 16 October 1995, to operate between Billund and Paris (CDG). The effects of State aid, they consider, are apparent not only in the narrow market served by the carrier receiving the aid, defined by reference to city pairs, but also in a wider passenger market and on indirectly competing routes. 242 The indirect effects of the contested decision on smaller carriers operating either feeder services to the main hubs, from which the major carriers operate, or on indirectly competing routes is illustrated by reference to the service operated by Maersk between Birmingham and Lyon. This route competes indirectly with, and is competitively influenced by, the London (Heathrow) to Paris route, as well as the Birmingham-Paris route. Air France's load factor on the Birmingham-Paris route was, according to the figures for 1992, merely 32%, compared with 61% for its competitors. Efficient airlines may be forced off routes or even precluded from developing new routes if the presence of a State-subsidised airline causes diminishing rates of return. 243 They add that the Commission did not sufficiently consider the effect which the disputed aid would have on potential competition in the air-transport sector. That view is illustrated by the Copenhagen-Paris route, on which Air France's load factor, according to the figures for 1992, was a mere 49%, compared with 61% for its competitors. Although the full effect on potential competition cannot be measured, it is evidenced by Maersk's decision, at the time when the contested decision was adopted, to postpone plans to introduce a service between Billund and Paris (CDG). 244 The Kingdom of Sweden also takes the view that the disputed aid increases the pressure on competing regional airlines to abandon marginal routes. Such companies can suffer severe adverse effects from measures taken by one of the biggest market participants, even if they are limited as a whole, while other larger companies are not affected to the same extent. 245 At the hearing, the Swedish and Norwegian Governments stated that the Scandinavian airline companies competing with Air France on routes between France and the main cities in Scandinavia also have internal routes which suffer from low frequency because of an extremely low population density but which are necessary in the interests of the economic development of outlying regions. Such routes are extremely vulnerable to any distortion of competition by State aid granted to a large competitor such as Air France. The major companies are only rarely interested in peripheral routes. Distortions in competition on high-density routes could therefore lead to a reduction in, or the disappearance of, services to outlying regions. This, they argue, would adversely affect the common interest in ensuring that there are adequate air connections even in outlying regions of the EEA. 246 The applicant in Case T-394/94 points out that there is no evidence from the contested decision that the Commission discharged its duty to weigh the interest in ensuring Air France's survival against the inevitable adverse effect on competition caused by the injection of the massive amount of FF 20 billion in aid. The Commission has at no time explained why it considered that the beneficial effects of the restructuring plan were sufficient to outweigh its adverse effects, limiting itself to merely examining the beneficial effects of the aid for its beneficiary. 247 It points out that Air France has accumulated large losses during recent years, despite the injection of FF 5.8 billion in aid authorised by the Commission. In view of the continued and increasing losses made by Air France, the Commission should, it argues, have noticed in retrospect that its investigations, based at the time on information supplied by Air France, were fundamentally flawed. In contrast to Air France, most of its competitors, unsubsidised and independent airlines, have had to adopt radical cost-cutting and restructuring measures in order to be able to adapt to a rapidly changing commercial environment within the liberalised market. These necessary survival measures could be taken only by means of making substantial reductions in workforce, abandoning non-profitable routes, cancelling orders for new aircraft, withdrawing investment in other airlines and selling non-core assets. For example, the applicant embarked on a serious cost-cutting campaign involving inter alia shedding jobs and abandoning non-profitable routes, including that between Edinburgh and Paris, which continues to be operated by Air France. 248 The Kingdom of Denmark and the United Kingdom add that the Commission ought to have compared Air France with other companies which have restructured with or without State aid. Only by so doing could the Commission have built up a picture of the market and the companies operating on it, which is a precondition for a proper exercise of its discretion. The experience of some of Air France's competitors demonstrates what can be achieved to restore the viability of a major international airline without State aid. Thus, British Airways withdrew from 16 international routes, sold a large number of aircraft and reduced its workforce by 13 500 in the 1980s. In the case of Lufthansa, restructuring has necessitated a 17% reduction in the number of employees since 1992. 249 The applicants, the Kingdom of Denmark and the United Kingdom take the view that the 16 conditions to which the Commission made approval of the aid subject are ineffective and therefore incapable of preventing the aid from having adverse effects on trading conditions to an extent contrary to the common interest. They stress that the conditions are limited to the duration of the restructuring plan, that is to say, they were to last until the end of 1996, whereas the aid will continue to have effects on Air France and the air transport market beyond that period. The error in limiting application of the conditions to the duration of the Plan is illustrated by the merger between Air France's European operations and those of Air Inter proposed for early 1997. The Commission's action in laying down such conditions to be complied with by the French Government, instead of subjecting the restructuring plan to detailed examination is, it is argued, contrary to the rules governing the Commission's exercise of its discretion in this area. The Commission could not avoid carrying out itself the assessment which Community law requires by instead laying down a number of conditions. 250 The applicants and the interveners supporting them stress, in particular, that it is possible for Air France to circumvent the conditions of authorisation which the contested decision imposes on the French State. For example, the holding company controlling Air France and Air Inter could allow Air Inter, which is not subject to those conditions, to adopt measures which Air France is prohibited from adopting. Were the contested decision not to be annulled, any recipient of State aid would be in a position to set up subsidiaries or sister companies in order to avoid the conditions of authorisation and to continue to operate on the market without any restriction. 251 The Commission considers that the applicants wrongly assimilate aid which distorts competition and affects trade between the Member States, within the meaning of Article 92(1) of the Treaty, to aid which adversely affects trading conditions to an extent contrary to the common interest, within the meaning of Article 92(3)(c). It states that it at no time considered that the disputed aid would not distort competition or affect trade. However, such aid does not necessarily constitute aid adversely affecting trading conditions to an extent contrary to the common interest. In the Commission's view, the applicants are proceeding on the premiss that any effort by Air France to survive will harm its competitors. That proposition, it argues, is unsustainable on a proper interpretation of Article 92(3)(c) of the Treaty and Article 61(3)(c) of the EEA Agreement. 252 In France v Commission, cited above in paragraph 79, the Commission took the view that the authorised aid was a rescue measure which, moreover, did not satisfy the criteria laid down for that type of aid. Such considerations, the Commission stresses, are absent in the present context. The aid here being contested is not a rescue measure, but is effectively linked to a genuine restructuring plan. There is therefore no inconsistency between the Commission's position in France v Commission and its position here. 253 The Commission adds that the passage from Advocate General Sir Gordon Slynn's Opinion in Commission v Germany (cited above in paragraph 58) referred to the question whether the aid involved could be regarded as an aid to facilitate the development of certain economic activities, and not to the question whether it adversely affected trading conditions to an extent contrary to the common interest. Likewise, the excerpt from the judgment in Philip Morris (cited above in paragraph 79) relates to the first requirement of Article 92(3)(c) of the Treaty and not to the adverse effect on trading conditions. 254 The Commission states that it did examine whether the aid could be considered to be compatible in accordance with Article 92(3)(c) of the Treaty and Article 61(3)(c) of the EEA Agreement. For the reasons given in its decision, it was in a position to conclude that the aid could benefit from the derogation provided for and, provided that certain commitments were respected and certain conditions satisfied, was compatible with the common market. It explained in the contested decision that, in analysing the effects of the aid within the EEA, it took into account the increased liberalisation of air transport following adoption of the `third package' and was satisfied that the negative effects of the aid would not be reinforced through the use of exclusive rights or privileged treatment in favour of Air France. 255 The Commission submits that some of the commitments which it obtained from the French Government were unprecedented or of unparalleled stringency. No other government had undertaken to privatise a company which was the beneficiary of aid (commitment No 2) and never before had restrictions been imposed on pricing freedom (commitment No 9). The Commission also points out the fact that only half the total amount of the aid could be paid immediately, payment of the balance in two tranches being subject to compliance with a number of conditions and to Commission authorisation (Article 2 of the contested decision). Furthermore, the French Government undertook not to grant to Air France any new appropriation or any other form of aid (commitment No 5) or to interfere with its management for reasons other than those connected with its status as a shareholder (commitment No 4). 256 In response to the criticism, voiced by the Maersk companies, that it excluded the role of small and medium-sized air carriers from its analysis, the Commission stresses that its examination was not confined to the major European carriers. In ascertaining that the aid would not adversely affect trading conditions to an extent contrary to the common interest, it had to ensure, in particular, that it was not used to undercut prices and that capacity was not increased to an extent greater than market growth. Those concerns applied to all Air France's competitors and to the European civil aviation sector as a whole. 257 Regarding the argument that it failed to examine the adverse effect of the aid on competition in regional air services, the Commission submits that the interveners have failed to provide any evidence whatever to substantiate their claim that the aid discourages the development of services to and from regional airports. Concerning the alleged effects of the aid on a market wider than that actually operated by Air France, on indirectly competing routes and on potential competition, the Commission states that the allegations are without foundation. It does not know what Maersk's postponement of their plans to introduce a Billund-Paris service may demonstrate. Their hesitation, the Commission submits, is more likely to have resulted from British Airways' entry on the Copenhagen-Paris route in 1993, immediately seizing 18% of the market. On a general level, the Commission takes the view that the contested decision satisfies the requirements of Article 190 of the Treaty as regards the evaluation of the impact of the aid on trading conditions. 258 Air France considers that everything in the contested decision goes to show that the effects of the aid were assessed in a Community context. The Commission analysed the situation of the European aviation industry, its prospects and the effects of the aid on Air France's competitive situation, taking into account the increased liberalisation in air transport. Finally, the very object of the commitments entered into by the French Government was specifically to prevent Air France from being able to use the aid to the detriment of its competitors. Findings of the Court 1. As regards the statement of reasons 259 In the light of the contentions of the applicants and the interveners supporting them, it is appropriate first to ascertain whether the contested decision is adequately reasoned with regard to the assessment of the effects of the aid on the companies competing with Air France and on the relevant air routes. The Court called on those applicants and interveners to submit the observations which they had lodged with the Commission during the administrative procedure in their capacity as parties concerned within the meaning of Article 93(2) of the Treaty (see paragraph 33 above). 260 In accordance with what was considered in paragraphs 89 to 96 above, therefore, the Court must examine whether the statement of reasons in the contested decision indicates clearly and unequivocally the Commission's reasoning, particularly in view of the essential complaints concerning the assessment of the contested aid plan in regard to its effects which the parties concerned drew to the Commission's attention during the administrative procedure. 261 On a complete reading of the observations submitted at the Court's request, it transpires that some of those parties had, in particular, insisted that the Commission should assess the effects of the aid on the airline companies in competition with Air France and on the different air routes concerned. It was asserted that the aid would allow companies belonging to the Air France group to continue to exploit their dominant position on the domestic French market. Furthermore, since the relevant geographical market in the air transport sector consists of routes which users consider to be substitutable, that is to say, city-to-city routes, the issue of substitutability ought to be analysed. Other more competitive companies might be able to take up routes previously served by Air France. The Commission, it was argued, should also be attentive to the effects of the aid on the situation of small airline companies, which often depend on a number of specific routes. Receipt of State aid by a major carrier such as Air France could affect the competitive balance on these routes. 262 A number of the parties concerned stressed the impact which the contested aid would have on competition on international routes outside the EEA. It was claimed that Air France had advertised aggressively in the Netherlands by offering very low rates for flights via Paris to, inter alia, Hong Kong, Singapore, Jakarta, Tokyo, Cape Town and Johannesburg (KLM, observations, p. 1). Air France was in competition on 8 of the 20 international routes on which competition was fiercest (United Kingdom, observations, p. 6). The other Community companies present on extra-Community routes were affected by reason of the potential substitutability between, for instance, Rome and London for a flight to New York. There was thus competition on all routes between Europe and North America and between Europe and the Far East. British Airways, for example, was in competition with other companies in regard to flights from Rome to New York and from Paris to New York. The domestic market was too small for many European companies. Consequently, extra-Community routes were vital for their long-term survival, and many therefore relied in large measure on transatlantic traffic (pp. ii, 57 and 58 of the Lexecon Report on the competitive impact of State aid on the European airline industry, presented by British Airways during the administrative procedure and forming Annex 17 to the application in Case T-371/94). 263 The Commission, it must be borne in mind, was itself aware of the problems raised by the effects which the aid would have on the competitive position of Air France, and had indeed already declared, in the communication of 3 June 1994, that it was necessary to examine those effects with regard to international and domestic routes on which Air France competed with other European carriers, adding that Air France's restructuring plan did not include an analysis of the network and its future development (OJ 1994 C 152, at p. 8). 264 In the contested decision, the Commission, when considering whether the aid affected conditions of trade to an extent contrary to the common interest, pointed out that it had stated, when the administrative procedure was instituted, that it had to analyse the effects of the aid on Air France's competitive position on both international and domestic routes on which it was in competition with other European companies. The Commission further stresses that the French Government had undertaken, for the duration of the restructuring plan, - not to increase the number of aircraft in Air France's operating fleet beyond 146 (commitment No 7); - not to increase Air France's supply beyond the level reached in 1993 for routes between France and the other EEA countries (commitment No 8); - to ensure that Air France would not apply tariffs below those of its competitors for an equivalent supply on the routes that it operated within the EEA (commitment No 9); - not to grant preferential treatment to Air France in the matter of traffic rights (commitment No 10); - to ensure that Air France would not operate more scheduled routes between France and the other EEA countries than it did in 1993, that is to say, 89 routes (commitment No 11); - to limit the supply of Air Charter to its 1993 level (commitment No 12) (contested decision, OJ, pp. 79, 86, 88 and 89). 265 The Commission considers that those commitments, expressed as conditions governing authorisation of the aid, involved severe limitations on capacity, supply and pricing freedom for Air France, and that such limitations were necessary to prevent the aid being used to transfer the airline's difficulties to its competitors. The commitments prevented Air France from pursuing an aggressive price policy on all the routes which it operated within the EEA (contested decision, OJ, p. 86). 266 With more particular regard to the effects which the aid might have on the domestic French market, the Commission also points out that: - the French authorities undertook to modify, in accordance with Decision 94/290/EC of 27 April 1994 on a procedure relating to the application of Council Regulation (EEC) No 2408/92 (Case VII/AMA/II/93 - TAT - Paris (Orly)-London) (OJ 1994 L 127, p. 22), the traffic distribution rules for the Paris airport system in such a way as to make them non-discriminatory (commitment No 15); - the French authorities undertook to ensure that the work required to adapt the terminals at Orly South, reserved for international traffic, and Orly West, reserved for domestic traffic, would not affect competitive conditions to the detriment of the airline companies operating there (commitment No 16); - it adopted, on 27 April 1994, a decision under which France was required to authorise Community carriers to exercise their traffic rights on routes between Paris (Orly) and Toulouse and between Paris (Orly) and Marseilles at the latest by 27 October 1994 (contested decision, OJ, pp. 87 and 88). 267 On a reading of its reasoning as thus stated, it is clear that the Commission did not examine the competitive position on a `route-by-route' basis, although such an examination had been proposed by the parties concerned and envisaged by the Commission itself. Instead of analysing in detail the effects which the aid would have on the various routes served by Air France, the Commission chose to impose on the French State the 16 conditions governing authorisation of the aid set out in Article 1 of the contested decision. It thus took the view that those conditions were appropriate and sufficient to ensure that the effects of the aid on the civil aviation sector coming within the scope of Article 92 of the EC Treaty and Article 61 of the EEA Agreement would not be contrary to the common interest. 268 It should be pointed out that the conditions relating to the maximum number of Air France's aircraft (No 7), the prohibition of conferring preferential treatment on Air France in the matter of traffic rights (No 10) and the limitation on Air Charter's supply (No 12), the scope of which had no geographical limits, cover in any event the extent of the EEA. The conditions regarding Air France's supply (No 8), its pricing practices (No 9), the maximum number of routes operated (No 11), the traffic distribution rules for the Paris airport system (No 15) and the renovation work at the two Orly terminals (No 16) specifically cover the geographical market within the EEA, including the domestic French market. The Commission expressly stated that, in its opinion, those conditions limited Air France's freedom and prevented it from pursuing an aggressive price policy `on all the routes operated by the French carrier within the European Economic Area' (contested decision, OJ, p. 86). 269 In the context of the reasoning given for the decision, the Court takes the view that this manner of addressing the problem indicates that the Commission did in fact concentrate on the competitive situation within the EEA, it being understood that the question whether the above conditions governing authorisation are in fact sufficient and appropriate to that end falls within the examination of the substance. Even if the statement of reasons did not follow the observations of the parties concerned, who had suggested carrying out a `route-by-route' examination, it shows clearly that the Commission considered it appropriate to use the mechanism of the 16 conditions of authorisation imposed on the French State in place of such an examination. The parties concerned could thus identify the Commission's reaction to their observations, determine whether the approach adopted by the Commission was well founded, and defend their interests before the Community judicature by challenging the full and adequate nature of the mechanism of the 16 conditions with regard to the competitive position obtaining within the EEA. 270 It must, however, be held that the statement of the grounds of the contested decision does not contain the slightest indication as to Air France's competitive position outside the EEA. First, there is no analysis of Air France's international network, taking account of the routes on which it is in competition with other airline companies based within the EEA. Second, the conditions of authorisation relating to the level of Air France's supply (No 8), its pricing practices (No 9), and the maximum number of routes operated (No 11) do not cover the connections which Air France operates or intends to operate to non-EEA countries, that is to say, long-haul - in particular transatlantic - flights. From the Commission's point of view, Air France - financially strengthened by the aid authorised - was thus entirely free to extend its capacity, increase the number of its connections, and to apply tariffs as low as it wished on international routes outside the EEA. 271 However, Air France's restructuring plan expressly envisaged the development of long-haul flights and an increase in frequencies on profitable routes, and the French authorities had announced a 10.2% increase in Air France's supply on long-haul flights (contested decision, OJ, pp. 76 and 77). In addition, the parties concerned had drawn the Commission's attention, first, to the problem of defining the relevant market in regard to air transport, which, in their view, consisted of those specific routes which users regarded as substitutable, second, to the fact that Air France had attempted, by means of an advertising campaign, to attract customers in the Netherlands for flights via Paris to non-EEA destinations, Air France thereby itself demonstrating that such flights were largely substitutable by means of appropriate feeder traffic, and, third, to the vital character of such flights for the long-term survival of several European companies. 272 It should be added that, in its decision of 5 October 1992 (Air France/Sabena, cited above in paragraphs 218 and 219), the Commission defined the relevant market as regular air transport connecting two geographical areas, that is to say, a bundle of air routes, provided that there was substitutability between the routes making up that bundle, such substitutability resulting from different factors such as, in particular, the length of the routes, the distance separating the various airports at the extremities of each of the routes making up the bundle, or the frequency of flights on each route (point 25). Consequently, the Commission concluded, in regard to connections between Europe and French-speaking countries in Sub-Saharan Africa, that the relevant market could be defined as a bundle of routes between all of the EEA departure points, on the one hand, and each of the individual destinations in Africa, on the other (point 39). 273 The Court takes the view that, having regard to that decision-making practice and bearing in mind the observations which the parties concerned made in that connection, the Commission was obliged to set out its views on the problem of non-EEA air routes served by Air France, the beneficiary of the authorised aid, in competition with other companies within the EEA. As the Court of Justice held in Bremer Vulkan (cited above in paragraph 94, paragraphs 53 and 54), information as to the situation on the markets in question, in particular the positions of the undertaking benefiting from the aid and of competing undertakings, constitutes an essential element in the reasoning of a decision relating to the compatibility of projected aid with the common market within the meaning of Article 92 of the Treaty. Although that judgment was delivered in relation to Article 92(1), this Court holds that such a statement of reasons is also required under Article 92(3)(c) of the Treaty and Article 61(3)(c) of the EEA Agreement in regard to the question whether the aid adversely affects trading conditions to an extent contrary to the common interest. 274 Since it did not extend conditions of authorisation Nos 8, 9 and 11 to non-EEA routes served by Air France, the Commission was required to assess - in its examination of the relevant market - the potential substitutability of the non-EEA flights operated, for example, from Paris, London, Rome, Frankfurt, Copenhagen, Amsterdam or Brussels, and thus the potential competition, in regard to those flights, between the airline companies whose hubs are situated in any of those cities. 275 The importance of such a statement of reasons is illustrated by the figures which the applicants in Case T-371/94 have submitted to the Court, without being challenged, for the purpose of demonstrating that a large portion of the turnover and operating profits of British Airways, SAS and KLM is realised on routes to non-EEA destinations, in particular on connections to the United States, Canada, Africa, the Middle East, India and the Far East (application, paragraph 212 and footnote 282). As the Court of Justice accepted in Bremer Vulkan (cited above in paragraph 94, paragraph 34), such factors occurring after the date on which the contested decision was adopted may be taken into consideration as illustrating the obligation to state reasons devolving on the Commission. In any event, a number of the parties concerned had already pointed out to the Commission that routes outside the Community, and in particular transatlantic routes, were vital for the survival of many European companies and that competition on those routes was the fiercest of all. 276 In addition, it is obvious that an increase in Air France's capacity and its leadership in terms of low tariffs on a given non-EEA route from its hub at Paris (CDG) Airport may have repercussions on feeder traffic to that hub. If the economic significance of the Paris hub increases at the expense of other hubs within the EEA, the feeder traffic to Paris will increase proportionately and, consequently, at the expense of the feeder traffic to those other hubs. The argument of the parties concerned regarding the situation of the small airline companies, frequently dependent on a few specific routes, thus appears to be fundamental, and the Commission ought therefore also to have set out its views in this regard. By way of illustration, it should be added that, as British Midland pointed out during the hearing before the Court, without being challenged, 30% of its passengers have been inter-line passengers travelling to other destinations on long-haul routes. Consequently, the Commission was not entitled to ignore the position of the small companies engaged in feeder traffic. 277 The problem posed by the non-EEA routes and associated feeder traffic cannot be regarded as being resolved by the combined effect of conditions of authorisation No 7 (limitation on the number of Air France's aircraft) and No 9 (restriction on the price leadership of Air France in feeder traffic within the EEA), or by Air France's duty to attain the objectives of its restructuring. If it is true that it is the non-EEA routes which are the most profitable, Air France will have every interest in using the greatest number of its aircraft on the most profitable international routes, without in any way compromising the success of its restructuring. As for feeder traffic, suffice it to note that nothing obliges Air France to assume responsibility for this itself, since such traffic towards the Paris hub can be assured by any airline company distinct from Air France, such as Air Inter, which is not subject to the conditions of authorisation imposed by the Commission (see paragraph 215 above); the economic significance of condition No 9, in so far as it covers the feeder traffic ensured by Air France within the EEA, thus appears insignificant in relation to the global problem posed by non-EEA routes. 278 Finally, while condition of authorisation No 12 imposes absolute limits of supply on Air Charter, which thus also relate to routes outside the EEA, the economic significance of Air Charter with 17 aircraft is so minimal in relation to that of Air France that the existence of this condition is not, by itself, such as to compensate for the lack of reasoning in regard to the position of Air France on these routes. The same goes for condition of authorisation No 10 prohibiting the French authorities from granting preferential treatment to Air France in the matter of traffic rights. While this condition is also directed at rights relating to non-EEA routes, it can benefit only those airline companies capable of profiting by it. These are, in substance, companies from non-member countries and French companies such as Air France, Air Inter, Air Charter, Air Liberté, Corsair, AOM, TAT and Euralair, in the event of their wishing to serve these routes from and to France. In contrast, other European companies which, in competition with Air France, operate non-EEA routes essentially from their own hubs outside France benefit from condition No 10 only to an insignificant extent. 279 It is true that the Commission, Air France and the French Republic have argued during the present proceedings that traffic rights on non-EEA connections, in particular transatlantic connections, were governed by bilateral agreements and that a restriction imposed with regard to pricing, capacity and number of routes would have been detrimental to Air France by reducing its competitiveness on outside markets. They have submitted that such a restriction would have benefited only non-EEA companies and would therefore have been manifestly contrary to the common interest. That reasoning, however, as advanced by the agents of the Commission and the interveners before the Court, does not feature in the contested decision. It is thus a line of argument that is not covered by collegiate responsibility, and therefore cannot be accepted. Consequently, it cannot remedy the defective reasoning by which the contested decision is vitiated on this point (see paragraphs 116 to 118 above). 280 It follows from all of the foregoing that the statement of reasons in the contested decision does not satisfy the requirements of Article 190 of the Treaty so far as concerns the assessment of the effects of the aid on the competitive position of Air France in regard to its network of non-EEA routes and the associated feeder traffic. That defect in the statement of reasons means that the Court cannot examine whether the arguments put forward on those points are well founded (see paragraph 238 et seq. above). Nor, moreover, is the Court in a position to rule on the argument relating to Air France's pricing practices on its non-EEA network, allegedly operational measures financed by the aid (see paragraphs 142 and 143 above). 281 The Court is, however, able to examine whether the Commission's assessment of the effects of the aid on Air France's competitive position within the EEA can resist the substantive arguments advanced by the applicants and the interveners supporting them. 2. As regards the soundness of the reasoning 282 It must first of all be borne in mind that economic assessments pursuant to Article 92(3)(c) of the Treaty, in respect of which the Commission enjoys a broad discretion, must be made in a Community context (Philip Morris, cited above in paragraph 79, paragraph 24); this means that the Commission is under an obligation to examine the impact of the aid on competition and intra-Community trade (Joined Cases T-447/93, T-448/93 and T-449/93 AITEC and Others v Commission [1995] ECR II-1971, paragraph 136). In the present context, since the contested decision was also adopted pursuant to Article 61 of the EEA Agreement, the context to be examined, as defined by the above case-law, must be extended to the European Economic Area. 283 It should be added that, in its judgment in Case 47/69 France v Commission [1970] ECR 487, at paragraph 7, the Court of Justice ruled that, in order to determine whether aid adversely affects trading conditions to an extent contrary to the common interest, it is necessary to consider, in particular, whether there is an imbalance between the charges imposed on the undertakings concerned on the one hand and the benefits derived from the aid in question on the other. This Court concludes that the Commission is under an obligation, when examining the impact of State aid, to weigh the beneficial effects of the aid against its adverse effects on trading conditions and the maintenance of undistorted competition, as it has itself pointed out in its XIVth Report on Competition Policy (1984, p. 130, point 202). 284 As to whether the Commission balanced those factors in the present instance, it must be noted in the first place that the contested decision traced the history of the various restructuring plans adopted by Air France since 1991 for dealing with its financial problems: CAP '93, under which Air France was granted FF 5.8 billion, PRE 1 and PRE 2 (contested decision, OJ, p. 74). The Commission thus took into account the background to the disputed plan, and in particular the FF 5.8 billion already paid as aid, when it assessed the possible positive and negative effects of the aid contested here. 285 In noting that the French Government was the majority shareholder in Air France (contested decision, OJ, p. 76) and in requiring the French authorities to begin the process of privatising Air France (Article 1(2) of the contested decision, OJ, p. 88), the Commission thus took account of the fact that Air France belonged to the public sector. The fact that the Commission approves aid paid to a public undertaking does not per se amount to discrimination against private undertakings in competition with the beneficiary of the aid. As is clear from paragraph 19 of the judgment in Italy v Commission (cited above in paragraph 125), the Commission must, even in the area of State aid, respect the principle of equal treatment as between public and private undertakings. It follows that the Commission could authorise the disputed State aid without discriminating against Air France's private competitors, provided that the aid did not adversely affect trading conditions to an extent contrary to the common interest. 286 Nor was the Commission obliged, in the present context, to compare the restructuring measures envisaged by Air France with those undertaken by other airline companies, nor, a fortiori, to require Air France's restructuring to be based on that of any other company (on this, see paragraphs 135 and 211 above). The adequacy of an undertaking's restructuring measures depends on its individual situation and on the economic and political context within which the measures concerned were adopted. In the present instance, the Commission found, when the contested decision was adopted in July 1994, that there had been some economic recovery within the European civil aviation sector, that the prospects for that sector were now reasonably favourable and that there was no structural overcapacity crisis (contested decision, OJ, pp. 81 and 82). On the basis of those factors, the restructuring measures envisaged by Air France and accepted by the Commission could justifiably be less severe than those undertaken by other airlines in the light of their specific situations and contexts. 287 Although, as has already been found above (paragraph 267), the Commission, in its examination of the impact which the aid might have on competition and trade within the EEA, did not assess the competitive position on a `route-by-route' basis and thus did not examine the conditions for direct or indirect competition with other airline companies in regard to each of the routes actually or potentially served by Air France, it did none the less impose on the French State a series of conditions designed to limit Air France's margin of manoeuvre, particularly in regard to capacity, supply and pricing (see paragraphs 264 to 268 above). 288 The Court takes the view that the basic choice thus made by the Commission falls within its discretion in this area. First, the Commission may in principle make a decision authorising aid under Article 92(3)(c) of the Treaty subject to conditions for ensuring that authorised aid does not alter trading conditions to an extent contrary to the general interest (Joined Cases T-244/93 and T-486/93 TWD v Commission [1995] ECR II-2265, paragraph 55). Second, Air France, which is one of the three major European airline companies, operates throughout the EEA. The Commission was therefore entitled to form the view that the effects of the aid had to be assessed, not in relation to any one individual connection or specific region, but in relation to the EEA considered as a whole. It does not appear mistaken to cover, for that purpose, the whole of Air France's area of operations with a network of obligations designed to protect all of its actual or potential competitors against any aggressive policy which it might be tempted to pursue, a fortiori since the Commission reinforced the mechanism of the conditions of authorisation by requiring, in the third paragraph of Article 2 of the contested decision, that the fulfilment of those conditions be verified by independent consultants. 289 That conclusion is not gainsaid by the approach taken by the Commission in, inter alia, its decisions in Aer Lingus (cited above in paragraph 55, OJ 1994 L 54, at p. 39) and Olympic Airways (cited above in paragraph 174, OJ 1994 L 273, at pp. 30 and 35), in which it did assess certain specific routes served by the airline companies in question. For those two companies, which are relatively modest in size when compared with Air France, a particular route may be of fundamental importance for their operations, thus justifying examination of the impact of aid granted to one of those companies being concentrated in that way, whereas the air network served by Air France within the EEA is more uniform in character. 290 In so far as the effectiveness of the conditions imposed on the French State has been challenged before the Court, with particular regard to the possibilities for Air France to circumvent those conditions, it must be noted that the legal and practical utility of such conditions of authorisation lies in the fact that, if the recipient undertaking were to fail to observe them, it would be for the Member State concerned to ensure proper implementation of the authorisation decision and for the Commission to assess whether it was appropriate to demand that the aid be repaid (Case T-380/94 AIUFFASS and AKT v Commission [1996] ECR II-2169, paragraph 128). It should be borne in mind that, in Case C-294/90 British Aerospace and Rover v Commission [1992] ECR I-493, paragraph 11), the Court of Justice held that, if a State does not comply with the conditions imposed by the Commission in a decision approving aid, the Commission is entitled, under the second subparagraph of Article 93(2) of the Treaty, to refer the matter directly to the Court of Justice by way of derogation from Articles 169 and 170 of the Treaty. 291 Having regard to the way in which the conditions underlying a decision to authorise aid thus operate, the mere assertion that one of those conditions will not be complied with cannot cast doubt on the legality of that decision (paragraph 128 of AIUFFASS and AKT v Commission, cited above in paragraph 290). In general, the legality of a Community act cannot depend on the possible existence of opportunities for circumvention or on retrospective considerations of its efficacy (Schroeder v Germany, cited above in paragraph 81, paragraph 14). 292 All the arguments challenging the legality of the contested decision on the ground that control of the implementation of the conditions of authorisation imposed on the French State would be ineffective, or that it would be possible for Air France to circumvent those conditions, must therefore be excluded from the Court's examination as having no bearing on the issue. In so far as it might subsequently transpire that those conditions have not been fully complied with or that Air France has in fact succeeded in abusively circumventing them, it would in that case be for the Commission to envisage a possible reduction in the authorised amount when it came to the payment of the second and third tranches of the aid or to consider whether the French Republic ought to be required to recover in full or in part the aid paid. 293 Consequently, only those arguments alleging that the conditions of authorisation were inherently and manifestly inappropriate, and in particular legally inadequate in scope, may be capable of calling in question the legality of the contested decision. 294 The Court finds that, contrary to the argument advanced in this connection by the applicant in Case T-394/94, the Commission did not err in limiting the scope of most of the conditions to the duration of Air France's restructuring plan. It is clear that the restrictions imposed for the purpose of limiting the impact of the aid could not be of unlimited duration. In the specific circumstances here, it does not appear arbitrary for the duration of the conditions to end on completion of the implementation of the restructuring plan. 295 It is in the light of the above considerations that the arguments directed against a number of specific conditions of authorisation must now be examined. That examination will show conclusively whether the Commission, instead of authorising the aid and attaching several conditions of authorisation to its decision, ought to have decided that the aid adversely affected trading conditions to an extent contrary to the common interest. 296 Subject to that proviso, the argument that the method chosen by the Commission to examine what impact the aid would have on the common interest was mistaken cannot be upheld. (a) Condition of authorisation No 1 297 This condition required the French authorities to ensure that `the entire amount of aid shall benefit Air France alone. Air France means the Compagnie Nationale Air France, as well as any company of whose capital it holds more than 50%, with the exception of Air Inter. In order to prevent any transfer of aid to Air Inter, a holding company will be set up by 31 December 1994 which will have a majority shareholding in Air France and Air Inter. No financial transfer which does not form part of normal commercial relationships shall be made between the companies in the group, either before or after the actual setting up of the holding company. Accordingly, all transfers of goods and services between the companies shall be carried out at market prices; in no case may Air France apply preferential tariffs in favour of Air Inter'. Summary of the applicants' arguments 298 The applicants submit that, by not including Air Inter in its assessment, the Commission committed an error which rendered the conditions governing the authorisation of the aid devoid of content. For example, the minimal reduction in capacity required of Air France was, they claim, greatly facilitated by the fact that Air Inter had unlimited possibilities for increasing its capacity. The Commission was wrong to consider that the holding company envisaged would prevent Air Inter from benefiting from the aid in any way. Air France and Air Inter form a single economic unit and must therefore be considered as a single undertaking for the purpose of applying the Community rules governing State aid. The change in structure between Air France and Air Inter from a parent-subsidiary relationship to that of two companies controlled by the same holding company does not alter this conclusion. At the same time, competition between Air France and Air Inter is inconceivable since they have identical economic interests. 299 In this context, the applicants in Case T-371/94, citing press articles published in August and September 1994, state that the chairman of the holding company was to be Mr Christian Blanc, who was also to remain chairman of Air France; 14 additional directors were to be chosen from among the directors and employees of Air France and Air Inter. The chairman of Air Inter was also to sit on the board of the holding company and had, moreover, been appointed chairman of Air France's new operating centre for its European activities, the `Centre de Résultat Europe' (European Results Centre). Air Inter was to be merged into Air France's `Centre de Résultat Europe' with effect from the end of the restructuring plan, that is to say, from 1 January 1997. In the interim, Air Inter was to begin operating some of Air France's European routes in its place. In addition, Air France and Air Inter were to hold shares in the same undertakings and had reinforced their cooperation in several areas. The Commission, they claim, had also identified Air Inter as a core asset of Air France that could not be sold off. 300 Those applicants submit that the fact that Air Inter belonged to the same group as Air France, and its announced merger with Air France, would have enabled Air Inter to `bank' on the aid. Thus, Air Inter could reassure the banks that its funding would be relatively free of risk and that, following the merger, its obligations would be honoured by the new company. 301 In so far as the Commission, in the contested decision, imposed the condition that only normal commercial relationships could take place between the companies in the group, those applicants submit that this condition could not prevent Air Inter from benefiting from the contested aid. There are, they argue, many ways in which two companies within the same group, in particular when they have joint operations and subsidiaries, can exchange products and services under conditions inconsistent with those prevailing on the market, without any possibility of verification. 302 They point out in this context that French tax law, in particular the fiscal concept of the `acte anormal de gestion' (`abnormal management act') relating to charges that are deductible from the profits within a group of companies, did not provide any means for verifying that Air Inter would not benefit either directly or indirectly from the aid granted to Air France. Direct transfers and the financial advantages represented by commissions or preferential prices granted by Air France to Air Inter, in anticipation of the merger between the two companies, could not be regarded as abnormal management acts. 303 The applicants add that the condition imposed was of limited application in so far as it did not cover the transfer by Air France of European routes and valuable slots to Air Inter. 304 So far as the exchange of slots between Air France and Air Inter is concerned, those applicants state that such exchanges are frequent between airlines. An airport slot is an essential asset in an airline's ability to operate a route. There is therefore a market in which slots are bartered for other slots. There is, however, no `market price'. Airlines forming part of the same group of companies may exchange slots in order to implement a group strategy. The strategy of the Air France group was for Air Inter to expand its operations outside France into Europe and beyond pending the merger scheduled for 1 January 1997. Air France could therefore very well provide Air Inter with a valuable peak-time slot for the operation of a particular route. The condition imposed by the Commission, seeking to hold Air France separate from Air Inter, was thus, they claim, ineffective. 305 In regard to all routes, Air Inter's ability to receive advance notice from Air France concerning the routes that Air France intended to relinquish provided it with a considerable advantage over independent competitors. It could thereby prepare its entry on a given route in time for the public announcement by Air France of its withdrawal from the route in question. Further, Air Inter's ability to benefit from the existing Air France infrastructure at the airports and in the countries concerned constituted an additional significant advantage over rival airlines wishing to begin operating such routes. 306 Those reasons, the applicants submit, explain how Air France could effectively transfer its routes to Air Inter. Their assertion, they argue, is illustrated by press articles published in September 1994, which reproduce official announcements by Air France (Annex 33 to the application). The applicants further submit that an agreement dating from 1992 between Air France and Air Inter provided for the transfer of Air France cockpit crew to Air Inter for all European routes that Air Inter was to begin operating. This, they submit, was not the sort of agreement that two independent EEA airlines would enter into. 307 In order to demonstrate the group strategy being pursued by Air France and Air Inter, the applicants refer to the `ABC World Airways Guide' for June 1994, which lists the timetables of many airlines throughout the world. It lists Air Inter's flights under an `AF' code. That use of the `AF' code allows a route consisting of a domestic flight provided by Air Inter and an international flight provided by Air France to be presented as a seamless flight, thereby receiving priority in the computer reservation system. 308 The Maersk companies add that the subsequent behaviour of Air France and its group demonstrates a disregard for the commitment to keep Air Inter commercially and financially independent. The flight numbers of Air Inter were, for the purpose of coordinating the electronic reservation systems, to adopt the computer code of Air France; Air Inter was to adopt the name of the future European company of the group and offer its simplified product and its low tariffs on numerous European routes, departing mainly from Orly. In addition, Air Inter's price reductions are explicable only in the knowledge that in a few years' time all of its losses were to become absorbed in Air France's, which in the meantime would have received the benefit of the aid and would therefore be better placed to bear such losses. 309 The interveners also point out that Air France and Air Inter placed in operation, on 2 January 1995, the first aircraft in a new joint regional and feeder service under the banner `Air France Air Inter Express'. As Air France's own documentation stated, this new joint approach expressed a common policy with a view to the merger of the two companies. The fact that a degree of fleet integration has already occurred demonstrates not only the Commission's error in concluding that Air Inter would not be a recipient of the aid, but also the inadequacies of the measures designed to prevent any spill-over of the aid. 310 Further, airline companies undergoing restructuring will normally introduce cost-cutting programmes throughout their group to contribute to loss reduction. Air France, because of the contested aid, would have been able to avoid requiring such a contribution from Air Inter. Air Inter was thus able to finance the current expansion of its operations where, but for the aid, it would have had to implement austerity measures. It was thus at least an indirect beneficiary of the aid in question. 311 At the hearing, the applicants in Case T-371/94 pointed out that, according to condition No 1, the contested aid was intended for Air France and for any company of whose capital Air France held more than 50%. Those companies are thus deemed to benefit from the aid. However, none of them needed to be restructured or, if they did require restructuring, they did not submit any restructuring plan. Authorisation of the aid in favour of Air France and its 80 subsidiaries was therefore manifestly unlawful, particularly with regard to those subsidiaries operating within sectors unconnected with air transport. 312 The Commission, the French Republic and Air France contend that the arguments put forward are unfounded. Findings of the Court 313 With regard to the arguments that condition of authorisation No 1 was inherently inappropriate on the ground that the failure to bring Air Inter within the scope of the contested decision ignored economic realities, in particular the economic unity of Air France and Air Inter, it should be pointed out that the contested aid had the twofold purpose of contributing both to the settlement of Air France's debts and to the financing of its restructuring plan, expiring on 31 December 1996. In authorising the aid, the Commission was thus required to ensure that the attainment of those objectives would not be compromised by the relations between Compagnie Nationale Air France and Air Inter within the Air France group, in particular through the direct or indirect transfer of part of the aid to Air Inter. Furthermore, as has been stated above (paragraphs 214 to 216), the Commission was obliged to take account of the fact that Air Inter was an asset of strategic importance for Air France, with the result that the two companies could not be required to effect a total and definitive separation. 314 In those circumstances, the Court considers that, in the exercise of its broad discretion, the Commission was entitled to form the view that, once the mechanism of the holding company had been established, Air France and Air Inter would be two independent companies, both legally and financially, for the purpose of applying the specific rules governing State aid. That mechanism - in conjunction with the system of verification by independent consultants and the scheduling of payment of the aid in three tranches under Article 2 of the contested decision - could be treated as an adequate and appropriate means by which to guarantee that Air France would be the sole beneficiary of the aid and to transform the legal structure of Air France and Air Inter, which passed from the dependency structure of subsidiary and parent company to that of independent sister companies. 315 The separate legal and financial status of the two companies, for the purposes of the rules governing State aid, is not brought into question by the fact that they have subsidiaries and management staff in common, nor by their coinciding air-transport interests. Those are purely factual matters which could at most have led the Commission and the independent consultants to be particularly vigilant in their verification, under Article 2 of the contested decision, of the proper implementation of the restructuring plan and of the fulfilment of the conditions laid down for approval of the aid. 316 The same applies with regard to the merger of the two companies scheduled for 1 January 1997. Irrespective of the fact that the Commission did not, in July 1994, have any specific and detailed plan of such a merger, of which it could have taken account in the contested decision, the possibility of joining the Air France group at the end of the restructuring period was not at all confined to Air Inter. In that regard, Air Inter was indistinguishable from any other airline company independent of Air France for the purposes of the rules governing State aid. Furthermore, it is clear that Air France, in the same way as any other undertaking in receipt of State aid, had to be able to regain its operating freedom once the restructuring phase, with the concomitant restrictions imposed by the Commission, had been completed. 317 While it is true that the actual statement of reasons given in the contested decision does not deal with the de facto interdependence between Air France and Air Inter or the prospects of a possible merger between the two companies, the Court nevertheless takes the view that the reference to the holding company, the effect of which was to guarantee their legal independence vis-à-vis each other, made any further reasoning in that regard superfluous. Within the general structure of the decision, Air Inter is an autonomous company, excluded from benefiting from the aid. It must therefore be treated, as long as that autonomy lasts, in the same way as any other airline company not in receipt of the aid and independent of Air France. 318 So far as the exchange of routes and slots between Air France and Air Inter is concerned, it must be noted that such operations do not constitute a special feature of the relationship between those two companies. Rather, they are common practices in which all airline companies engage. Thus, as the French Government stated during the hearing without being challenged, in 1996, at Paris (CDG) Airport, Air France exchanged 50 slots with some 30 companies outside the Air France group, including two with British Airways, one with British Midland and one with KLM. No exchanges were made with Air Inter during the 1994/95 winter season; only one was made during the 1995 summer season, and four during the 1995/96 winter season. With regard to route exchanges, the French Government pointed out that the Paris-Dresden route was taken over by Lufthansa after Air France had abandoned it, while Jersey Air European took over the Paris-Glasgow route and Crossair the route between Bordeaux and Geneva. 319 In that context, it should be added that the possible transfer by Air France to Air Inter of profitable routes and slots in exchange for non-profitable routes and slots would have run counter to the restructuring as conceived by Air France itself in its Plan and would have jeopardised achievement of the operating and productivity objectives posited in the contested decision. The Commission was therefore entitled to form the view that the control mechanism introduced by Article 2 of the contested decision was adequate to cope with that unlikely scenario. 320 Regarding the argument that Air Inter was at least an indirect beneficiary of the aid, without which Air France would have had to call on Air Inter to contribute financially to its restructuring, it is important to bear in mind that the Commission was entitled to consider as justified, in the exercise of its broad discretion, the maintenance of the restructured Air France company at the level of the other two major European airline companies (see paragraph 209 above) and that Air Inter represented an important strategic, and hence non-disposable, asset of Air France (see paragraphs 214 to 216 above). Consequently, the Commission was entitled to take the view that Air France's position would be weakened if, instead of authorisation of the aid in conjunction with the establishment of the holding company described above, Air Inter had been required to mobilise its own capital or incur debts itself in order to contribute to the financing of Air France's restructuring. In those circumstances, Air Inter cannot be described as an indirect beneficiary of the aid. 321 The arguments based on the ineffectiveness of control of the implementation of condition of authorisation No 1 or on the possibility of its circumvention by Air France are not such as to affect the actual legality of the contested decision since they relate only to the phase after that decision was adopted or even after the period of Air France's restructuring (see paragraph 292 above). For the same reason, all the references by the applicants and the interveners supporting them to the conduct of Air France and/or Air Inter after the contested decision had been adopted must be discounted (see paragraph 81 above). 322 As for the problems of control raised with regard to French tax law, suffice it to state that, far from being restricted to the concepts of such law, the independent consultants - on whom Article 2 of the contested decision imposed the task of verifying the proper implementation of the restructuring plan and fulfilment of the conditions laid down for approval of the aid - were free to monitor the soundness of the legal and financial separation between Air France and Air Inter in accordance with the economic, financial and accounting methods which they considered to be appropriate. Implementation of the 1992 agreement providing for the transfer of cockpit crew from Air France to Air Inter, during the period of validity of the conditions of authorisation imposed by the contested decision, would obviously have to comply with those conditions, in particular condition No 1, under which all provisions of services between Air France and Air Inter had to be carried out at market prices, the monitoring of compliance with that condition falling within the phase subsequent to the contested decision. 323 Finally, in so far as it has been argued that condition of authorisation No 1 allowed aid to be paid to subsidiaries of Air France that were not under any obligation to restructure, suffice it to point out that condition of authorisation No 6 required that the aid be used exclusively by Air France `for the purposes of restructuring the company', which prohibited subsidiaries not subject to restructuring from benefiting from it. As for Air Charter, which was, moreover, the subject of conditions of authorisation Nos 12 and 13, it should be noted that Air France's charter sector was covered by the contested restructuring plan (p. 22 of the Plan). The Court takes the view that, in the exercise of its broad discretion, the Commission was entitled to confine itself to that general rule, reinforced by the control mechanism in Article 2 of the contested decision, and to consider that only those essential matters which concerned Air France itself, Air Inter and Air Charter required more detailed rules. 324 It follows that the arguments directed against condition of authorisation No 1 must be rejected. (b) Condition of authorisation No 3 325 This condition required the French authorities to ensure that `Air France shall continue the process of implementing in full the Plan as communicated to the Commission on 18 March 1994, in particular as regards the following productivity targets expressed by the indicator equivalent revenue passenger kilometre/employee for the duration of the restructuring plan: - 1994: 1 556 200 equivalent revenue passenger kilometre/employee, - 1995: 1 725 500 equivalent revenue passenger kilometre/employee, - 1996: 1 829 200 equivalent revenue passenger kilometre/employee'. 326 It should be added that the Commission specified that the ERPK efficiency indicator represents revenue passenger kilometres and revenue tonne kilometres (converted to be comparable with passenger revenue yield, on the basis of one tonne kilometre being equivalent to 3.5 passenger kilometres) per employee. That indicator represents the total level of demand for an airline's services in terms of both passengers and cargo (contested decision, OJ, p. 83). Summary of the applicants' arguments 327 The applicants take the view that the ERPK is a flawed unit of measurement. Due to the diversity in the nature of carriers' operations, it is very difficult to arrive at a single composite measure which can take account of all operational differences in a meaningful way. Ideally, therefore, a wide range of indicators should be used to measure performance in discrete areas of the airline business. The Commission, they argue, violated this elementary rule by assessing Air France's current and expected productivity on the basis of only one unit of measurement, namely the ERPK, which, to the applicants' knowledge, has never been used in the air transport sector. 328 The applicants state that they normally measure productivity on the basis of `revenue tonne kilometres' (`RTK') or `revenue passenger kilometres' (`RPK') per employee, without combining the two units. A unit of measure such as the ERPK, combining passenger kilometres and tonne kilometres, would, they argue, double the importance of passengers. It is, moreover, a unit of measurement which combines entirely different services, namely the carriage of freight and the carriage of passengers. The higher the percentage of freight carried, the lower the unit costs, particularly when an airline operates all-cargo aircraft. This contributes to making an airline carrying cargo appear extremely efficient in comparison with an airline carrying passengers. 329 Furthermore, since the ERPK simply multiplies the number of passengers carried (including cargo converted into a number of passengers) by the number of kilometres flown, a simple way to boost an ERPK figure is to operate long-haul routes, thus providing an increased number of kilometres. According to the applicants, available statistics suggest that this is precisely what Air France is currently doing on transatlantic routes: it is boosting capacity, regardless of the fact that all other airlines are cutting theirs. Moreover, this unit of measurement says nothing of the profitability of an airline's activities because the multiplication of the number of passengers by the number of kilometres flown does not provide any indication of the resulting revenue and the cost of transporting the passengers. As a result, Air France could provide satisfactory results from the point of view of passengers multiplied by kilometres flown but disastrous yields. 330 Finally, even if the ERPK were a relevant unit of measurement, a number of factors place its reliability in question. First, in its communication of 3 June 1994, the Commission referred to Air France's productivity only in terms of `available seat kilometres' (`ASK'). Subsequently, in Decision 94/662 (cited above in paragraph 145), the Commission measured Air France's productivity solely in terms of number of personnel per aircraft, passengers carried per employee, ASK per employee and RPK per employee. There is, finally, no consensus on what constitutes a `correct' ratio between the yield of cargo and passenger operations. 331 The applicants also point out that Air France's productivity figures do not take account of services provided by personnel `wet-leased' to Air France (that is to say, where Air France takes a lease of an aircraft and its crew) or subcontracted personnel. Productivity measured `per employee' is, they argue, artificially inflated if persons not included among Air France's employees actually contribute to its productivity. Air France is currently wet-leasing aircraft and personnel from several companies. The ERPK per employee thresholds for payment of the three tranches of aid could well be satisfied merely through increased reliance on wet-leases or subcontracting arrangements, since the commitments imposed by the Commission do not cover such an eventuality. In this context, the applicants state that Air France wet-leased from TAT aircraft and complete crews, not just cockpit crews. Air France, they continue, has also wet-leased aircraft and crew from Air Littoral and Brit'Air and continues to do so. 332 The applicants argue, finally, that the productivity targets set by condition No 3 were too low compared to those already achieved by other airlines. In this context, they criticise the Commission for having merely compared Air France's productivity with that which seven other European airline companies were expected to achieve in 1996 (contested decision, OJ, p. 83). Those airlines include Alitalia and Iberia, which are experiencing serious difficulties and whose future is uncertain. The Commission also included among the seven two airline companies, SAS and Swissair, which fly, on average, much shorter routes than Air France and whose productivity thus appears unusually low. Only a comparison with companies having activities and flying distances similar to those of Air France would, they argue, be appropriate. To measure Air France's efficiency within the air transport sector, it would have been more meaningful to compare its expected productivity with that of `healthy' airlines such as KLM, British Airways, SAS and Lufthansa. In any event, such a comparison was necessarily approximate since the Commission could not have had a precise idea of the continuing restructuring undertaken by the group of companies in question. 333 The Commission, the French Republic and Air France contend that the arguments put forward are unfounded. Findings of the Court 334 Condition No 3 was not confined to requiring that productivity targets expressed in ERPK be achieved, but required the French authorities to ensure that Air France would pursue full implementation of its restructuring plan, the objectives in terms of ERPK being indicated only by way of specific example. Likewise, under Article 2 of the contested decision, payment of the second and third tranches of the aid was subject to, inter alia, actual implementation of the Plan for the undertaking and achievement of the planned results `(particularly as regards the profits and cost-effectiveness ratio as expressed in equivalent revenue passenger kilometre/employee ...)'. It follows that the improvement in Air France's overall productivity was not to be measured exclusively in terms of ERPK but also fell to be assessed in the light of other productivity improvement objectives referred to in the restructuring plan, in particular those concerning reductions in staff and investments, procurement savings, improvements in the use of working time and a salary freeze. 335 Once the significance of the ERPK/employee unit has thus been reduced to its proper dimensions, it must be seen as an indicator of physical productivity which counts both passengers and freight transported, taking account - through the use of the conversion coefficient 3.5 - of the economic reality under which the transport costs of one tonne of freight and staff requirements for that purpose are well below those of passenger transport, the situation being reversed with regard to the receipts from those two forms of transport. Far from doubling the importance of passengers, this unit of measurement thus makes it possible to ascertain whether a company is transporting more passengers and freight than previously, with the same number of employees, over distances which are globally the same or whether it is transporting the same number and quantity thereof with fewer employees, thus improving its physical productivity. 336 Admittedly, as the Commission itself has acknowledged before the Court, ERPK is not an infallible criterion in all circumstances. Thus, it is possible that the conversion coefficient of 3.5 may have varied during the period of Air France's restructuring. However, it is also true that ERPK is particularly appropriate for measuring the productivity of a company such as Air France, for which air freight represents a fundamental constituent element of its air transport activities, amounting to up to 40% of its total cabin load. In addition, it is the unit of measurement which Air France has traditionally used since 1978. In those circumstances, the Commission was justified in including ERPK among the other factors relevant to the company's productivity for the purpose of measuring the improvement in Air France's productivity. 337 This conclusion is not invalidated by any of the points raised by the applicants or the interveners supporting them. 338 With regard to the charge of inconsistency laid against the Commission in that the ERPK indicator does not feature in Decision 94/662 (cited above in paragraph 145), which was adopted on the same day as the decision here, it need merely be noted that Decision 94/662, unlike that here under challenge, concluded that the aid granted to Air France at an earlier period was incompatible within the meaning of Article 92(1) of the Treaty and refused to apply Article 92(3) in the absence of a proper restructuring plan on Air France's part. In those circumstances, there was no question, in that decision, of laying down productivity targets expressed in ERPK to be achieved by Air France. 339 Regarding the possibility that the ERPK figure might be artificially inflated simply by increasing the kilometres flown, the Commission has rightly pointed out that it would appear illogical for Air France, simply in order to cover more kilometres, to fly aircraft with an insufficient cabin load and thus, under the monitoring of the Commission and the independent consultants pursuant to Article 2 of the contested decision, compromise the overall success of its restructuring plan. Furthermore, the indicators used by the applicant companies for measuring their own productivity, namely RTK and RPK, are open to the same risk of manipulation inasmuch as their multiplier is also the number of kilometres flown. 340 The same applies with regard to the argument concerning wet-leasing. While it is true that recourse to wet-leasing does make it possible to improve the ERPK/employee ratio in so far as the aircraft concerned help to increase ERPK without their crews being counted in the denominator of the ratio, such distortion will exist irrespective of the unit of measurement employed if it relates to the number of employees (ASK, RTK, RPK), and is thus not specific to ERPK. Moreover, wet-leasing is a current practice within the air transport sector, and Air France's situation does not therefore differ fundamentally in that regard from that of other European carriers. Finally, if Air France had in fact had recourse to numerous wet-leases, it would, while under the supervision of the Commission and the independent consultants, have been compromising the implementation of its own restructuring plan, which specifically envisaged a reduction in staff, better utilisation of its fleet and crews and a lowering of costs. The Commission was therefore justified in omitting to take account of wet-leases in this connection. 341 So far as concerns the argument directed against the choice of the seven airline companies selected for the purposes of a productivity comparison with Air France, the Court takes the view that the Commission was entitled to base its comparison on a relatively large number of companies in order to achieve, in so far as possible, a true and representative average for the sector. In so doing, it was not obliged to choose only those companies that were most efficient or specialised in long-haul transport, but could also include in its comparison other companies such as Alitalia, Iberia, SAS and Swissair by forming the view that such an approach took account of the complexity of air transport as a whole. Consequently, no manifest error of assessment has been established in the choice of seven airline companies. 342 Finally, the same applies with regard to the contention that the productivity targets set by condition No 3 were too weak. This is no more than a bare assertion, unsupported by any concrete factors capable of establishing that the Commission committed a manifest error in this regard. In those circumstances, the Commission was entitled to confine itself to contradicting that assertion by stating that, in its opinion, the productivity targets were reasonable, adequate and achievable. 343 It follows that the arguments directed against condition of authorisation No 3 cannot be upheld. (c) Condition of authorisation No 6 344 This condition required the French authorities to ensure that `for the duration of the Plan, the aid is used exclusively by Air France for the purposes of restructuring the company and not to acquire new holdings in other air carriers'. Summary of the applicants' arguments 345 In the view of the applicants, this condition was inherently defective, since the aid would have been used principally to sustain Air France's operations. The scope of the condition was also limited by the interpretation given to it by Air France. In its view, the ban on acquiring shareholdings in other airlines did not apply to paying for acquisitions agreed upon before the contested decision was adopted or to increasing existing shareholdings in other airlines, such as Sabena. Moreover, the requirement under Article 92(3)(c) of the Treaty that State aid be used solely for the restructuring of its beneficiary implies, of itself, that the beneficiary be prevented from acquiring shares in airlines. The acquisition of shares in other airlines could not possibly be considered to constitute a restructuring measure. 346 The Commission contends that those arguments are unfounded. Findings of the Court 347 As the Commission has stressed before the Court, the wording of this condition prohibited use of the aid both in order to acquire new holdings and in order to increase existing holdings. Concerning the argument relating to unlawful financing both of operational activities and of the final instalment of the purchase price for the holding in the share capital of Sabena, suffice it to recall that the arguments put forward in this regard have already been rejected (see paragraphs 137 to 141 and 223 above). 348 With regard, finally, to the allegedly redundant nature of condition No 6, even on the assumption that the prohibition of using aid to acquire holdings already features in Article 92(3)(c) of the Treaty, the usefulness of such a condition consists in enabling the Commission to refer the matter directly to the Court of Justice under the second subparagraph of Article 93(2) without first being required to initiate the procedure under the first subparagraph of Article 93(2) or under Article 169 (see paragraph 11 of British Aerospace and Rover v Commission, cited above in paragraph 290). Moreover, condition No 6 was not limited to prohibiting the acquisition of holdings, but further required that the aid be used exclusively for the purposes of restructuring Air France. 349 It follows that the arguments directed against condition of authorisation No 6 must be rejected. (d) Condition of authorisation No 7 350 This condition required the French authorities to ensure that `during the period covered by the Plan, Compagnie Nationale Air France does not increase the number of aircraft in its operating fleet beyond 146'. Summary of the applicants' arguments 351 In the applicants' submission, the Commission was wrong to consider that this condition would be effective. It did not cover wet-leasing operations, through which Air France could increase the number of aircraft effectively at its disposal. The Commission also failed to take account of the fact that Air France could continue ordering new aircraft and expanding its fleet through Air Inter, not only because Air Inter's presence in the Air France group meant that there was a significant commonality of economic interests between the two companies but also because of their merger scheduled for early 1997. All the new aircraft ordered and received by Air Inter would therefore revert to Air France in 1997. Furthermore, there was nothing to stop Air France funding the acquisition of aircraft for Air Inter. The strategy of the Air France group, they argue, was to make Air Inter a European carrier. In this connection, the operation of specific routes which Air France had previously operated was being transferred to Air Inter. Such a mechanism was, in effect, tantamount to Air France's being able to increase its operational fleet beyond 146 by relying also on the fleet of its sister company, which remained unfettered by any commitments. 352 The Commission contends that those arguments are unfounded. Findings of the Court 353 With regard to the possibility of recourse to wet-leases, condition No 7 also applied, as the Commission has stated before the Court, to aircraft leased with their crews. By imposing a limit on the number of aircraft in Air France's `operating' fleet, this condition was directed not only at Air France's own aircraft but also at those which any other company might have made available to it for the purpose of operating them. In addition, it must be read in conjunction with Air France's restructuring plan, which, under the control of the Commission and the independent consultants pursuant to Article 2 of the contested decision, provided for the number of seats offered to be slightly reduced in comparison with 1993 (contested decision, OJ, p. 75). 354 So far as the references to Air Inter are concerned, suffice it to recall that, for the duration of Air France's restructuring, Air Inter had to be regarded as an independent company, that the commercial relations between the two companies were governed by condition of authorisation No 1, that any potential circumvention, by means of Air Inter, of the conditions imposed on Air France, whilst it might lead the Commission to seek recovery of the aid disbursed, is irrelevant to the legality of the contested decision, and that its possible merger with Air France concerned Air Inter in the same way as it would any other airline company independent of Air France (see paragraphs 292 and 313 to 315 above). 355 The arguments directed against condition of authorisation No 7 must accordingly be rejected. (e) Condition of authorisation No 8 GROUNDS CONTINUED UNDER DOC.NUM: 694A0371.3 356 This condition required the French authorities not to `increase, during the period covered by the Plan, the supply of Compagnie Nationale Air France beyond the level reached in 1993 for the ... routes ... between Paris and all destinations in the European Economic Area (7 045 million available seat kilometre) [and] between provincial airports and all destinations in the European Economic Area (1 413.4 million available seat kilometre). The supply could be increased by 2.7% each year, unless the growth rate of each of the corresponding markets is lower. However, if the annual growth rate of these markets exceeds 5%, supply could be increased beyond 2.7% by the amount of increase above 5%'. Summary of the applicants' arguments 357 The applicant in Case T-394/94 claims that the Commission committed a manifest error of appreciation in concluding, in the contested decision, that the European air transport sector was not suffering from a structural overcapacity crisis. In so doing, the Commission apparently took no account of the fact that there was and is overcapacity, even though this was expressly confirmed by the `Comité des Sages' in its report on the European civil aviation industry drawn up in January 1994 at the request of the Commission itself. In particular, the `Comité des Sages' considered that overcapacity was due in part to the State aid which had been granted. The Commission's argument that overcapacity was merely a `temporary phenomenon' is thus contradicted by the Commission's own sources. 358 The applicants take the view that, in a sector suffering from overcapacity, the compensation for State aid must be a reduction in the beneficiary's capacity, even if the market is growing. Such an obligation remains even if the overcapacity is only a temporary phenomenon. The applicants in Case T-371/94 consider that the notion of `compensatory justification' is central to many Commission decisions, including those relating to State aid granted to car manufacturers dating from the 1980s, at a time when the car market was suffering from overcapacity but growing significantly (see, inter alia, Commission Decision 89/661/EEC of 31 May 1989 concerning aid provided by the Italian Government to Alfa Romeo, OJ 1989 L 394, p. 9). They add that the compensatory justification cannot be avoided simply because the market is growing, since one can never exclude the risk of a re-emergence of overcapacity. The Kingdom of Denmark expresses the view that a comparison with the Sabena, TAP, Aer Lingus and Olympic Airways decisions (cited above in paragraphs 55 and 174) makes it clear that these other cases all involved reductions in capacity imposed on the recipients of State aid. 359 The Commission, the applicants argue, was also wrong in stating - on the basis of statistics produced by IATA forecasting a 6% annual traffic increase - that the overcapacity in the air-transport sector might disappear by 1995. The statistics of IATA are unreliable and its forecasts frequently wrong. Moreover, traffic growth cannot be considered in isolation from the factors that cause it. In the air transport market, the current growth in traffic has been achieved largely by lowering prices and thus lowering yield below the level necessary for the survival of numerous airlines. 360 The applicants submit that Air France was able to use Air Inter to expand its capacity and market share without restrictions until their merger in 1997. They point out in this regard that, if it was unlikely that Air France would operate more domestic routes, this was a result of its strategic plan, which allocated the domestic network and certain European routes to Air Inter. 361 The applicants point out that the capacity limitations applied only to routes between France and non-French destinations within the EEA. With the exception of the Paris (CDG)-Nice route, Air France currently operates within the EEA only routes between France and other EEA countries. Since the entry into force of Council Regulation No 2408/92 of 23 July 1992 on access for Community air carriers to intra-Community air routes (OJ 1992 L 240, p. 8), EEA air carriers have been free to operate on any route between two EEA Member States and to provide limited cabotage services within any Member State other than their own. As a result, they claim, Air France was completely unrestrained in regard to the capacity which it could offer on routes between two EEA Member States other than France and on domestic routes within an EEA Member State other than France. 362 It appears to the applicants that condition No 8 was not intended to cover capacity offered by Air France wholly within France. The capacity limitations, moreover, were of little significance because 1993 - the reference year - was a peak in Air France's supply of capacity. Further, the condition applied only to passenger traffic. The Commission failed to explain why there was no limitation on Air France's capacity in connection with cargo traffic. Finally, the commitment concerning increases in capacity would not have prevented Air France from relying on wet leases to increase its capacity. 363 The applicants also claim that the Commission made a manifest error of assessment in linking the limitation on Air France's capacity to a decrease in its market share within the EEA. The Commission declared in the contested decision that, by limiting Air France's supply below market growth, `its market within the European Economic Area' would decrease to the benefit of its competitors (contested decision, OJ, p. 87) . According to the applicants, even in a situation where the maximum 2.3% (that is to say, 5% minus 2.7%) limitation on Air France's rate of increase in capacity applied, it was in a position to maintain its market share by little more than a 1% increase in its load factor. The United Kingdom also alleges the same manifest error of assessment, adding that it would follow from a 3.8% increase in the load factor (contested decision, OJ, p. 87) and an authorised increase of 2.7% in capacity that the number of Air France's passengers would be expected to grow by 6.6% (that is to say, 1.038 x 1.027 = 1.066), a figure in excess of the 5.5% projected annual market growth (contested decision, OJ, p. 77). 364 The Commission, the French Republic and Air France contend that those arguments are unfounded. Findings of the Court 365 In stating, in the contested decision, that the European civil aviation sector was not affected by structural overcapacity, in so far as existing overcapacity was likely to be only a temporary phenomenon, the Commission relied essentially on IATA statistics dating from 1993 and forecasting an annual increase in air traffic of 6% (contested decision, OJ, p. 82). IATA is an international body of world repute to which almost all airline companies belong and which regularly publishes traffic forecasts respected in the profession. The Commission was therefore entitled, without committing any manifest error, to rely on the figures published by that body in drawing its conclusion that there was no structural overcapacity. 366 That analysis is not contradicted by the report of the `Comité des Sages', which, while it recommended in general terms that a reduction in capacity should be considered, did not express any views on whether the existing overcapacity was structural or temporary (Annex 13 to the application in Case T-394/94, pp. 18 and 22). Furthermore, as Air France pointed out before the Court, without being challenged, developments in air transport have confirmed the Commission's analysis, since overcapacity has been reabsorbed in the interim. 367 That being so, the finding that there was no structural overcapacity entitled the Commission to conclude that the state of the aviation industry did not require general capacity cut-backs (contested decision, OJ, p. 82). It necessarily follows that the Commission did not commit any manifest error of assessment by not imposing a reduction in the capacity of Air France or Air Charter. On this view, therefore, the Commission was not under an obligation to analyse, in regard to capacity, the air routes on which Air France and its subsidiaries were in competition with other European carriers, but could properly confine itself to imposing limitations on Air France's expansion, in so far as those limitations did not compromise the company's prospects of regaining its financial viability and competitiveness. Those considerations also apply to the freight sector, which, as has been confirmed above (paragraph 336), is a significant activity for Air France. 368 Having regard to Air France's special position as one of the three major European airline companies, the reference to capacity reductions made by other companies of much more modest dimensions, such as Aer Lingus, TAP, Sabena or Olympic Airways, is irrelevant. The same holds true for the reference to the motor vehicle market in the 1980s, no evidence having been adduced to establish the specific relevance of that market to the analysis of the civil aviation sector for the years 1992 to 1994 and its medium-term prospects (1994 to 1997). As for the risk that Air Inter might be used to increase Air France's capacity, suffice it to recall that the two companies were to be regarded as mutually independent for the duration of Air France's restructuring. In regard, finally, to wet leases, the Commission has stated before the Court that any flight by an aircraft leased with its crew would be taken into account as an Air France flight for the purposes of condition No 8. The applicants noted that statement but did not challenge it. 369 Regarding the claim that condition No 8 was too restricted, it must be acknowledged that it covered only routes between France and other EEA countries and thus did not limit Air France's supply on routes between two EEA countries other than France, on routes within an EEA country other than France, or on domestic French routes. By confining itself to the France-EEA network, however, the Commission did not exceed the bounds of its broad discretion. 370 The Commission was entitled to leave the domestic French market out of account on the ground that Air France operated only one domestic route, since the French domestic carrier was then - and for the medium-term future - Air Inter and the exclusion of French domestic routes could thus have had no more than a negligible economic impact. The same applies with regard to the routes within any EEA country other than France, since - under Article 3(2) of Regulation No 2408/92 and Point 64.A, Chapter VI, of Annex XIII to the EEA Agreement (Transport - List provided for in Article 47) (OJ 1994 L 1, p. 422), as amended by Decision No 7/94 of the EEA Joint Committee amending Protocol 47 and certain Annexes to the EEA Agreement (OJ 1994 L 160, p. 1, at p. 87) - the EEA Member States were not required to authorise the exercise of cabotage rights prior to the end of Air France's restructuring period. Consequently, operation of such routes could be regarded as exceptional and economically insignificant. That consideration is equally relevant to the operation of routes between two EEA countries other than France, since the Commission was justified in discounting the economic significance of such an activity without any link with Air France's hub in Paris. 371 So far as concerns the claim that there was a failure to appreciate the effects that a limitation on Air France's capacity would have on the development of its market share, it must be acknowledged that the phrase featuring in the contested decision, to the effect that `[b]y limiting Air France's supply even below market growth its market within the European Economic Area will decrease, to the benefit of its competitors' (contested decision, OJ, p. 87), may appear mistaken in so far as the market share of an undertaking depends not on the volume of its capacity but on its degree of utilisation. It should, however, be borne in mind that Air France's supply - that is to say, capacity - was expressed in condition No 8 in terms of the number of seats available. By specifying that its supply was to be limited to within the forecast market growth, the Commission thus sought to restrict only Air France's prospects of sharing in that growth - in other words, its potential market share defined by the number of seats available. The Commission has explicitly stated before the Court that the limitations on supply imposed on Air France were in no way intended to prevent achievement of its restructuring plan, which envisaged an increase in productivity, it being possible for both productivity and effective market share to increase due to an improvement in the load factor. Returned to the context of the objectives served by Air France's restructuring, the contested phrase does not, therefore, express any manifest error on the Commission's part. 372 Finally, as regards the claim that the Commission allowed Air France the opportunity to exceed the forecast traffic growth of 5.5%, suffice it to note that the Commission has stated, without any challenge on this point, that the forecast increase of 3.8% in Air France's load factor related to the three-year restructuring period and was not an annual rate, this latter rate amounting approximately to 1.2%. Applying the method of calculation proposed by the United Kingdom, the number of Air France's passengers ought, consequently, to have increased by 3.9% (1.012 x 1.027 = 1.039), a figure below the forecast annual growth of 5%. 373 It follows that the arguments directed against condition of authorisation No 8 must be rejected. (f) Condition of authorisation No 9 374 Under this condition, the French authorities were required to `ensure that Air France does not, during the period covered by the Plan, apply tariffs below those of its competitors for an equivalent supply on the routes that it operates within the European Economic Area'. Summary of the applicants' arguments 375 The applicants consider that the limitation imposed on Air France's pricing freedom was ineffective. The wording of the condition suggests that it applied only to Air France's existing routes, that is to say, those which it was operating at the time from Paris and the French regions to other destinations within the EEA, and vice versa. They submit that Air France was offering a panoply of promotional fares. In view of the fact that those fares already existed at the time of the contested decision, it is arguable that they were not covered by the condition. Since the contested decision, Air France has continued to offer similar promotions. In any case, airlines control their average fares not so much by increasing or decreasing fare levels as by controlling access by passengers to the different fare categories. Air France could thus undercut prices by allocating more seats to such promotional fares. Furthermore, the applicants submit, it is in many cases impossible for a third party to know what tariffs are charged by a competitor as they are secret. The products offered by carriers on the same route are also so varied and so difficult to compare with one another that it will be very difficult in most cases to establish that a given tariff is lower than another. 376 Air France, the applicants further argue, was not prevented from exerting downward pressure on prices by flooding a specific route with excess capacity, provided that it decreased its capacity on other routes. Finally, the condition under consideration did not cover Air France's pricing of products or services in other air transport-related areas, such as aircraft maintenance. Nor is it clear whether the expression `on the routes that it operates within the European Economic Area' covered the provision of charter services by Air Charter. 377 The Maersk companies add that, because of the imprecision of condition No 9, Air France was able to use the aid to introduce and subsidise the operation of more costly levels of service offered under the guise of an `equivalent offer'. The recent announcement by Air France of a FF 500 million revamp of its long-haul service was a case in point. As a consequence, competitors who do not have the benefit of State aid must respond either by introducing higher levels of service or by reducing prices. The Kingdom of Sweden also points to the very broad scope of the terms `price leadership' and `equivalent offer', which give rise to legal uncertainty. Those terms, it argues, are not apt to thwart Air France's increasing the availability of discount prices in connection with the increases in capacity on specific routes. 378 The Commission contends that those arguments are unfounded. Findings of the Court 379 In the first place, nothing in the wording of condition No 9 justifies the interpretation that it applied only to the routes served by Air France at the time when the contested decision was adopted. Rather, it follows from that wording that the prohibition of price leadership applied to all of the routes operated by Air France `during the period covered by the Plan', which also covered new routes opened after the contested decision had been adopted. 380 Next, it must be noted that, by virtue of condition of authorisation No 1, Air Charter, as a company in which Air France held more than 50% of the capital, was also covered by condition No 9. 381 As for the alleged opportunities for Air France to dilute the conditions governing access to promotional prices and to flood certain routes with excess capacity, the Court takes the view that the Commission was entitled to regard those possibilities as unrealistic, given that Air France was obliged, under the supervision of the Commission and the independent consultants pursuant to Article 2 of the contested decision, to implement fully its restructuring plan, which provided, inter alia, for improvements in productivity. 382 The other arguments put forward are confined merely to allegations that condition No 9 could not be applied effectively and cannot therefore be considered in the present context (see paragraph 292 above). 383 Consequently, the arguments directed against condition of authorisation No 9 must be rejected. (g) Condition of authorisation No 10 384 This condition required the French authorities not to `grant preferential treatment to Air France in the matter of traffic rights'. Summary of the applicants' arguments 385 The applicants take the view that the Commission was wrong to consider that this condition would be effective. Since the entry into force of Regulation No 2408/92 on 1 January 1993, the granting of traffic rights has become irrelevant in regard to international routes within the Community and, since 1 July 1994, within the EEA. Those rights are enjoyed automatically by EEA airlines. The applicants also accuse the French authorities of misapplying Regulation No 2408/92 and protecting the interests of Air France and Air Inter. 386 They submit that the condition in fact applied only to the operation of domestic routes. Even there, it was largely irrelevant because Air France operated only one domestic route and non-French EEA airlines did not have to obtain traffic rights in respect of the French domestic market. In any event, until 1 April 1997 those airline companies had only limited access to that market. In addition, on most of the lucrative routes Air Inter's rights were protected by the French authorities on the basis of Article 5 of Regulation No 2408/92, under which exclusive concessions on domestic routes could continue temporarily. 387 They contend that, even if the condition had been relevant, it would have been ineffective since the persons to whom the granting of traffic rights had been delegated were among the members of the board of directors of Air France or of the board of the holding company. This, in their view, engendered a risk of discrimination for competing air transporters which could not be averted by a mere commitment. 388 The applicants point out that Member States may require airlines to submit operating programmes for any specific route prior to the start of services. In France, the task of clearing or refusing to clear operating programmes is carried out by the head of the Direction Générale de l'Aviation Civile (Directorate-General for Civil Aviation) and by the head of the Service du Trafic Aérien (Air Traffic Service). Those authorities may effectively prevent airlines from exercising their automatic traffic rights by illegally refusing to clear operating programmes. The events leading to and following the adoption of Commission Decision 94/290 (cited above in paragraph 266) illustrate this; the applicants refer to a number of letters from the above authorities containing such refusals. 389 In any event, Air France, the Direction Générale de l'Aviation Civile and the Service du Trafic Aérien all come within the general supervision of the Minister of Transport. The case-law of the Court of Justice confirms that such organic links between an undertaking competing on a market with other undertakings and the bodies regulating that market contravene Article 90 of the Treaty, in conjunction with Article 86, because of the very risk of discrimination inherent in such a situation (Case C-202/88 France v Commission [1991] ECR I-1223, paragraphs 51 and 52; Case C-69/91 Decoster [1993] ECR I-5335, paragraphs 12 to 22). 390 The Commission contends that those arguments are unfounded. Findings of the Court 391 With regard to the allegations to the effect that condition No 10 is too limited, it should be noted that European airline companies must still obtain traffic rights for routes between the EEA and non-EEA destinations, which are not covered by Regulation No 2408/92. As the Commission has pointed out before the Court, Air France is in competition on those routes with other French airline companies such as TAT, Euralair, Corsair, AOM and Air Liberté. Condition No 10 was therefore relevant for that air traffic sector. The same applies with regard to the traffic covered by Regulation No 2408/92 in so far as, irrespective of actual traffic rights, the national authorities may, following a formal authorisation procedure, decide on the detailed rules for applying that regulation. Furthermore, the applicants and the interveners supporting them have specifically claimed that the French authorities misapplied the provisions of that regulation for the purpose of protecting the interests of Air France and Air Inter. 392 It should be added that, while the principle of non-discrimination was the basis for requiring the French authorities not to accord preferential treatment to Air France, the usefulness of condition No 10 lay, as has already been stated above (paragraph 348), in the fact that it allowed the Commission to refer the matter directly to the Court of Justice without first being required to institute the procedure under the first subparagraph of Article 93(2) or under Article 169 of the Treaty. 393 The other arguments put forward refer to the risk that the French authorities, because of their close links with Air France, might have prevented other companies from asserting their traffic rights. They are thus confined to questioning whether condition No 10 could be effectively applied and cannot therefore be considered in the present context (see paragraph 292 above). 394 It follows that the arguments directed against condition of authorisation No 10 must be rejected. (h) Condition of authorisation No 11 395 This condition required the French authorities to ensure that `Air France does not operate, during the period covered by the Plan, more scheduled routes between France and the other countries in the European Economic Area than it did in 1993 (89)'. Summary of the applicants' arguments 396 The applicants take the view that this condition was ineffective in so far as it provided a maximum cap but did not prevent Air France from opening new routes and closing others. Air France could also increase the number of routes it operated beyond the limit of 89 by means of wet leases, and the number of points served to and from France by introducing indirect routings via other Member States, as continuations of existing routes, the London-Paris route, for instance, becoming London-Paris-Rome. Air Inter, the applicants submit, was already beginning to serve European routes previously operated by Air France, with a view to the merger envisaged in 1997. As a result, Air France was in a position to open new routes up to the limit of 89; whenever it wished to open a new route, it needed only to hand over one of its existing routes to Air Inter, in the knowledge that all their European operations would in any event be merged in 1997. 397 Regarding the transfer of routes from Air France to Air Inter, the applicants recall the position stated by the director of the Air France group, as reported in a press article published in September 1994. According to that report, Air Inter was to recover a number of routes from Air France during the following two years: under its own designation, it was to operate flights to the Maghreb countries, the Iberian Peninsula, Great Britain and Ireland. The directors of the group considered themselves entitled to alter designations in this way, particularly since Air Inter was not affected by the same capacity limitations. 398 Finally, the applicants note that statistics compiled by the Official Airline Guide indicate that Air France operated only 64 routes within the EEA in May 1994. As a result, the Commission's acceptance of the limitation of Air France's network to 89 routes left it free to open 25 additional routes between France and other EEA States. Moreover, condition No 11 did not cover domestic French routes or routes between two EEA States other than France. 399 The Commission, the French Republic and Air France contend that those arguments are unfounded. Findings of the Court 400 Regarding wet leases and extensions of existing routes, the Commission has stated before the Court that these two types of measure came within the ambit of condition No 11. The applicants noted that interpretation but did not challenge it. 401 So far as the reference to Air Inter is concerned, suffice it to recall that the conduct of that company, which was independent of Air France for the duration of its restructuring, is irrelevant in the present context, a fortiori since the allegations aired concerning the transfer of routes between Air France and Air Inter are based on a press article which appeared after the contested decision was adopted. 402 Regarding the exclusion of domestic French routes and routes between EEA States other than France, it is sufficient to point out that the Commission was entitled to take the view that the economic impact of those routes was so negligible that it could be discounted in the present context (see paragraph 370 above). 403 As to the fact that Air France could open new routes and close others, while respecting the maximum figure of 89 routes, the Commission has properly pointed out before the Court that it could not have sought to prevent Air France from reacting to market demand, provided that all the conditions of authorisation were complied with. Without such flexibility, the success of the restructuring plan designed to restore Air France's financial viability and competitiveness would have been compromised. 404 Finally, in so far as it has been contended that Air France was operating only 64 routes in the EEA in May 1994, with the result that the Commission's acceptance of a network of 89 routes authorised Air France to open 25 additional routes, the Court takes the view that the Commission did not exceed the limits of its broad discretion in accepting the number of routes which Air France had operated in 1993, just as it limited, under conditions of authorisation Nos 8 and 12 respectively, the supply of Air France and Air Charter to the level reached in 1993. 405 It follows that the arguments directed against condition of authorisation No 11 cannot be accepted. (i) Condition of authorisation No 12 406 This condition required the French authorities to `limit, during the period covered by the Plan, the supply of Air Charter to its 1993 level (3 047 seats and 17 aircraft), with a possible annual increase corresponding to the market growth rate'. Summary of the applicants' arguments 407 The applicants submit that the limitation on Air Charter's supply was ineffective. Air Charter is not an air carrier but a marketing agency whose activity is to charter aircraft to tour operators. Of the 17 aircraft operated by Air Charter in 1993, only eight belonged to the Air France group and nine were leased. The leases were to terminate during 1995. The supply limitations were offered by the French authorities and accepted by the Commission at a time when Air Charter had already notified the lessors that it would not renew its leases. Air Charter was therefore allowed to add up to nine replacement aircraft to its fleet and thus potentially to increase its capacity by 20% to 25% on an already highly competitive market. The lessors recovering their nine aircraft would necessarily have competed with Air Charter, which, as a beneficiary of the aid, would have been able to lease its aircraft to tour operators at artificially low prices. 408 The applicants add that the Plan did not contemplate any restructuring measure for Air Charter, which would nevertheless receive part of the aid. The supply limitation was thus an open invitation for a State-aided company, not subject to restructuring measures, to use the aid to double its fleet and, in any event, to increase supply on the French charter market. 409 The United Kingdom takes the view that Air France or Air Charter ought to have made a commitment that Air Charter would buy only the number of aircraft required to replace the capacity lost by non-renewal of those leases. 410 The Commission, the French Republic and Air France contend that those arguments are unfounded. Findings of the Court 411 Concerning the risk that Air Charter might apply artificially low prices, suffice it to point out that the company, more than 50% owned by Air France, was required to comply with condition of authorisation No 9, which prohibited it from applying tariffs below those of its competitors for an equivalent supply. The Commission was accordingly entitled to form the view that Air Charter would manage its supply on the basis of market requirements alone, in the same way as any other commercial undertaking. 412 Nor, inasmuch as it prohibited any increase in Air Charter's supply beyond its 1993 level, subject to market growth, did condition No 12 have the effect of authorising a doubling of the company's operating fleet. As the Commission has stressed before the Court, it was in no way obliged to require Air Charter either to renew the leasing contracts which it had just terminated for commercial and financial reasons or to refrain from replacing those aircraft whose leases had expired, which would have penalised Air Charter by reducing its operating fleet by more than 50%. 413 In so far as it has been contended that Air Charter would receive part of the aid even though the Plan did not envisage any restructuring measure for the company, suffice it to state that Air France's restructuring plan did indeed concern the charter sector of the Air France group (p. 22 of the Plan) and that, in any event, condition of authorisation No 6 prohibited any use of the aid for purposes other than restructuring. 414 The arguments directed against condition of authorisation No 12 must accordingly be rejected. (j) Condition of authorisation No 13 415 The French authorities were required under this condition to `guarantee that any transfer of goods or services from Air France to Air Charter reflects market prices'. Summary of the applicants' arguments 416 The applicants consider that this condition was ineffective. It was, they submit, unworkable because the notion of `market price' is imprecise and required Air France to treat a subsidiary - the chairman of which had been appointed head of Air France's French operations - at arm's length while simultaneously granting it part of the aid. In addition, the commitment did not seek to control the sale of goods and provision of services by Air Charter to Air France, which therefore did not have to reflect market prices. 417 The Commission contends that those arguments are unfounded. Findings of the Court 418 In so far as the present arguments are limited to questioning whether condition No 13 could be effectively applied, suffice it to recall that they must be excluded from consideration in the present context (see paragraph 292 above). 419 To the extent to which it has been contended that this condition covered neither the sale of goods nor the provision of services by Air Charter to Air France, it must be noted that the Commission has stated before the Court, without being challenged, that Air Charter did not supply significant goods or services to Air France. In addition, the applicants in Case T-371/94 have themselves acknowledged, in connection with condition of authorisation No 12, that Air Charter was not an air carrier, but rather a marketing agency whose activity was to charter aircraft to tour operators and which had approximately 40 employees, but no mechanics or crew personnel (paragraph 234 of the application in Case T-371/94). In those circumstances, the Commission was justified in discounting the economic impact that such sales or provisions of services might have had. 420 It follows that the arguments directed against condition of authorisation No 13 cannot be upheld. (k) Conditions of authorisation Nos 15 and 16 421 The French authorities were required by these conditions to: - `[modify,] with the cooperation of Aéroports de Paris ..., as soon as possible, ... the traffic distribution rules for the Paris airport system in accordance with the Commission decision of 27 April 1994 on the opening of the Orly-London link' and - `ensure that the work required to adapt the two terminals at Orly carried out by Aéroports de Paris, and a possible saturation of one or other of those terminals, do not affect competitive conditions to the detriment of the companies operating there'. Summary of the applicants'arguments 422 The applicants submit that condition No 15 was no more than a shallow pretence, given the French authorities' clear intention not to comply with the decision of 27 April 1994, as evidenced already in May 1994 by the adoption of rules for the allocation of traffic rights within the Paris airport system which were in clear violation of Community rules. They add that, while the contested decision authorised Air France to receive the first tranche of the aid immediately, condition No 15 required that Air France's competitive advantage resulting from the Paris airport traffic distribution rules be eliminated at some time defined only by the terms `as soon as possible'. 423 The applicants emphasise the illusory nature of condition No 16, which, they claim, was violated even before it was imposed through the discriminatory conditions, established before the adoption of the decision, for the transfer of all French companies outside the Air France group from Orly West to Orly South and the regrouping of Air France and Air Inter at Orly West. Aéroports de Paris and Air France both come within the supervision of the Minister of Transport. Such organic links, the applicants argue, contravene Article 90 of the Treaty, in conjunction with Article 86, because of the inherent risk of discrimination to which they give rise. The plan to adapt the Orly terminals, they claim, was conceived in a way which made it difficult and costly for Air Inter's competitors to begin new services from Orly South. As a result, only a radical modification of the Plan could have avoided discrimination against Air France's competitors. 424 On a general level, the applicants submit, with regard to these conditions, that a commitment to obey the law cannot be considered as offsetting the aid's effects, since the French authorities must comply with the law in any event. 425 The Commission contends that those arguments are unfounded. Findings of the Court 426 The arguments directed against conditions Nos 15 and 16 are limited to emphasising that those conditions were both ineffective and lacking in utility. It is thus sufficient to point out, first, that arguments seeking only to question whether a condition governing authorisation of the aid could be effectively applied must be excluded from examination in the present context (see paragraph 292 above) and, second, that, on the assumption that the French authorities were already under a duty, by virtue of other Community law provisions, to comply with the obligations set out in conditions of authorisation Nos 15 and 16, the usefulness of those conditions lies in the fact that they enabled the Commission to refer the matter directly to the Court of Justice without first being obliged to institute administrative proceedings (see paragraph 348 above). 427 The arguments directed against conditions of authorisation Nos 15 and 16 must therefore be rejected. 428 Since none of the arguments directed against the conditions of authorisation has been upheld, the contention that the method chosen by the Commission to examine what impact the aid would have on the common interest was mistaken must be conclusively dismissed (see paragraphs 295 and 296 above). 429 It follows from the foregoing that, subject to paragraphs 238 to 280 above, all of the claims alleging that the Commission committed errors in forming the view that the aid was intended to facilitate the development of economic activity and did not adversely affect trading conditions to an extent contrary to the common interest must be rejected. The applicants and the interveners supporting them have been able to defend their rights and the Court has been able to exercise its power of review. Consequently, and with the exception of the assessment of the effects of the aid on the competitive position of Air France in regard to its network of non-EEA routes and the associated feeder traffic, the contested decision satisfies in that regard the requirements of Article 190 of the Treaty, and the claim that the statement of reasons was inadequate must therefore be rejected. The contentions alleging that the Commission committed errors in concluding that the restructuring plan was capable of restoring Air France's economic viability The alleged general inadequacy of the restructuring plan - Summary of the parties' arguments 430 The applicants and the interveners supporting them make the general criticism that the restructuring plan was inadequate and imprecise. The applicant in Case T-394/94 submits that the Commission failed adequately to demonstrate, in the contested decision, the extent to which the aid was necessary to finance the vague and inadequate proposals disclosed in the Plan, and that it failed to insist on a plan setting out precise details of the steps necessary to restore the viability of Air France. The applicants in both cases claim that the Commission failed to provide adequate reasoning for the contested decision, on the ground that it neglected to consider third-party comments filed during the administrative procedure. 431 The Commission takes the view that the contested decision is adequately reasoned on that point. As regards the substance, it states that it assessed the coherence and effectiveness of the restructuring plan on its merits and did not commit any errors of assessment or of law. - Findings of the Court 432 It is first necessary to consider whether the contested decision was adequately reasoned in regard to the restructuring plan drawn up and submitted by Air France, particularly in view of the essential grounds of complaint submitted by the parties concerned during the administrative procedure (see paragraph 96 above). 433 In this connection, it must be noted that the parties concerned stated, during the administrative procedure, that the restructuring plan was inappropriate, inadequate and excessively vague, and thus not capable of restoring Air France's viability. It was, they argued, even less stringent than the preceding plan, PRE 2, which had already been considered to be insufficient in August 1992. It did not constitute what was necessary for Air France, but only what was acceptable to France, since PRE 2, which was more stringent than the Plan here in issue, had been withdrawn because of union protests. Furthermore, the Commission ought to have taken account in this context of all the restructuring plans previously issued by Air France, which had all failed because of the political situation and the power of the unions. 434 The parties concerned emphasised that the restructuring plan would have no prospect of success if it were not possible to dismiss excess staff, cut wages and require staff to improve productivity. The only realistic means whereby to reduce Air France's costs, namely an increase in staff productivity, was envisaged on a voluntary basis. It was thus highly unlikely that the desired 30% increase in productivity would be achieved. The Plan did not recommend any reduction in the benefits enjoyed by Air France staff. It provided only for a reduction of 5 000 jobs over three years, whereas Lufthansa had shed 8 000 jobs over two years and British Airways 4 000 over one year. In addition, the Plan failed to take account of the overcapacity crisis within the Community air transport sector; indeed, it even envisaged an increase in the fleet and in capacity. 435 The parties concerned added that the amount of FF 20 billion provided for in the Plan as State aid was not clear. Referring to a press article, they pointed out that there were indications of a lack of transparency in Air France's accounts. The Commission, they argued, ought to have ensured that Air France's accounts were not hiding anything. Furthermore, the chairman of Air France stated in February 1994, in a press article, that the company had to obtain FF 8 billion by the end of March of that year; in the context of PRE 2, the sum of FF 5 billion was discussed. 436 Finally, the restructuring plan never mentioned the Air France group and did not impose any restriction on the group as a whole. It related only to Air France and did not allude to the group's future intentions regarding Air Inter. However, Air Inter was in equal need of restructuring. Consequently, the Commission ought to have insisted that the Plan also cover the operations of Air Inter and Air Charter. 437 In the light of those observations, the Court points out that, in the contested decision, the Commission traced the history of the various restructuring plans adopted by Air France with a view to resolving its financial problems. In September 1991, Air France adopted a first restructuring plan (CAP '93), which provided inter alia for a capital injection of up to FF 5.8 billion. In October 1992, after suffering a further deterioration in its financial situation, the Air France group adopted a second restructuring plan (PRE 1), which, however, proved in early 1993 to be unable to redress the situation of the group and was for that reason abandoned. In September 1993, a third plan (PRE 2) was launched, only to be withdrawn, in the face of union objection, in favour of the Plan (contested decision, OJ, p. 74). So far as the disputed restructuring plan is concerned, the Commission pointed out that it had been drawn up by Air France on the basis of a paper drafted by the consultants Lazard Frères, which also fixed the amount of recapitalisation needed to redress Air France's financial structure and profitability. The Commission stated that the Plan, whose purpose was to be attained between 1 January 1994 and 31 December 1996, provided for a 30% increase in Air France's productivity (contested decision, OJ, p. 75). 438 The Commission then went on to specify the `particular ... topics' on which the Plan focused, namely, a reduction in costs and financial expenses (through a decrease in investments, a reduction in operating costs and increased productivity coupled with a decrease in financial charges), a different conception of the product and better utilisation of resources (in particular through marketing initiatives, and at fleet and network level), reorganisation of the company and employee participation. The Commission added that implementation of the Plan was to be financed through the increase in capital and the sale of non-core assets (contested decision, OJ, pp. 75 and 76). 439 With regard to the assessment of the viability of the restructuring plan, the Commission took the view that it set out a number of measures that represented genuine efforts toward the restructuring of the airline. It recognised in particular the great efforts undertaken in the social field (wage freeze, block on promotions, better utilisation of working time, distribution of free shares to employees in compensation for reductions in wages). The staff concerned had approved the programme through a referendum. Following approval by the unions, the Commission stated that it was convinced that the social measures provided for in the Plan could be fully adopted and successfully implemented (contested decision, OJ, p. 82). 440 In addition, the Commission considered that the restructuring of the airline into profit centres designed to rationalise its operation represented one of the strong points of the Plan. It took the view that the improvements in productivity envisaged by the Plan would lead Air France to a `good average' position compared to other airlines, pointing out that it based its analysis on the ERPK efficiency indicator. After explaining how that unit of measurement functioned, the Commission found that Air France's productivity would improve by 33.3% during the restructuring period. The ratio to be achieved in 1996 was expected to he higher than the estimated average ratio of the seven other largest European airlines (Lufthansa, British Airways, KLM, Alitalia, Iberia, SAS and Swissair). In short, the Commission found that the Plan was capable of restoring the economic and financial viability of Air France, particularly since the French Government had made commitments that Air France would be run in accordance with commercial principles and treated as a normal undertaking (contested decision, OJ, p. 83). 441 That statement of reasons constitutes an adequate response to the observations of the parties concerned and indicates sufficiently the Commission's reasoning with regard to the general aspects of the restructuring plan. It demonstrates that the Commission did not overlook the preceding restructuring plans that had failed to restore Air France's position. In particular, the Commission noted the fact that PRE 2 had failed because it had not been accepted either by Air France's staff or by the unions, whereas the new plan did meet their approval. It is clear that only an achievable restructuring plan, even if less stringent than a previous unachievable plan, can have any chance of success. The Commission was thus under no obligation to provide more detailed reasoning on that point. 442 As to whether the measures in the restructuring plan were sufficient for attaining the intended objectives of rationalisation and debt repayment, the description of the measures envisaged and the setting up of the arrangements for supervision by the Commission under Articles 1 and 2 of the contested decision constitute a sufficient statement, as regards the reasoning of that decision, that the Commission believed that it was possible for the restructuring plan in question to be achieved and that it had reserved for itself the means of recourse that it thought appropriate, in the event that such achievement were compromised. If the conditions set out in Article 1 were not complied with, the Commission could refer the matter directly to the Court of Justice under the second subparagraph of Article 93(2) of the Treaty (see paragraph 348 above). Furthermore, Article 2 provided that proper implementation of the restructuring plan was a condition governing payment of the second and third tranches of the aid. 443 When the restructuring plan is considered in this light, the Commission was clearly not under an obligation to provide specific explanations comparing Air France's plan and those of other airlines such as Lufthansa and British Airways. Those plans related to other airlines restructured at different times. 444 The ground of complaint alleging lack of clarity in Air France's accounts was unsupported by any factual evidence. It merely referred to a press article and called on the Commission to take care that Air France's accounts were not hiding anything. The Commission was therefore under no obligation to state an express view on this point by indicating, in particular, whether or not it had acceded to that request. 445 In so far as it has been alleged that the restructuring plan in dispute could not be limited to Air France alone but ought to have covered other companies in the group, it is sufficient to point out that the Commission cannot require a Member State to draw up a restructuring plan for a company which, in that State's opinion, is not in need of restructuring. However, the question whether and to what extent the Commission, in examining and authorising a plan which seeks to restructure a company forming part of a group, may be required to take account of other companies in the group is not relevant to the reasoning of the contested decision in regard to the adequacy of the restructuring plan in question, which is confined to Air France. The questions concerning the involvement of the entire group have been addressed above in a separate context (paragraphs 298 to 324). The same applies with regard to the specific question of Air France's capacity, which was itself also the subject of specific examination above (paragraphs 357 to 373). 446 It follows that the reasoning of this part of the contested decision must be considered to comply with the requirements of Article 190 of the Treaty. 447 With regard to the general criticism that the restructuring plan was inadequate and imprecise, suffice it to point out that the Commission enjoys a broad discretion when assessing a plan designed to restructure an undertaking in economic and financial difficulties, and that its assessment also frequently relates to confidential information to which competitors of the undertaking concerned may not have access. Consequently, it is only in cases where the Commission has committed a particularly manifest and serious error when assessing such a plan that the Court may rule against the authorisation of State aid intended to finance such restructuring. In the present instance, no such error has been established. However, the Court points out that it has been unable to examine the productivity targets to be achieved by Air France with specific regard to its non-EEA air routes, since the reasoning on this point in the contested decision is insufficient (see paragraph 280 above). 448 Subject to this last proviso, the arguments directed against the Commission's approval of Air France's restructuring plan must be rejected. 449 The contention of the applicants in Case T-371/94 that this plan in reality sought not to restore Air France's viability but to respond to government objectives therefore has no basis in fact or in law. The remaining contentions 450 The applicants and the interveners supporting them argue that Air France's restructuring plan wrongly excluded consideration of Air Inter, Air France's sale of a maximum of assets not linked to air transport, and an overall reduction in capacity. In addition, they contend, that plan was based extensively on the ERPK indicator designed to measure Air France's productivity, even though it was an inappropriate unit of measurement for that purpose. Furthermore, the measures envisaged by Air France's restructuring plan were, they claim, much less severe than those adopted by other airline companies. 451 In that regard, it is enough to refer to what has been stated above, in the examination of other contentions, in order to conclude that none of the above arguments directed against Air France's restructuring plan can be upheld. 452 As regards the claim of the applicants and the interveners supporting them that the Commission was wrong to authorise the purchase of 17 new aircraft as a feature of the restructuring plan, the Court points out that, in the absence of clarification as to the financing of that investment and explanation as to its legal nature, it is not in a position to examine this contention. III - The plea alleging infringement of Article 155 of the Treaty 453 In so far as the applicant in Case T-394/94 submits that, in failing to apply Articles 92 and 93 of the Treaty correctly, the Commission also infringed Article 155 of the Treaty, it must be stated that the examination of the substantive pleas raised by the applicants and the interveners supporting them has failed to disclose any error of assessment or of law in the application of Articles 92 and 93. Furthermore, the purpose of Article 155 of the Treaty is to provide a general definition of the Commission's powers. It cannot therefore be argued that each time the Commission infringes a specific Treaty provision such infringement involves an infringement of the general provision of Article 155. It follows that this plea must in any event be dismissed. IV - Conclusion 454 Examination of all of the pleas in law raised in the present litigation has made it clear that the contested decision suffers from insufficient reasoning on two points, concerning, respectively, the purchase of 17 new aircraft for FF 11.5 billion (see paragraphs 84 to 120 above) and the competitive position of Air France on the network of its non-EEA routes with the associated feeder traffic (see paragraphs 238 to 280 above). Those two points are of crucial importance within the general scheme of the contested decision. That decision must consequently be annulled. In those circumstances, it is no longer necessary to rule on the request by the applicant in Case T-394/94 that all relevant files and documents held by the Commission should be produced. Decision on costs Costs 455 Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been asked for in the successful party's pleadings. Since the Commission has been unsuccessful and the applicants and the Maersk interveners have asked for costs to be awarded, the Commission must be ordered to pay the costs. 456 Pursuant to Article 87(4) of the Rules of Procedure, the French Republic, the Kingdom of Denmark, the United Kingdom, the Kingdom of Sweden, the Kingdom of Norway and Air France must bear their own costs. Operative part On those grounds, THE COURT OF FIRST INSTANCE (Second Chamber, Extended Composition) hereby: 1. Joins Cases T-371/94 and T-394/94 for the purposes of judgment; 2. Annuls Commission Decision 94/653/EC of 27 July 1994 concerning the notified capital increase of Air France; 3. Orders the Commission to pay the costs, including those of the interveners Maersk Air I/S and Maersk Air Ltd; 4. Orders Compagnie Nationale Air France, the French Republic, the Kingdom of Denmark, the United Kingdom of Great Britain and Northern Ireland, the Kingdom of Sweden and the Kingdom of Norway to bear their own costs.

COURT OF APPEAL FOR ONTARIO CITATION: Airia Brands Inc. v. Air Canada, 2017 ONCA 792 DATE: 20171017 DOCKET: C61094 Gillese, MacFarland and Pepall JJ.A. BETWEEN Airia Brands Inc., Startech.Com Ltd. and QCS-Quick Cargo Service GMBH Plaintiffs (Appellants) and Air Canada, AC Cargo Limited Partnership , Societe Air France, Koninklijke Luchtvaart Maatsch appij N.V. dba KLM, Royal Dutch Airlines, Asiana Airlines Inc., British Airways PLC , Cathay Pacific Airways Ltd., Deutsche Lufthansa AG, Lufthansa Cargo AG, Japan Airlines International Co., Ltd., Scandinavian Airlines System, Korean Air Lines Co., Ltd. Cargolux Airlines International, Lan Airlines S.A., Lan Cargo S.A., Atlas Air Worldwide Holdings, Inc., Polar Air Cargo Inc., Singapore Airlines Ltd., Singapore Airlines Cargo PTE Ltd., Swiss International Air Lines Ltd., Quantas Airways Limited, and Martinair Holland N.V. Defendants ( Respondents ) Proceeding under the Class Proceedings Act, 1992 , S.O. 1992, c. 6 Paul Bates, Linda Visser and Emilie McLachlan Maxwell, for the appellants Katherine L. Kay, Danielle K. Royal and James S.F. Wilson, for the respondents Air Canada and AC Cargo Limited Robert S. Russell and Denes A. Rothschild, for the respondent British Airways PLC Lisa La Horey and Brent Kettles, for the intervener Attorney General of Ontario Heard: December 13 and 14, 2016 On appeal from the order of Justice Lynne Leitch of the Superior Court of Justice, dated August 26, 2015, with reasons reported at 2015 ONSC 5332. Pepall J.A.: A. Overview [1] This appeal concerns the applicable test for determining jurisdiction over absent foreign claimants (“AFCs”) in a class action involving a claim of conspiracy to fix prices of air freight shipping services for shipments from or to Canada. The appellants allege that the airlines Air Canada, AC Cargo Limited Partnership (“Air Cargo”), and British Airways PLC (“BA”) (collectively the “respondents”) [1] and other airlines, operating in locations all over the world, participated in a conspiracy to increase the price of air freight shipping services between the years 2000 and 2006. Specifically, they allege that the respondents and others conspired to limit or unduly lessen the supply of air freight shipping services, or to enhance unreasonably the price of associated fuel and security surcharges. [2] The appellants sought an order certifying the class action with a class that included AFCs.  The proposed class was to include persons who directly purchased air freight shipping services for shipments from or to Canada and indirect purchasers who purchased such services through a freight forwarder.    The case is limited to the Canadian parameters of the Canadian conspiracy; that is to say, the illegal price fixing of fuel and security surcharges on air freight shipping services for shipments from or to Canada. [3] In response, the respondents and others brought a motion for a declaration that the Ontario court did not have jurisdiction over AFCs and that the class should be defined to exclude such parties (the “jurisdiction motion”).  For the purposes of the motion, AFCs were defined as persons who reside outside of Canada, entered into contracts for Air Freight Shipping Services [2] outside of Canada, suffered any alleged losses outside of Canada, except those who expressly consent to the jurisdiction of the Ontario court. [4] The respondents also served a notice questioning the constitutional applicability of the real and substantial connection test and ss. 27(3), 28(1), and 29(3) of the Class Proceedings Act, 1992 (“ CPA ”), which codify Ontario’s opt out class proceedings regime, to AFCs. [5] The respondents sought an order staying the proposed action insofar as it related to AFCs on the basis of jurisdiction simpliciter and alternatively, on the basis of forum non conveniens . [6] The motion judge granted the respondents’ jurisdiction motion, concluding that the real and substantial connection test for jurisdiction simpliciter should not be applied.  Rather, the motion judge held that the jurisdictional analysis was to be guided by principles of order, fairness, and comity. She concluded that, because AFCs were not present in Ontario, or had not consented in some way to the jurisdiction of the court, jurisdiction had not been established.  In the alternative, the motion judge held that there was no real and substantial connection and, in any event, Ontario should decline to exercise jurisdiction on the basis of forum non conveniens .  In a subsequent order, she certified the action as a class proceeding, but excluded AFCs from the class. [7] The appellants appeal from the motion judge’s jurisdiction order.  The Attorney General for Ontario has intervened in opposition to the motion judge’s conclusion that the real and substantial connection test was inapplicable to AFCs. [8] For the reasons that follow, I would allow the appeal.  The motion judge erred in law in concluding that the real and substantial connection test was inapplicable and that jurisdiction existed only if AFCs were present in Ontario or consented to the Ontario court’s jurisdiction.  Moreover, she erred both in concluding that if the real and substantial connection test were to be applied, the test was not satisfied, and in her consideration of the principles governing forum non conveniens . B. Facts (1) Nature of the Claim [9] Air freight shipping services are shipments of goods by air.    Airlines typically sell the ir air freight shipping services to freight forwarders.  Shipping customers in turn purchase these services from the freight forwarders.  The freight forwarders in essence serve as intermediaries between the airlines and the shipping customers. The airlines may not know the identity of the shipper if a freight forwarder is used.  Airlines also sell air freight shipping services directly to shipping customers.  Air Canada, for example, has thousands of direct purchase shipper customers located throughout the world , but these direct purchasers represent only a small portion of Air Canada’s customer base for air freight services. [10] The appellants, the representative plaintiffs in this class action, include Airia Brands Inc., a Canadian manufacturer located in London, Ontario, and Startech.Com Ltd., a Canadian supplier also located in London, Ontario, both of whom purchased air freight shipping services from freight forwarders for the shipment of their products by air from and to Canada.  QCS-Quick Cargo Service GMBH is a German freight forwarder that purchased air freight shipping services for shipments from and to Canada. The appellants assert a damages claim for conspiracy under the Competition Act , R.S.C. 1985, c. C-34 .  They also plead that the respondents are liable for the tort of civil conspiracy. [11] The respondent airlines entered into transactions with customers, including AFCs, for shipments from and to Canada.  Air Canada is a company domiciled in Canada.  Air Canada’s principal hub location for all its services, including air freight shipments, is Toronto (Pearson) International Airport.  Air Cargo is a limited partnership that is controlled by Air Canada. Air Cargo provides air freight services.  It has over 1,000 employees, about half of whom are located in Ontario.  Approximately 50% of AC Cargo’s Canadian cargo transportation revenue is generated from Toronto-based shipments.  At the times material to this action, BA had cargo shipping operations located at Toronto (Pearson) International Airport.  BA operated 16 direct flights per week from the U.K. to Toronto.  Approximately 75% of its Canadian air cargo customers were located in the Greater Toronto Area. [12] At the core of this class action is the issue of whether the respondents are, as the appellants allege, liable for conspiracy to fix prices for air freight shipping services, by imposing certain surcharges or extra fees on base prices for air freight shipping services.  As mentioned, the appellants’ claim is limited to the Canadian parameters of the global conspiracy; that is to say, the illegal price fixing of fuel and security surcharges on air freight shipping services for shipments from or to Canada.  In furtherance of the conspiracy, the appellants allege that at least three in-person meetings occurred in Canada, of which at least one was in Ontario. (2) Guilty Pleas and Settlements [13] The conspiracy has been the subject of guilty pleas and judicial findings of guilt around the world.  In Canada, the pleas generally related to outbound shipments only, but Cathay Pacific Airways Ltd. pled guilty to fixing surcharges on air freight shipping services to and from Canada. [14] The action that is the subject matter of this appeal originally involved claims against other defendants, but those claims have been settled, leaving only three respondents remaining: Air Canada, Air Cargo, and BA.  The first settlement by parties to the action was entered into in 2006.  The class action as against Lufthansa AG, Lufthansa Cargo AG, and Swiss International Airlines Ltd. was certified on consent as a class proceeding in 2008 for settlement purposes. A global class was certified. An extensive notice program was undertaken worldwide, at a cost in excess of US$5 million. The notice program was to provide fair and adequate notice to class members by informing them about the litigation, the settlements, and the right to opt out.  The notice program employed a number of notification methods, including mailed notice to approximately 310,000 persons, as well as notice by publication.  The respondents approved the formal order made by the court.  That said, the terms of the settlement did not bind them on any issue, including whether the action should be certified as a class proceeding. [15] After that settlement, the action was certified on consent for settlement purposes with a number of other defendants who entered into settlement agreements with the appellants . The respondents did not oppose the certification orders related to the settlement agreements , which again certified a global class .  The se subsequent settlement agreements similarly contained express provisions that the terms of the settlement did not bind the respondents in any way. (3) U.S. Class Proceeding [16] Over a decade ago, a parallel class proceeding was commenced in the United States (the “U.S. class action”).  The U.S. class action was certified on behalf of persons who purchased air freight shipping services for shipments directly from or to the United States : In re Air Cargo Shipping Services Antitrust Litigation , MDL No. 06-1775, 2014 WL 7882100 (E.D.N.Y. Oct. 15, 2014), report and recommendation adopted in full by 2015 WL 5093503 (E.D.N.Y. Jul. 10, 2015), at p. 1 .  The certified class is global in nature, including both domestic and foreign purchasers of air freight services. [17] Prior to the U.S. certification motion, the defendants in the American proceeding brought a motion to dismiss the claims of the representative plaintiffs on a number of grounds.  In an order resulting from that motion, the U.S. court maintained the claims for inbound and outbound shipments, but dismissed claims for shipments to, from, or within the European Union (excluding from or to the United States) , because they were based on alleged violations of European law.  The court declined to exercise jurisdiction over the claims brought under European law on the grounds of forum non conveniens and international comity.  However it assumed jurisdiction of claims brought under U.S. law that involved shipments between the European Union and the United States . The court specifically considered whether foreign plaintiffs had standing to bring claims under the applicable U.S. law, holding that they did. See: In re Air Cargo Shipping Services Antitrust Litigation , MDL No. 06-1775, 2008 WL 5958061 (E.D.N.Y. Sept. 26, 2008) report and recommendation on these issues adopted by 2009 WL 3443405 (E.D.N.Y. Aug. 21, 2009), affirmed 697 F.3d 154 (2nd Circ 2012). [18] In making its decision, t he U.S. court rejected the defendants’ argument that the conduct at issue – charging fixed prices for air cargo services – occurred outside the United States. The U.S. court stated it would take a broader view of the conduct relevant to the plaintiffs’ claims, and considered not just where communications about the price fixing occurred, but also where the air cargo services themselves were rendered.  It concluded that it was significant that air freight services are not rendered in one location , but are “ performed along entire transportation routes, touching both the country of origin and the country of destination ”: In re Air Cargo (Sept. 26, 2008), at p. 13 . [19] If the appellants succeed on this appeal, the Canadian and U.S. class proceedings would be substantially aligned. (4) The Motion Judge’s Jurisdiction Reasons [20] Before considering the appellants’ certification motion, the motion judge addressed the jurisdiction motion brought by the respondents and three other airlines who have since settled the proceeding against them.  She commenced her analysis by noting that the representative plaintiffs sought to certify the following class pursuant to their certification motion: All persons (excluding Defendants, their respective parents, employees, subsidiaries, affiliates, officers, directors, persons currently resident in Australia who paid more than AUD$20,000 for the carriage of goods to and from Australia by air during the period January 1, 2000 to January 11, 2007, and persons who commenced litigation in a jurisdiction other than Canada prior to the conclusion of the trial of the common issues) who purchased Airfreight Shipping Services* during the period January 1, 2000 to September 11, 2006, including those persons who purchased Airfreight Shipping Services through freight forwarders, from any air cargo carrier, including, without limitation, the Defendants, but not including Integrated Air Cargo Shippers.** *Airfreight Shipping Services means airfreight cargo shipping services for shipments to or from Canada (excluding shipments to and from the United States). **Integrated Air Cargo Shipper is defined as an air cargo shipper that manages an integrated system of people, airplanes, trucks and all other resources necessary to move airfreight cargo from a customer’s point of origin to the delivery destination, and for greater certainty, includes but is not limited to FEDEX, UPS, DHL and TNT. [21] The class that the appellants sought to certify was subject to two exceptions: persons who commenced litigation outside of Canada prior to the conclusion of the trial of the common issues, and persons and shipments that fell within the scope of the proposed class actions that had been commenced in the United States and Australia. [22] The motion judge identified two issues to be addressed: did the court have jurisdiction over AFCs and if so, should it be declined based on forum non conveniens . [23] After describing the parties’ positions, she first turned to the expert evidence proffered by them. At para. 112 she concluded, based on the affidavits presented, that the prevailing law outside of Canada is that jurisdiction is based on presence, consent, or submission; that is, parties may only become plaintiffs if they bring the claim themselves or join in an existing claim.  At para. 113, she agreed with the original respondents “that the real and substantial connection test is a radical departure from the norms adhered to by other countries and the Ontario opt-out regime set out in s. 27(3) of the [ CPA ] cannot be applied outside of Ontario.” At paras. 114-115 she accepted, based on the record before her, the respondents’ argument that an Ontario class action judgment would not be recognized and enforced by a foreign court, exposing the respondents to the potential of double recovery by AFCs. [24] Having made these findings, the motion judge then turned to the issue of jurisdiction, noting that the CPA , a procedural statute, could not create jurisdiction where there is none.  She considered some of the governing jurisprudence. [3] She distinguished Currie v. McDonald’s Restaurants of Canada Ltd. (2005), 74 O.R. (3d) 321 (C.A.), which adopted the real and substantial connection test to address whether an Illinois court had jurisdiction over non-resident Ontario class members in the context of enforcement of a foreign judgment. In contrast, the case before her raised the question of whether the court should assume jurisdiction where foreign conflict of law principles precluded other countries from recognizing an Ontario judgment. [25] The motion judge also considered Meeking v. Cash Store Inc., 2013 MBCA 81, 367 D.L.R. (4th) 684 , where, in circumstances in which an Ontario court in a class action had territorial jurisdiction over both the defendant and the representative plaintiff, common issues between the claims of the representative plaintiff and that of non-resident plaintiffs were held to be a presumptive connecting factor sufficient to give the Ontario court jurisdiction over the non-resident plaintiffs.  The Manitoba Court of Appeal had concluded that this did not constitute an unconstitutional expansion of the real and substantial connection test.  In considering Meeking , the motion judge reasoned at para. 173 that Meeking had limited significance because it related to a national class action and, as such, the real and substantial connection test was consistent with the principles of order and fairness.  Moreover, it was unnecessary to decide if Meeking was wrongly decided and contrary to Van Breda v. Village Resorts Ltd. , 2012 SCC 17, [2012] 1 S.C.R. 572 “because the assertion of jurisdiction based on the sharing of a common issue is equivalent to asserting jurisdiction based on a party being a necessary or proper party, a notion rejected in Van Breda . ” [26] The motion judge noted the distinction made by the Supreme Court in Van Breda between the real and substantial connection test applied as a conflict of laws rule and as a constitutional principle.  In addition, while the Court affirmed that the appropriate test to determine whether a court has jurisdiction is the real and substantial connection test, it did not oust the traditional private international law basis for court jurisdiction. [27] The motion judge concluded that Van Breda invited courts to develop approaches to jurisdiction to meet constitutional requirements and that recognize order and fairness. Having regard to the unique circumstances presented by the case – parties who are not present in Ontario, have not consented to Ontario’s jurisdiction, and have not attorned to Ontario’s jurisdiction – she concluded that the principles of fairness, order, and comity should guide the jurisdictional analysis, not the real and substantial connection test. [28] In particular, the motion judge agreed with the respondents that the potential for re-litigation and the multiplicity of further actions by AFCs was inconsistent with the objectives of class proceedings and contrary to the principles of order and fairness. Further, asserting jurisdiction over AFCs where the court could not reasonably expect that its judgment would be recognized in foreign countries would offend comity. [29] At paras. 139-140, she considered Ramdath v. George Brown College of Applied Arts and Technology, 2010 ONSC 2019, 93 C.P.C. (6th) 106 , in which Strathy J. (as he then was) rejected the defendant’s argument that “jurisdiction should follow recognition” – that is, the notion that an Ontario court, in analyzing whether it has jurisdiction simpliciter over a claim, must consider whether its judgment would likely be recognized in foreign jurisdictions.  Strathy J. noted that holding otherwise would mean that Ontario courts would be deprived of jurisdiction even in the presence of an obvious real and substantial connection to Ontario.  This, in turn, would allow defendants to oust the Ontario court’s jurisdiction by “simply point[ing]” to another country that would not recognize a potential judgment.  The motion judge distinguished Ramdath on the basis that, in Ramdath , there was no issue of order and fairness and it was conceded that there was a real and substantial connection between Ontario and the claims of the international claimants.  Both the international students and the defendant would expect that their relationship claims would be litigated in Ontario and there was a finite number of international students from identified countries unlike this case.  Moreover, before Strathy J., there was limited evidence from foreign law experts.  She also observed that in McKenna , he reached a different conclusion on different facts. [30] The motion judge addressed the ability of the appellants to rely on the Lufthansa notice program but held that it was irrelevant to the reasonable expectations of AFCs and she stated at para. 196 that “the fact of adequate representation of rights and procedural fairness becomes relevant only after a court conclude s that it ha s jurisdiction.” [31] Finally, she concluded that the court was bound by the constitutional limits on its jurisdiction.  At paras. 200-202, she stated: [T]he territorial limits in s. 92 of the Constitution Act, 1867 , prohibit the court from assuming jurisdiction over any class members who do not meet the traditional test of presence or consent recognized abroad, i.e. [AFCs]. The constitutional limits on the court’s jurisdiction lead me to the conclusion that the real and substantial connection test ought not to be applied to establish jurisdiction over [AFCs]. Rather, I am satisfied that jurisdiction over class members can only be established if they are present in Ontario or have consented in some way to the jurisdiction of this court. [32] As such, the court did not have jurisdiction over AFCs and the class action in relation to them was stayed.  Having reached this conclusion, she declined to address the respondents’ alternative argument that ss. 27(3), 28(1), and 29(3) of the CPA were constitutionally inapplicable to AFCs. [33] The motion judge then addressed whether, if the real and substantial connection test did apply, it was satisfied in this case.  In a brief discussion, she described the parties’ arguments on the issue, rejected the new presumptive connecting factor described in Meeking and determined that the real and substantial connection test was not met.  She did not discuss the issue of rebuttal of presumptive connecting factors. [34] The motion judge also decided that if the court did have jurisdiction over the AFCs, such jurisdiction should be declined on the basis of forum non conveniens .  She accepted the respondents’ argument that in a multi-jurisdictional class action, the court should pay particular attention to whether its assumption of jurisdiction would be consistent with comity, prevailing international legal norms, and the reasonable expectations of the parties.  The AFCs would have had no expectation that their rights would be adjudicated in Ontario.  If they were included in the class, the Ontario court would have to apply the laws of at least 30 different countries in relation to matters that involve non-Canadians who entered into transactions outside of Canada.  The evidence was that an Ontario judgment would not be recognized in other jurisdictions, reaffirming the risk of double recovery.  The appellants’ contention that the AFCs’ claims would not be advanced anywhere at any time did not justify including those claims in the action.  Accordingly, she stated that she would stay the proposed class action as it related to the AFCs on the basis that Ontario is forum non conveniens .  She did not address whether an alternative forum was more appropriate. C. Issues [35] The issues for this court to consider on this appeal are: (i)  What is the applicable standard of review? (ii)  Did the motion judge err in her rejection of the real and substantial connection test for global class actions? (iii) Did she err in her consideration of forum non conveniens ? [36] Before engaging in an analysis of these issues, I will first briefly address this court’s jurisdiction to hear the present appeal.  Section 30 of the CPA addresses the appropriate appeal routes for a number of types of orders and judgments made in class proceedings.  The CPA however makes no reference to the appropriate avenue for appeal of jurisdiction orders.  Where the CPA does not specifically address an avenue of appeal, s. 6(1)(b) of the Courts of Justice Act , R.S.O. 1990, c. C.43 governs whether an appeal in a class proceeding lies to this court: Locking v. Armtec Infrastructure Inc. , 2012 ONCA 774, 30 C.P.C. (7th) 1, at para. 8; Cavanaugh v. Grenville Christian College , 2013 ONCA 139, 32 C.P.C. (7th) 1, at paras. 29-30; and Waldman v. Thomson Reuters Canada Ltd. , 2015 ONCA 53, 71 C.P.C. (7th) 33, at paras. 5-7. [37] The question therefore is whether the jurisdiction order under appeal is final and appealable to this court pursuant to s. 6(1)(b) or whether it is interlocutory.  The jurisdiction order finally disposes of the issue of an Ontario court’s jurisdiction over the AFCs, and therefore the present appeal is properly before this court. D. Analysis (1)     Standard of Review [38] This appeal addresses whether an Ontario court can take jurisdiction over class action proceedings involving AFCs and the appropriate test to be applied.  This part of the analysis involves a question of law and therefore a correctness standard is applicable: Housen v. Nikolaisen , 2002 SCC 33, [2002] S.C.R. 235, at paras. 8-9, 27. [39] In contrast to the i dentification of the correct legal test, the application of the correct legal test generally involves questions of mixed fact and law, which attract a standard of palpable and overriding error.  However, where an error in the application of the correct legal test can be attributed to an extricable legal error – for example, the failure to consider a required element of a legal test, a mischaracterization of a legal test, or a similar error in principle – a standard of correctness applies: Housen , at paras. 33-36. [40] This appeal also addresses the issue of forum non conveniens , which requires the application of the relevant legal test to the facts, and involves questions of mixed fact and law. Again, this issue is reviewable on a standard of palpable and overriding error, except where the motion judge’s analysis involves an error that is traceable to an extricable question of law. (2)     Did the motion judge err in her rejection of the real and substantial connection test for global class actions? (a) Positions of the Parties [41] The appellants submit that the motion judge erred in numerous respects in rejecting the real and substantial connection test.  They first argue that the operative test for determining jurisdiction simpliciter is that described in Currie , which incorporates the real and substantial connection test . [42] Moreover, by holding that jurisdiction over the AFCs must be based on presence in the jurisdiction or consent to the jurisdiction, the motion judge replaced the real and substantial connection test with one based on imported foreign law; foreign law improperly became the determinant for jurisdiction.  The appellants argue that factors of order and fairness described in Van Breda are subsumed by the real and substantial connection test and do not amount to a stand-alone test. [43] The appellants additionally argue that, contrary to the motion judge’s analysis, jurisdiction is not a function of enforcement . H er decision therefore conflicts with the decisions of Excalibur Special Opportunities LP v. Schwartz Levitsky Feldman LLP , 2016 ONCA 916, 135 O.R. (3d) 743, leave to appeal refused, [2017] S.C.C.A. No. 54; Ramdath, Nantais v. Telectronics Proprietary (Canada) Ltd. (1995), 25 O.R. (3d) 331 (Gen. Div.), leave to appeal refused (1995), 25 O.R. (3d) 331 at 347 (Gen. Div.); and Robertson v. Thomson Corp, (1999) 43 O.R. (3d) 161 (Gen. Div.) , all of which provide that enforcement issues should not preclude certification of classes that include non-residents. In holding that the real and substantial connection test should be rejected based on concerns relating to recognition and enforcement, the motion judge allowed fairness to the respondents to overtake the analysis and become a higher priority than fairness to the AFCs.  It was also an error to conclude that the prospect of re-litigation created order, fairness, and comity concerns, all the while ignoring that the risk of re-litigation was virtually non-existent due to the expiry of limitation periods. [44] The respondents’ position is that cases involving non-resident foreign class members in proposed class actions raise unique jurisdictional considerations.  The motion judge did not err in concluding that it would be inappropriate to assert jurisdiction over the AFCs in light of: the unique and specific factual circumstances of the AFCs, the expert evidence that a decision of the Ontario court assuming jurisdiction over the AFCs on the basis of the real and substantial connection test would not be recognized, and the applicable principles of fairness and order.  Contrary to the appellants’ assertion, there is no rigidly defined Currie test. Currie supports the proposition that the court may examine both the real and substantial connection test and principles of order and fairness in determining whether jurisdiction should be assumed in an international class action.  Subsequent decisions that the motion judge relied on in her reasons, such as McKenna v. Gammon Gold Inc. , 2010 ONSC 1591, 88 C.P.C. (6th) 27 , reversed on other grounds, 2011 ONSC 3782, 13 C.P.C. (7th) 232 (Div. Ct.); and Perell J.’s decision in Excalibur Special Opportunities LP v. Schwartz Levitsky Feldman LLP , 2014 ONSC 4118, 31 B.L.R. (5th) 46, have applied similar considerations. [45] Furthermore, the respondents submit that in Van Breda , the Supreme Court recognized the distinction between the real and substantial connection test as a conflicts rule and as a constitutional principle.  The Supreme Court elaborated on the test as a conflicts rule, including discussion of presumptive connecting factors and their potential for rebuttal, but declined to elaborate on the content of the constitutional principle, deferring that question to an appropriate case in the future.  The respondents submit that the motion judge properly concluded that asserting jurisdiction over the AFCs would offend the constitutional requirements of order and fairness.  This i s because a n Ontario judgment would not be recognized by foreign courts , creating a potential for double-recovery . Furthermore, AFCs would reasonably expect to bring their actions in their home jurisdiction. [46] The Attorney General, in its capacity as intervener, submits that the motion judge erred in holding that jurisdiction existed only if the AFCs were present in Ontario or consented to the Ontario court’s jurisdiction and in holding that the real and substantial connection test was constitutionally inapplicable. [47] The Attorney General points to over 25 years of jurisprudence from the Supreme Court establishing that the real and substantial connection test governs whether a provincial superior court may assume jurisdiction over a dispute for both common law and constitutional purposes. Van Breda did not invite judges to devise their own test for jurisdiction.  It held the opposite, expressly cautioning judges against resolving jurisdiction issues on a case-by-case, ad hoc basis.  The common law conflicts rules must recognize Canadian constitutional, statutory, and common law requirements.  The real and substantial connection test strikes an appropriate balance between these objectives. [48] The Attorney General further argues that neither the real and substantial connection test, nor ss. 27(3), 28(1), and 29(3) of the CPA (the opt out provisions), are constitutionally inapplicable. The real and substantial connection test promotes the purposes of the CPA .  In contrast, the motion judge’s holding defeats those purposes. [49] The Attorney General also challenges the factors considered by the motion judge in her analysis of jurisdiction.  Consideration of foreign enforceability conflate s the analysis of jurisdiction simpliciter with forum non conveniens .  Requiring a plaintiff to prove that it can enforce a judgment before a court has jurisdiction reverses the onus and upends the analysis set out in Van Breda .  The risk of duplicative litigation and double recovery are inherent in the nature of conflicts of laws problems and are not fatal to the assumption of jurisdiction.  Risk is one of many factors a court may consider. [50] Lastly, the Attorney General submits that the real and substantial connection test is a constitutional imperative.  The presence or consent test unduly narrows the jurisdiction of provincial superior courts to deal with matters that may have a real and substantial connection to a province and may leave prospective class members who have suffered harm, which is real and connected to Ontario, without the ability to seek redress in Ontario. (b) Discussion (i) The Evolution of the Real and Substantial Connection Test [51] As Lebel J. observed at para. 66 of Van Breda , striking a proper balance between flexibility and predictability, or between fairness and order, has been a constant theme in Canadian jurisprudence on jurisdiction. [52] Starting in 1990 with the Supreme Court’s decision in Morguard Investments Ltd. v. De Savoye , [1990] 3 S.C.R. 1077, and continuing with this court’s decision in Excalibur , overturning Perell J.’s decision in 2014 ONSC 4118, and for which leave to appeal was refused, the real and substantial connection test has been a dominant, although not exclusive, test governing the issue of jurisdiction. [53] In Morguard , the Supreme Court addressed jurisdiction in the context of extra-provincial enforcement of judgments. Justice La Forest noted at p p. 1108-1109 that the real and substantial connection approach to jurisdiction provides a reasonable balance between the rights of the parties.  In Beals v. Saldanha , 2003 SCC 72, [2003] 3 S.C.R. 416, the Supreme Court expanded the application of the real and substantial connection test to the recognition of foreign judgments. Justice Major held at para. 23 that a substantial connection with the subject matter of the action w ill satisfy the test even in the absence of such a connection with the defendant in the action.  Accordingly, a Canadian court could assume jurisdiction if the foreign court had a real and substantial connection with the subject matter of the action or the parties . Justice Major further noted at para. 37 that t he presence of traditional indicia of jurisdiction such as attornment, consent, residence, and presence serve to bolster the real and substantial connection . [54] In Van Breda , a case dealing with the assumption of jurisdiction in tort actions, Lebel J. observed that, in developing the real and substantial connection test, the Supreme Court had crafted a constitutional principle rather than a simple conflicts rule. Justice Lebel sought to draw a clearer distinction between the constitutional and private international law dimensions of the test.  The constitutional dimension of the rule concerns the territorial limits of jurisdiction. The real and substantial connection test establishe s boundaries within which conflicts rules could be applied. The purpose of the constitutionally - imposed territorial limit is to ensure the existence of the relationship or connection needed to establish the legitimate exercise of state power. A weak or hypothetical connection cast s doubt on the legitimacy of the exercise of state power over the affected persons.  In contrast, conflict rules decide when jurisdiction can be assumed over a dispute, what law will govern a dispute, or how an adjudicative decision from another jurisdiction will be recognized and enforced. As Lebel J. stated, at para. 33, “The constitutional territorial limits … are concerned with setting the outer boundaries within which a variety of appropriate conflicts rules can be elaborated and applied.” [55] In recognizing the need to develop an appropriate framework for the assumption of jurisdiction based on the real and substantial connection test, Lebel J. specified, at para. 73, that the framework for the assumption of jurisdiction cannot be “an unstable, ad hoc system made up on the fly on a case-by-case basis — however laudable the objective of individual fairness may be.” He went on to s ay , at paras. 78-79: In my view, identifying a set of relevant presumptive connecting factors and determining their legal nature and effect will bring greater clarity and predictability to the analysis of the problems of assumption of jurisdiction, while at the same time ensuring consistency with the objectives of fairness and efficiency that underlie this branch of the law. From this perspective, a clear distinction must be maintained between, on the one hand, the factors or factual situations that link the subject matter of the litigation and the defendant to the forum and, on the other hand, the principles and analytical tools, such as the values of fairness and efficiency or the principle of comity. These principles and analytical tools will inform their assessment in order to determine whether the real and substantial connection test is met. However, jurisdiction may also be based on traditional grounds, like the defendant’s presence in the jurisdiction or consent to submit to the court’s jurisdiction, if they are established. The real and substantial connection test does not oust the traditional private international law bases for court jurisdiction. [56] Fairness, efficiency, and comity inform the test but are not stand alone connecting factors. At para. 84, Lebel J. specifically excluded “general principles or objectives of the conflicts system, such as fairness, efficiency or comity” from the list of presumptive connecting factors, although he did note that these principles may influence the appropriateness of new factors. [57] Justice Lebel outlined a list of presumptive connecting factors for torts.  The onus is on a plaintiff to establish that one or more of the presumptive factors exists.  If one or more of the presumptive connecting factors applies, the court should assume that it has jurisdiction over the claim.  However, the presumption of jurisdiction is rebuttable.  A defendant may rebut the presumptive effect of any of the factors to demonstrate that the court lacks jurisdiction.  To do so, the defendant must establish, as outlined at para. 95, that the factor “does not point to any real relationship between the subject matter of the litigation and the forum”, or that the relationship between the subject matter and the forum is weak. [58] The Supreme Court set out the following four, non-exhaustive presumptive connecting factors for tort cases that, prima facie , entitle a court to assume jurisdiction over a dispute: (a)  the defendant is domiciled or resident in the province; (b)  the defendant carries on business in the province; (c)   the tort was committed in the province; and (d)  a contract connected with the dispute was made in the province. [59] At para. 91, Lebel J. described the following considerations to assist in identifying new presumptive factors: (a)   similarity of the connecting factor with the recognized presumptive connecting factors; (b)  treatment of the connecting factor in the case law; (c)   treatment of the connecting factor in the statute law; and (d)   treatment of the connecting factor in the private international law of other legal systems with a shared commitment for order, fairness and comity. [60] Justice Lebel also discussed whether a court would be limited in hearing only that part of a multi-jurisdictional claim that could be directly connected with the jurisdiction. In holding that a court would not be limited in such a manner, he explained at para. 99 that “[t]he purpose of the conflicts rules is to establish whether a real and substantial connection exists between the forum, the subject matter of the litigation and the defendant. ” Where a real and substantial connection exists “ in respect of a factual or legal situation, the court must assume jurisdiction over all aspects of the case.” [61] Jurisdiction may therefore be based on traditional grounds such as presence or consent, or on the existence of a real and substantial connection.  Moreover, as stated in Beals v. Saldanha , the former may bolster the latter. [62] That traditional grounds are an appropriate basis for jurisdiction was reiterated in Chevron Corp. v. Yaiguaje , 2015 SCC 42, [2015] 3 S.C.R. 69, a case involving an action for recognition and enforcement of a foreign judgment in Ontario.  In such an action, there is no need to establish a real and substantial connection between the enforcing forum and either the judgment debtor or the dispute. [63] Of course, despite having jurisdiction, a court has discretion to decline to exercise its jurisdiction and to stay the proceedings based on the doctrine of forum non conveniens . [64] For the purposes of this appeal, however, the first issue to be addressed is the thorny issue of the intersection of jurisdiction and class action proceedings, the topic I will next discuss. (ii) Class Action Proceedings and the Unresolved Dilemma of Jurisdiction Class Action Regime [65] Having discussed the applicable principles for jurisdiction, it is helpful to return to first principles governing class actions. [66] A class action is brought by a named plaintiff who serves as the representative plaintiff for a class of named or unnamed persons.  The AFCs are an example of an unnamed class. [67] In an article entitled “Are National Class Actions Constitutional ? ” (2010) 26 Nat’l J. Const. L. 279, Peter W. Hogg and S. Gordon McKee provide a concise outline , at p. 281, of the gatekeeping function of the court in a class action proceeding: Before a class action can proceed to the trial of the common issues, it must be certified by the court.  The court needs to be satisfied that the proceedings disclose a cause of action, that there is an identifiable class, that the class will be adequately represented by the representative plaintiff, that the claims of the class raise common issues, and that the class proceeding is the preferable procedure to adjudicate the common issues of the claims asserted in the action.  If certification is denied, the class action will not proceed to trial, although the plaintiffs will then be free to bring individual actions against the defendant.  Only if certification is granted, does the class action proceed to trial. [68] Class actions were available at common law.  As long ago as 1938, class action legislation was introduced in the United States.  In Canada, the Province of Quebec was in the vanguard introducing class action legislation in 1978.  Ontario followed in 1993.  Now, the federal government and all provinces except Prince Edward Island have enacted class action legislation. As has frequently been described, there are three public policy purposes that have fueled the development of class actions: access to justice, behaviour modification, and judicial economy. Expansive and Restrictive Approaches to Jurisdiction over AFCs in Class Actions [69] Cases involving class actions raise unique jurisdictional challenges.  Unlike traditional litigation, which consists of an identifiable plaintiff actively selecting a jurisdiction and hence consenting to the jurisdiction, class actions involve at least one identifiable representative plaintiff and frequently unidentified members of a larger class. Typically in litigation, the question is whether the Ontario court has jurisdiction over a defendant, not whether it has jurisdiction over AFCs.  Indeed, the purpose of class actions is, in part, to confer a benefit on absent class members.  It is difficult to reconcile class actions that include unidentified claimants with traditional approaches to jurisdiction. In those circumstances, a real and substantial connection on an individualized basis may be elusive.  To allow for jurisdiction, either the members must be identified and present or consent to jurisdiction or there must be another doctrinal mechanism available to anchor jurisdiction. [70] Two very different approaches to this jurisdictional dilemma have emerged, one expansive and the other more restrictive. [71] One arm of the expansive approach focuses on the commonality of interest between the claims of resident and non-resident class members, as Tanya J. Monestier notes in her article “Personal Jurisdiction Over Non-Resident Class Members: Have I Gone Down the Wrong Road?” (2010) 45 Tex . Int'l L . J . 537, at pp. 546-548. [72] Meeking provides an example of this more expansive approach.  In Meeking , the Manitoba Court of Appeal focused on commonality between resident and non-resident class members to provide a basis for jurisdiction.  In that analysis, the identity or confluence of an interest shared between non-resident plaintiffs and the representative plaintiff served to anchor jurisdiction in circumstances where the court had territorial jurisdiction over both the representative plaintiff and the defendant. McCutcheon v. The Cash Store (2006), 80 O.R. (3d) 644 (S.C.J.) ( Meeking ’s Ontario counter-part); and Harrington v. Dow Corning Corp., 2000 BCCA 605, 82 B.C.L.R. (3d) 1, leave to appeal refused [2001] S.C.C.A. No. 21, both adopted the same approach. [73] The expansive approach has attracted criticism. In particular, Professor Monestier argues that the common issues approach is artificial and also conflates the test for jurisdiction with the test for certification. [74] Similarly, but without citing Meeking or the other aforementioned cases , Hogg and McKee dismiss an approach where a real and substantial connection for the entire class is established through a real and substantial connection between the representative plaintiff and the forum , coupled with commonality between the issues of the representative plaintiff and the rest of the class. They too argue that this conflates certification (which requires common issues) and the test for jurisdiction. [75] Another arm of the expansive view of class action jurisdiction is reflected in American jurisprudence.  In Phillips Petroleum Co. v. Shutts , 472 U.S. 797 (1985), the U.S. Supreme Court held that in a class action, so long as the defendant had a sufficient connection to the forum state, the forum court had jurisdiction over a plaintiff class that included non-resident persons with no connection to the forum state provided they had been given adequate notice plus an opportunity to be heard, an opportunity to opt out of the action, and there was adequate representation by the representative plaintiff. [76] Justice Rehnquist reasoned at pp. 808-810 that non-resident plaintiffs are not in the same degree of jeopardy as out-of-state defendants because their interests are protected by the representative plaintiffs. Moreover, a court’s inquiry at the certification stage helps ensure that those interests will be adequately represented and are sufficiently common with the interests of the representative plaintiffs. See also Ortiz Fibreboard v. Corp. , 527 U.S. 815 (1999), at pp. 847-848; Carlough v. Amchem Prod., Inc., 10 F.3d 189 (3rd Cir. 1993) , at p. 199. [77] At p. 291 of their article, Hogg and McKee dismiss the approach taken in Phillips for Canada because it is based on due process rights rather than the doctrine of extraterritoriality applicable in this country.  It bears noting that their conclusion serves to negate class actions with unidentified class members, be they national or international. [78] It also bears noting that, although not identified as such, at its heart, the approach adopted by Sharpe J.A. in Currie is akin to the formulation set out in Phillips . As I later discuss in greater detail, Currie similarly held that jurisdiction over non-resident plaintiffs need not turn on whether they have opted into a class proceeding, so long as their interests are adequately represented and they are accorded sufficient procedural fairness, including adequate notice. [79] In contrast, a more restrictive approach to the real and substantial connection test requires that there be a substantive connection, beyond common interests, between the non-resident class members and the adjudicating forum: Monestier, at p. 548. For example, in HSBC v. Hocking, 2008 QCCA 800 , [2008] R.J.Q. 1189, the Quebec Court of Appeal held that a shared interest in the common issues was insufficient to establish a real and substantial connection where there was otherwise no connection to the jurisdiction . [80] The difficulty with the restrictive approach, as Professor Monestier observes, is that it is almost impossible for a court to assert jurisdiction over a non-resident class member owing to a lack of actual connection between such a class member and the adjudicating forum. She notes, at p p . 551- 552: The fundamental problem with a restrictive approach to the real and substantial connection test is that it essentially undercuts the ability of the class action to act as a vehicle for the resolution of issues that transcend provincial borders and are perhaps best suited to being addressed in class form. [81] An obvious problem created by the lack of a uniform approach to class action jurisdiction, as Hogg and McKee discuss at p p . 286 -287 , is that a defendant needs to be assured that it will not be exposed to further litigation on the same issue by non-resident members of the plaintiff class. If the enforcing court does not regard the adjudicating forum as having jurisdiction over the non-resident class members, the judgment will not be enforceable and nothing prevents the non-resident class member from proceeding with a claim in the enforcing forum. This creates concern about fairness to the defendant, who remains exposed to the risk of re-litigation. See also Monestier, at pp. 552-554. Opt In and Opt Out Regimes [82] One option that avoids the jurisdictional issues associated with the real and substantial connection test when it comes to non-resident class members is the implementation of opt in and opt out regimes. [83] An opt in or opt out approach is reflected in certain statutes.  In Quebec and Ontario, a class action judgment is binding on all members of the class unless they have opted out of the proceeding: Code of Civil Procedure, R.S.Q., c. C-25, art. 10 27 and the CPA , s. 27(3).  In British Columbia, in contrast, the governing statute provides for an opt out for class members who are residents of the province and an opt in provision for those who are resident outside of that province: Class Proceedings Act, R.S.B.C. 1996, c. 50 , ss. 16(1), 16(2) . Clearly a non-resident class member who has opted into the proceeding has consented to the jurisdiction of the court and is bound by the result. [84] While Professor Monestier notes, at p. 558 , that the opt in approach is doctrinally sound, it also “thwart [ s ] the policy objectives of class actions , such that they are no longer able to achieve the very goals for which they were designed.” [85] In a similar vein, Professor Janet Walker, in “Cross Border Class Actions: A View from Across the Border ” ( 2004 ) 3 Mich. S t. L. Rev. 755 observes that the opt in alternative may provide for an under-inclusive class.  She states at p. 770: First, to the extent that class actions are intended to have a regulatory affect by requiring market actors to internalize the costs of wrongful conduct, under - inclusive plaintiff classes mean that the costs internalized are less than the costs generated by the wrongful conduct … Second, to the extent th at class actions are intended to facilitate compensation for wrongs suffered, under - inclusive plaintiff classes result in the failure of members of the plaintiff class to receive compensation … Finally, to the extent the class actions are intended to also bring closure to matters for defendants, the under - inclusiveness of plaintiff classes means that defendants will be left with unresolved claims that might be brought in other actions or in other fora. [86] Opt out regimes also present certain challenges, as Hogg and McKee comment at p. 287: We have noticed that the courts will insist that “sufficient notice” be given to the members of the plaintiff class, but so far the courts have not insisted that actual notice be given to every member of the class.  Therefore, a class action judgment in Ontario (for example) may apply to some members of the plaintiff class who in fact know nothing about the proceedings brought on their behalf. [87] Professor Monestier posits that it is necessary to rethink whether a real and substantial connection is needed to ground jurisdiction over a non-resident plaintiff class, noting at p. 539 that “ [t] he test cannot be readily transposed to the separate question of whether a court has jurisdiction over an amorphous class of unnamed plaintiffs . ”  She suggests that courts should instead reorient the analysis towards insuring that procedural safeguards are afforded to non-resident plaintiffs. (iii) Jurisprudence on Class Actions and Jurisdiction [88] In Ontario, the real and substantial connection test has been consistently applied to the question of jurisdiction in class actions. The first case to deal with the issue of jurisdiction over non-resident class members in Ontario was Currie , released in 2005 . The particular issue in Currie was whether an Illinois judgment approving the settlement of a global class action against McDonald’s was enforceable against Currie, an Ontario resident, so as to preclude him from launching his own class action in Ontario against McDonald’s Canada. [89] Justice Sharpe, writing for th is court, noted at paras. 14-15 that legislation in several provinces specifically contemplated the inclusion of non-resident class members, and that strong policy reasons favoured the fair and efficient resolution of interprovincial and international class action proceedings.  In appropriate cases, conflict of law rules should recognize the importance of having claims finally resolved in one jurisdiction.  He highlighted one of the concerns associated with such enforcement that had been identified by Henry Paul Monaghan in “Antisuit Injunctions and Preclusion against Absent Nonresident Class Members” (1998) 98 Colum . L . Rev . 1148.  The article describes , at pp. 1155-1156, the need to guard against potential abuses arising from class action defendants using the settlement of class action proceedings as a means to limit liability at “bargain-basement” prices. [90] Justice Sharpe provided guidance on addressing th is and other concerns arising from class actions that included non-resident class members.  In doing so, he explained at para. 20 that the position of a class action plaintiff is not the same as that of a typical defendant , and that rules for recognition and enforcement of class action judgments should reflect those differences: Class action regimes typically impose upon the court a duty to ensure that the interests of the plaintiff class members are adequately represented and protected.  This is a factor favouring recognition and enforcement against unnamed class members. [91] To address the concern for fairness, Sharpe J.A. held, at para. 25, that the court had to be satisfied with the procedures adopted in the proceeding: Respect for procedural rights, including the adequacy of representation, the adequacy of notice and the right to opt out, could fortify the connection with [ the foreign] jurisdiction and alleviate concerns regarding unfairness. [92] He rejected the need for an opt in regime, noting that this would effectively negate meaningful class action relief.  While he acknowledged that it may be easier to justify the assumption of jurisdiction in interprovincial cases than in international cases, a failure to opt out could be seen as a form of passive attornment sufficient to support jurisdiction over a non-resident, unnamed plaintiff, provided that certain conditions were met: a real and substantial connection link s the cause of action to the foreign jurisdiction , the rights of non-resident class members a re adequately represented, and non-resident class members a re accorded procedural fairness, including adequate notice. [93] Justice Sharpe ultimately determined , on the case before him, that because the unnamed plaintiffs were not afforded adequate notice, an Ontario court ought not recognize and enforce the foreign judgment against the Canadian representative class member and the other Canadian class members he sought to represent. [94] The principles described in Currie were followed by Strathy J. in Ramdath and McKenna , both decided in 2010 .  In Ramdath, Strathy J. concluded that the court should take jurisdiction over non-resident students of George Brown College in a class action claim alleging that the College misrepresented the benefits of a certain programme. He held that, provided the conditions in Currie were met, neither foreign law evidence that a Canadian class action judgment might not be given preclusive effect in a foreign jurisdiction, nor the absence of actual notice, should preclude an Ontario court from taking jurisdiction over the entire class.  There was a real and substantial connection between Ontario and the subject matter of the action, and procedural fairness could be provided to the plaintiff class.  In McKenna, Strathy J. again applied the real and substantial connection test and the framework set out in Currie in assessing the court’s jurisdiction over non-resident class members.  He noted at para. 108: Although Currie involved the enforcement in Ontario of a judgment in a foreign class action, the mirror image of the principles stated by the Court of Appeal are applicable to the exercise of jurisdiction by this court in a class action that seeks to include class members outside the jurisdiction. [95] As noted earlier, in 2006 in McCutcheon , Cullity J. certified a class proceeding involving non-residents.  He determined that he could bind non-resident class members to an Ontario proceeding because there was a sufficient real and substantial connection between non-resident class members and Ontario, and the principles of order and fairness were met. Justice Cullity concluded that a common interest between the class members served to establish the real and substantial connection. Similarly, In Baxter v. Canada (Attorney General) , [2005] O.T.C. 391 (S.C.J.), Winkler J. (as he then was) observed that certified common issues in a class action could serve as a basis for jurisdiction over extra-provincial parties. [96] These cases all pre-date Van Breda , which was released in 2012, and must now be read through the lens of that decision.  As discussed earlier, Van Breda confirmed the real and substantial connection test as a constitutional imperative and a conflict of law rule, and founded presumptive connecting factors which, if present, establish jurisdiction. [97] After Van Breda , in its 2013 decision in Meeking , the Manitoba Court of Appeal grappled with issues similar to those in this appeal except that it dealt with recognition and enforcement of an Ontario judgment against non-resident, unnamed plaintiffs.  There, the court held at paras. 93 and 97 that: The Canadian jurisprudence to which I have referred that would allow for common issues to be considered as a presumptive connecting factor in the real and substantial connection test is persuasive.  Fairness to non-resident plaintiffs is achieved through the notification process and opt-out provisions, while, at the same time, the policy considerations favouring class actions described by McLachlin C.J.C. in Western Canadian Shopping [ Centres Inc. v. Dutton , 2001 SCC 46, [2001] 2 S.C.R. 534] are fulfilled.  Further, the constitutional principle of federalism is respected. Therefore, I would conclude that, in circumstances where the court has territorial jurisdiction over both the defendant and the representative plaintiff in a class action proceeding, common issues between the claim of the representative plaintiff and that of non-resident plaintiffs is a presumptive connecting factor, sufficient to give the court jurisdiction over non-resident plaintiffs. [98] Subsequently, Abdula v. Canadian Solar Inc ., 2015 ONSC 53, 126 O.R. (3d) 459, adopted the same approach at paras. 58-59. [99] Finally and most recently, in 2016, this court addressed the application of the real and substantial connection test in Excalibur . A t para. 34 , MacFarland J.A. (Cronk J.A. concurring) affirmed that the test to determine whether to take jurisdiction over foreign class members “begins with an inquiry into jurisdiction simpliciter , on the principles set out in Club Resorts Ltd. v. Van Breda ”. She noted that Currie was not to be interpreted as standing for the proposition that an Ontario court should approach the issue of taking jurisdiction in a restrained manner.   Furthermore, the reasonable expectations of the non-resident class members were not to be treated as an independent consideration in determining whether to take jurisdiction in a global class proceeding. [100] In Excalibur, the representative plaintiff and the respondent accounting firm were both based in Toronto, but the remaining 56 plaintiffs were non-residents of Ontario. Justice Mac F arlan d concluded that three of the four presumptive connecting factors identified in Van Breda were present. There were also no serious concerns of order and fairness as the identity of all but one class member was known and all class members could receive appropriate notice. [101] In dissent, Blair J.A. reasoned that the motion judge had not disputed that the court had jurisdiction simpliciter and could take jurisdiction; rather the motion judge was addressing whether the Ontario court should take jurisdiction. Justice Blair held that the motion judge did not err in considering the reasonable expectations of the proposed non-resident class members or in taking an approach of “restraint” to the issue of whether to assume jurisdiction over the global class. [102] The Supreme Court refused leave to appeal Excalibur in June of this year. (iv) The motion judge erred in rejecting the real and substantial connection test [103] In light of the foregoing, it is clear that the motion judge erred in simply anchoring her jurisdiction analysis in a negation of the traditional bases for jurisdiction, namely presence or consent, and in failing to apply the real and substantial connection test articulated in Van Breda .  As explained in Van Breda , order, fairness, and comity are not independent roots of jurisdiction but are subsumed by the real and substantial connection test.  As stated by Lebel J., the purpose of the constitutionally - imposed territorial limit is to ensure the existence of the relationship or connection needed to establish the legitimate exercise of state power. [104] It is true, as noted by the motion judge and as stated by Lebel J. at para. 79 of Van Breda , that jurisdiction may be based on traditional grounds. This would include presence in the jurisdiction and consent to the jurisdiction.  However, relying on those factors to ground jurisdiction is very different from rejecting jurisdiction based on their absence.  The motion judge erred in doing the latter.  Here the traditional grounds for jurisdiction were not available.  As such, the real and substantial connection test had to be the start of the analysis. [105] As recognized by Sharpe J.A. in Currie and the commentary discussed previously, the situation of unidentified non-resident class members in a proposed class action presents unique concerns with respect to ensuring that a sufficient connection exists to justify taking jurisdiction over them. In my view, this is what the Courts of Appeal in Ontario and Manitoba sought to address in Currie pre- Van Breda , and in Meeking , post- Van Breda , albeit in different ways.  Moreover, it seems to me that a robust analysis may encompass the approach of both appellate courts. [106] In setting out the contours of what the framework should be in these circumstances, I will address a preliminary issue raised during the appeal, which informs what is relevant to the assessment. I agree with the appellants that jurisdiction is not a function of foreign recognition and enforcement standing alone.  Put differently, when addressing jurisdiction, issues of foreign recognition and enforcement are not preclusive of all other factors.  Here, the motion judge permitted foreign law governing recognition to dominate her analysis to the exclusion of all other relevant factors. [107] Turning to the appropriate framework, jurisdiction may be established over AFCs where: 1) there is a real and substantial connection between the subject matter of the action and Ontario, and jurisdiction exists over the representative plaintiff and the defendants; 2) there are common issues between the claims of the representative plaintiff and AFCs; and, 3) the procedural safeguards of adequacy of representation, adequacy of notice, and the right to opt out as described in Currie are provided, thereby serving to enhance the real and substantial connection between AFCs and Ontario. [108] In my view, this framework provides the necessary safeguards to establish that jurisdiction properly exists and ensures the protection of the values of order and fairness.  Quite apart from that consequence, a positive result of this framework is that the objectives at the heart of class actions are served. [109] As the motion judge had already determined that the Ontario court did not have jurisdiction over the AFCs, her subsequent analysis of the issue of jurisdiction was very brief.  She agreed at para. 210 with the original respondents that the new presumptive factor described in Meeking could not be recognized, as this would be inconsistent with Van Breda ’s guidance that, in identifying new presumptive factors, courts should consider the treatment of the connecting factor in the private international law of other legal systems having a shared commitment for order, fairness, and comity.  Then, after describing both the appellants’ and the respondents’ positions, she concluded at paras. 213-214: It cannot be said here as it was in Currie , Ramdath , McKenna and Excalibur [4] for example, that it would come as no surprise to, or it would not be unreasonable from the perspective of, the [AFCs] that legal claims arising from their purchase of Airfreight Shipping Services outside Canada would be litigated in an Ontario court. I am not satisfied that in these circumstances the real and substantial connection test is met. [110] Apart from her discussion of the new presumptive factor in Meeking and the relevance of reasonable expectations, it is unclear whether the motion judge accepted all or some of the respondents’ submissions and some or none of those of the appellants regarding the application of the presumptive connecting factors discussed in Van Breda . Given her rejection of the real and substantial connection test and in the absence of a consideration of the established presumptive connecting factors, it falls to this court to conduct the jurisdiction analysis anew applying the aforementioned analytical framework. [111] Dealing with the first factor, unquestionably, there is a real and substantial connection between the subject matter of the action and Ontario.  All of the three respondents carry on business in Ontario.  As Gascon J. stated in Chevron Corp. at para. 89, “If a defendant maintains a business in Ontario, it is reasonable to say that the Ontario courts have an interest in the defendant and the disputes in which it becomes involved.”  Moreover, there is jurisdiction over the three respondents based on presence in the jurisdiction and over the three representative plaintiffs based on presence and consent to the jurisdiction.  Airia, located in London, Ontario, purchased shipping services for transport from Ontario and Startech, also located in London, Ontario, purchased shipping services for transport from and to Ontario.  QCS is a German freight forwarder that purchased shipping services to Canada from Air Canada and BA, and also purchased services for shipment from Canada using agents located in Ontario. [112] The claim of the plaintiffs alleges the tort of conspiracy.  There is also a claim for damages for breach of the Competition Act .  Three specific meetings in furtherance of the conspiracy are alleged to have taken place in Canada, one of which was in Toronto on June 22, 1999.  Although the appellants define the ‘Relevant Period’ for the conspiracy as beginning on or about January 1, 2000 and continuing until September 11, 2006, the Toronto meeting is pleaded as being in furtherance of the conspiracy.  The respondents argue that the elements required to complete the tort of conspiracy did not occur in Canada.  However, this is not determinative: see Central Sun Mining Inc. v. Vector Engineering Inc. , 2013 ONCA 601, 117 O.R. (3d) 313. Moreover, the tortious conduct relates to air freight shipments linked to Canada, which served as either the shipments’ country of origin or country of destination. [113] Turning to the second factor, there are common issues between the representative plaintiffs over whom the court has jurisdiction and the AFCs.  In her decision on the representative plaintiffs’ related motion for certification, reported at 2015 ONSC 5352, the motion judge held that the representative plaintiffs’ claim raised common issues among the members of the class she certified.  The common issues certified by the motion judge relate to the core question of whether the respondents are liable to the class members for the tort of conspiracy and breaches of the Competition Act arising from the supply of airfreight shipping services to and from Canada in the relevant time period.  These common issues clearly extend to the AFCs. [114] Lastly, as a result of the settlements with some of the other defendants, the AFCs have been afforded the three procedural safeguards described in Currie .  Notice has been effected in 140 countries and as mentioned, mailed notice has gone to 310,000 persons.  The designed website had received more than 54,000 visitors from 135 countries as of November 2008 and the interactive telephone service had fielded 3,900 calls.  As of January 2009, 270 class members from 33 different countries registered to receive further information about the Canadian litigation by mail.  Each round of settlements involved a further notice campaign, including direct mail. [115] The respondents argued before the motion judge that the notice program should not be considered as it amounted to an action to carry out the Lufthansa settlement that, based on the terms of the settlement, was not to be referred to or received in evidence in any proceeding.  The motion judge chose not to resolve the issue as she was of the view that it could not have an effect on the determination of the jurisdiction motion and the notice program was irrelevant to the reasonable expectations of the AFCs vis-à-vis the respondents and could not prejudice them.  There is no evidence that any motion to strike was brought by the respondents. [116] I do not accept that the extent of and facts relating to notice would be captured by the terms of the Lufthansa settlement and that such evidence would be precluded from consideration in the proceeding against the respondents.  In any event, even if they were, I would note that the CPA specifically provides for notice.  Moreover, other significant protections are provided by the CPA .  To ensure its fair and expeditious determination, a court may make any order under s. 12 that it considers appropriate regarding the conduct of the class action.  The certification criteria in s. 5 provide that there be a representative plaintiff who would fairly and adequately represent the interests of the class among other matters.  Pursuant to s. 29 of the CPA , a class action may only be discontinued or settled with court approval.  Section 31 ensures that class members other than the representative plaintiffs are not liable for costs except in respect of the determination of their individual claims. Section 32 provides that the court must approve the fees of class counsel.  These protections are all provided within the context of the gatekeeping function of the court in a class action proceeding as previously described in these reasons.  In my view, there is a sufficient basis on which to ground jurisdiction over the AFCs. [117] As in Abdula , this is not a case of a defendant being forced to defend a lawsuit in a jurisdiction in which it has no connection.  I would also observe that assuming jurisdiction over the AFCs serves the objectives of class proceedings. [118] Nor has the assumption of jurisdiction been rebutted.  The respondents’ business in Ontario includes the sale of services that are the subject matter of the alleged conspiracy.  As mentioned, part of the conduct in furtherance of the alleged conspiracy took place in Ontario, and there are shared common issues between the representative plaintiffs and the AFCs. [119] Accordingly, I would conclude that an Ontario court has jurisdiction over the AFCs in this class action proceeding. (3)     Did the motion judge err in her consideration of forum non conveniens ? [120] The motion judge also decided that jurisdiction should be declined on the basis of forum non conveniens .  I will now turn to this issue. [121] In Van Breda , at para. 110, Lebel J. set out a list of non-exhaustive factors to consider in the forum non conveniens analysis: the location of the parties and the witnesses; the cost of transferring the case to another jurisdiction or declining the stay; the impact of a transfer on the conduct of the litigation or on related or parallel proceedings; the possibility of conflicting judgments; problems related to recognition and enforcement of judgments; and the relative strength of the connection of the parties. [122] The burden is on the respondents to show that another jurisdiction has a real and substantial connection to the claim and also the availability of a clearly more appropriate forum than Ontario: LaPointe Rosenstein Marchand Melançon LLP v. Cassels Brock & Blackwell LLP , 2016 SCC 30, [2016] 1 S.C.R. 851, at para. 52, and Van Breda at paras. 103-105.  As stated in Van Breda at para. 104: “ Forum non conveniens recognizes that there is a residual power to decline to exercise jurisdiction in appropriate, but limited, circumstances in order to assure fairness to the parties and the efficient resolution of the dispute.”  Consistent with the need to identify a clearly more appropriate forum than Ontario, the principle of comity informs the application of forum non conveniens . [123] The motion judge accepted the respondent airlines’ arguments that Ontario was forum non conveniens and suggested that AFCs pursue individual actions within their own jurisdictions.  However, she failed to ask whether any jurisdiction was clearly more appropriate than Ontario.  This was in error. [124] I would note that, in concluding Ontario was not the appropriate forum for the AFCs’ claims, the motion judge relied extensively on this court’s decision in Kaynes v. BP, PLC , 2014 ONCA 580, 122 O.R. (3d) 162.  In Kaynes , Sharpe J.A. held that the United States and United Kingdom were more appropriate forums than Ontario for a class proceeding involving a claim in misrepresentation arising out of share purchases, the bulk of which were made on foreign exchanges. [125] An examination of the facts in Kaynes reveals why Kaynes is distinguishable from the present case.  First, the appellant in Kaynes was able to point to specific alternative fora that were more appropriate than Ontario, which the respondents here have failed to do.  Second, litigation had commenced in the U.S. with respect to the exact same claims that the representative plaintiff sought to litigate in Ontario, whereas the claims put forth in the present class proceeding, dealing with shipments from or to Canada, are not the subject of any other existing proceedings. Indeed, the representative plaintiffs seek to exclude those claims relating to shipments between Canada and countries with ongoing proceedings arising from the same alleged conspiracy.  Third, the majority (over 99%) of the proposed class in Kaynes lacked a link to Canada, as they had purchased shares outside of Canada.  In contrast, to be part of the class in the present proceeding, an AFC must have purchased air freight services from or to Canada.  Lastly, the substantive claims in Kaynes rested in part on U.S. securities law, unlike the claims in the present case, which rest solely on Canadian law. [126] I would also observe that in a subsequent decision of this court in Keynes v. BP, P.L.C., 2016 ONCA 601, 133 O.R. (3d) 29, the same panel decided that the stay that it had previously imposed on the Ontario action based on forum non conveniens was to be lifted.  This was because it had become clear that the plaintiffs could not proceed with a claim in the proceedings in the United States as had previously been anticipated and the claim was now conceded to be governed by Ontario law.  Another forum was not clearly more appropriate. [127] In this case, there is no such forum.  Furthermore, the evidence clearly demonstrates a robust connection between the parties and Ontario.  All of the respondents carry on business in Ontario, as do at least two of the representative plaintiffs.  To be part of the class, AFCs must have purchased air freight services from the respondents for shipments from or to Canada.  Based on the respondents’ own evidence, the majority of these services were rendered for shipments from or to Ontario.  Some of the events in furtherance of the conspiracy claim unfolded in part in Ontario.  Litigation relating to these same claims has not been brought in another jurisdiction and if it is in the future the plaintiffs are excluded from the class.  The evidence of the respondents disclosed a minimum of 11, 000 customers in Ontario for shipping services that arguably were impacted by the conspiracy. [128] Moreover, the availability of class actions, contingency fees, and the ability to defer costs favour Ontario as the most efficient and cost-effective forum for resolution of the conspiracy claim.  The motion judge’s ruling has the effect of fracturing a single class of AFCs into countless possible actions brought by individual AFCs in their home jurisdictions.  This outcome lacks the efficiency and cost-effectiveness provided by the present class proceedings, while creating the potential for a multiplicity of proceedings and increasing the likelihood for conflicting decisions. [129] Section 28 of the CPA provides for the tolling of limitation periods.  AFCs can only benefit from this particular provision if their claims are prosecuted in Ontario.  Moreover, as the conspiracy in issue is alleged to have taken place between 2000 and 2006, if the AFCs are denied recourse in Ontario, their claims may very well be time-barred in other jurisdictions.  This suggests that the risk of re-litigation is low thereby undermining the concerns of order and fairness raised by the respondents. [130] The motion judge found that the court would have to apply the laws of at least 30 countries if AFCs were included in the class.  In her decision on the related motion for certification, the motion judge held at para. 133 that the issue of whether foreign law would have to be applied to the litigation was “uncertain at this stage of the litigation”.  I agree that the extent to which foreign law will apply in these proceedings is unclear. [131] First, the only pleading in which foreign law was pleaded was that of a defendant who has since settled the claims against it. Second, foreign law must be proven and in the absence of same, domestic law is applicable.  Third, even if foreign law is considered to be applicable, it will have to be applied to those AFCs who consented or attorned to the jurisdiction in any event. [132] Recognition and enforcement are two factors of many to consider.  However, it may be dangerous to accord primacy to these factors, particularly in the face of the multitude of other factors that contribute to the inquiry of forum non conveniens .  This danger is perhaps best illustrated by the evidence on the position taken by the respondent BA in related litigation in the U.K. There, it relies on orders made by the Canadian courts, including the court in Ontario, approving the Lufthansa settlement agreement, to preclude the litigation of claims in the U.K.  Here, in essence, its position is to the contrary. [133] In conclusion, there is no clearly more appropriate forum to resolve the AFCs’ claims than Ontario, and the respondents have not met their onus in demonstrating otherwise. (4) Other [134] Lastly, in their notice of constitutional issue, the respondents posited that even if the court possessed adjudicative jurisdiction over AFCs based on the real and substantial connection test, the territorial limits of provincial legislative power in s. 92 of the Constitution Act would still prevent the court from applying ss. 27(3), 28(1), and 29(3) of the CPA as set out in Appendix A, attached hereto.  Those subsections address opting out, suspension of limitation periods that would otherwise apply to those class members’ claims, and settlements. [135] The respondents essentially argue that these provisions of the CPA alter the substantive foreign laws that would otherwise apply to AFCs by suspending foreign limitation periods and ignoring foreign res judicata principles, which limit the binding effect of judgments to claimants who ask to bring a claim. [136] The Attorney General responds that, as a procedural statute, the CPA does not confer, modify, or create substantive rights.  Subsections 27(3) and 29(3) of the CPA , which bind all class members to a settlement or common issues judgment, including AFCs who have not opted out, cannot prevent a claim from being brought in courts outside the province.  The provisions only have res judicata effect outside Ontario if and when a foreign court recognizes and enforces a settlement or judgment.  Similarly, s. 28(1) does not suspend limitation periods in a foreign jurisdiction. [137] The motion judge noted, at para. 116 of her reasons, that the CPA is a procedural statute and, citing Bisaillon v. Concordia University , 2006 SCC 19, [2006] 1 S.C.R. 666, that class action procedure does not alter the jurisdiction of courts nor does it create new substantive rights. That said, at para. 204, she stated that she need not address the issue of the constitutional inapplicability of those subsections of the CPA given her decision on the absence of jurisdiction over the AFCs. [138] While it was open to the respondents to advance this argument in the alternative before this court, they took the position that this issue was not under appeal: footnote 62 of the respondents’ factum.   In all of these circumstances, I decline to address the issue of the constitutional applicability of these sections of the CPA . E. Disposition [139] For these reasons, I would allow the appeal.  As agreed, I would order the respondents to pay the appellants $75,000 in costs of this appeal, inclusive of disbursements and taxes and order the intervener to bear its own costs.  I would order that the matter of costs of the jurisdiction motion be remitted to the motion judge for determination. Released: “SEP” OCT 17 2017 “S.E. Pepall J.A.” “I agree. E.E. Gillese J.A.” “I agree. J. MacFarland J.A.” Appendix A Class Proceedings Act, 1992 , S.O. 1992, c. 6 Subsection 27(3) A judgment on common issues of a class or subclass binds every class member who has not opted out of the class proceeding, but only to the extent that the judgment determines common issues that, (a) are set out in the certification order; (b) relate to claims or defences described in the certification order; and (c) relate to relief sought by or from the class or subclass as stated in the certification order. Subsection 28(1) Subject to subsection (2), any limitation period applicable to a cause of action asserted in a class proceeding is suspended in favour of a class member on the commencement of the class proceeding and resumes running against the class member when, (a) the member opts out of the class proceeding; (b) an amendment that has the effect of excluding the member from the class is made to the certification order; (c) a decertification order is made under section 10; (d) the class proceeding is dismissed without an adjudication on the merits; (e) the class proceeding is abandoned or discontinued with the approval of the court; or (f) the class proceeding is settled with the approval of the court, unless the settlement provides otherwise. Subsection 29(3) A settlement of a class proceeding that is approved by the court binds all class members. [1] After the motion in issue, and before this appeal, settlements were reached with the defendants Cathay Pacific Airways Ltd., Asiana Airlines Inc., and Korean Airlines Co. Ltd.  Claims against the other defendants were settled previously. [2] As subsequently discussed, these are defined as air freight cargo shipping services for shipments to or from Canada (excluding shipments to and from the United States) during the period January 1, 2000 to September 11, 2006. [3] Understandably, she did not consider t he Supreme Court’s decision in Chevron Corp. v. Yaiguaje , 2015 SCC 42, [2015] 3 S.C.R. 69, which had not been rendered when the jurisdiction motion was argued. Chevron addressed the issue of jurisdiction in the context of recognition and enforcement of a foreign judgment. [4] This reference is to the decision of the Superior Court that was subsequently overturned.

OPINION OF MRS ADVOCATE GENERAL ROZÈS DELIVERED ON 30 JUNE 1983 ( ) Mr President, Members of the Court, A series of actions was brought against the Commission on 15 June 1981 by officials and temporary staff in relation to the conditions for the grant of the double educational allowance in respect of attendance at an establishment of higher education by their children. The cases on which I give my opinion today are only a part of those originally brought. They do not include those cases which the Court on 25 May 1982 ordered to be disjoined on the ground that the Commission raised an objection of inadmissibility in respect of them by reason of delay in the presentation of the complaint through official channels. In those cases the proceedings were adjourned sine die by the decision of the President of the Court of 7 June 1982. The main purpose of these proceedings is as follows: — To obtain a declaration that the second indent of the third paragraph of Article 3 of Annex VII to the Staff Regulations is inapplicable in so far as it restricts the doubling of the allowance to officials who are entitled to the expatriation allowance; and — Consequently, to obtain an order requiring the Commission to rectify the applicants' accounts by adding the amounts representing the double education allowance which they have been illegally denied. I — The facts of these proceedings, which concern a question of pure law, are extremely simple. 1. The applicants, who are aH employed at the Ispra branch of the Joint Research Centre, fulfil all the conditions for the allowance to be doubled except one: they are not entitled to the expatriation allowance provided for by Article 69 of the Staff Regulations and by Section 2 of Annex VII thereto. Consequently they consider themselves to be the victims of discrimination in comparison with their colleagues who do receive that allowance and whose children, like theirs, attend an establishment of higher education situated in Italy more than 50 km from their place of employment. In practice in most cases the establishment in question is Milan University which is situated 72 km from Ispra. At the end of 1980 they submitted requests under Article 90 (1) of the Staff Regulations to be granted the double allowance. The appointing authority rejected the requests by reference to the clear wording of Article 3 of Annex VII. 2. The applicants then- submitted complaints under Article 90 (2) of the Staff Regulations but they were all rejected, initially by implied decisions (failure to reply within the prescribed period of four months) and subsequently on the institution of proceedings by express decisions of rejection dated either 15 July or 9 December 1981. II — The disputed matter cannot be considered properly, in my opinion, without recalling first the considerable alterations made to the conditions for the grant of the education allowance since the various Staff Regulations of Officials and the regulations governing the other servants of the EEC and the EAEC came into force on 1 January 1962. ( ) 1. In Regulations Nos 31 (EEC) and 11 (EAEC) of the Council of 18 December 1961 the allowance was available to every official whether or not he was entitled to the expatriation allowance and regardless of the establishment attended by his child. Yet the education allowance did not cover the complete cycle of higher education since it was not available once the child attained the age of 21 years. In addition there was no provision for doubling the allowance. 2. The principle of doubling the allowance was introduced in 1965. ( ) The double allowance was then granted to officials whose children attended an educational establishment and where there was no European school within 50 km of their place of employment, provided they were entitled to the expatriation allowance. In 1968 that set of rules was consolidated into the uniform regulations. applying to all Community officials which replaced the Staff Regulations of the ECSC, the EEC and the EAEC. ( ) 3. In 1972 ( ) the entitlement to the double education allowance was extended to officials whose children were pursuing a course of higher education. That new entitlement was subject to compliance with the following three conditions: — Receipt by the official of the expatriation allowance; — The absence of an educational establishment of university level in the official's country of origin within 50 km of his place of employment; — Actual attendance at an educational establishment of university level situated more than 50 km from his place of employment. It follows from a comparison of the two last conditions that the establishment attended does not necessarily have to be situated in the country of origin of the official. 4. In 1974 the Commission submitted to the Council a proposal to liberalize the conditions for the grant of the double education allowance. It sought in particular to delete the requirement that the official be entitled to the expatriation allowance. In adopting Regulation No 711/75 ( ) the Council accepted the Commission's proposal only in part in relation to higher education. The requirement that the official be in receipt of the expatriation allowance was abolished in respect of primary and secondary education but retained for higher education. It simply added the words that the condition was not to apply “if there is no such establishment in the country of which the official is a national.” ( ) 5. The provision in force today reads as follows: “The maximum prescribed in the first paragraph shall be doubled for: ... — An official whose place of employment is at least 50 km from an establishment of higher education in the country of which he is a national or working in his language, provided that the child actually attends an establishment of higher education at least 50 km from the place of employment and the official is entitled to the expatriation allowance; the latter condition shall not apply if there is no such establishment in the -country of which the official is a national.” That wording widens certain minor points only as compared to the previous wording. ( ) It retains the three requirements laid down in the previous text. It should also be pointed out that by virtue of Article 5 (1) of the General Implementing Provisions for granting the Education Allowance ( ) the amount of the education allowance payable in respect of attendance at an establishment of higher education is a standard sum inasmuch as it amounts to the maximum prescribed in the first paragraph of Article 3 of Annex VII to the Staff Regulations regardless both of the actual educational expenses incurred and of the salary of the official in receipt of the allowance. For the academic year 1981-82 the figure was BFR 4105 per child per month. ( ) Likewise by virtue of Article 5 (2) of those general provisions each official who fulfils the requirements for the grant of the double allowance and whose child attends an establishment of higher education automatically receives a sum which is double the basic rate. For the same academic year he would therefore receive BFR 8210 per child per month. III — 1. The applicants base their applications on the sole submission of infringement of the principle of nondiscrimination which is one of the general principles of law recognized by the Court's case-law. That principle is infringed if situations which are similar are treated differently or situations which are different are treated in the same way, without any objective justification. ( ) The applicants consider that the requirement for the grant of the double education allowance that the official must be entitled to the expatriation allowance means that officials who are in comparable situations are treated differently without any justification. They state that all officials whose children pursue higher education at an establishment situated more than 50 km from their place of employment incur the same expenses arising from the pursuit of their studies. They are therefore in identical situations. Yet officials who are entitled to the expatriation allowance receive double the allowance granted to those who are not so entitled. Therein lies the discrimination. 2. Furthermore, there is no objective justification for such different treatment. That is the point which seems to me to be the central issue of these cases. Does the fact that the grant of the double education allowance is subject to the requirement that the official be entitled to the expatriation allowance create “an arbitrary difference in treatment between officials”? ( ) Does it, in other words and in certain cases, create a discriminatory situation “caused by the application of a general rule, which... constitutes a breach of the principle of equality among officials whose circumstances are similar”? ( ) Alternatively, does it create a classification based on objective criteria and directly related to the purpose of the rules which applies in the same manner to all officials who are in the position envisaged by the Staff Regulations, but which give rise to inconvenience in borderline cases? ( ) Although the wording does not state the purpose expressly it is clear that the Council's purpose in retaining the requirement that the official be entitled to the expatriation allowance is to enable officials who are not nationals of the State in which they are employed to discharge the higher expenses incurred by their children in pursuing studies in their country of origin. In that respect it is possible to agree with the Council and the Commission that studies in a country other than that in which the student's father or mother is employed involve, on average, greater expenses, in particular in relation to travel, than studies in the latter country. It is also to be noted that, in the majority of cases, officials who are entitled to the expatriation allowance are nationals of a State other than that in which they are employed (for example, 97.4% of the officials and temporary staff employed at Ispra who are entitled to the expatriation allowance are not of Italian nationality) and that, in most cases, their children return to their country of origin to complete their higher education (for example, at Ispra 147 children were in that position during the academic year 1981-82, whilst 36 were studying in Italy). 3. However, account must be taken of the analysis conducted by the applicants who, far from being convinced by the Council's reasoning, dispute whether the supposedly higher expenses involved in studies in the country of origin are the real reason for the requirement that the official be entitled to the expatriation allowance. In that respect they submit three arguments of which the final one seems to me to be the strongest. (a) In their opinion, if the explanation given is correct, it is difficult to understand why that requirement was abolished in 1975 in relation to the grant of the double allowance in respect of primary and secondary education. In my opinion, however, such a comparison between types of education is not relevant. In retaining the condition that the official be entitled to the expatriation allowance in relation to higher education the Council made a choice in the context of its personnel policy which cannot be reviewed by a court and it has drawn the logical consequences from that choice. Its intention was that the grant of the double allowance should remain an exceptional case in particular on budgetary grounds. In fact the abolition of the requirement relating to the expatriation allowance in respect of primary and secondary education did not increase to any significant extent the number of officials benefiting from the double allowance since there is at least one European school capable of providing their children with an appropriate primary and secondary education in the places of employment of most of them. Yet in relation to postsecondary education there are no establishments equivalent to European schools, so that to have extended the abolition to that level would have considerably increased the number of persons in receipt of the double allowance. The applicants maintain also that the supplementary expenses arising from studies undertaken in the country of origin by the child of an official employed abroad are covered as a whole by the expatriation allowance. The Commission, however, answers quite rightly that the expatriation allowance is personal to officials whereas the education allowance is specifically intended to cover the expenses associated with their children's studies. (b) The applicants have stressed throughout the proceedings the “absurdity” of a system which leads to the double allowance's being granted to' officials entitled to the expatriation allowance and refused to their colleagues who are not so entitled, although their children attend the same university and thus incur the same expenses. It is undeniable that that argument has some validity. However, it does not lead me to conclude that the situation amounts to arbitrary discrimination. In fact, it may be seen from the Court's case-law that, in order to interpret a doubtful provision, it is necessary to examine its aim and scheme. ( )In fact the grant of the double allowance to officials entitled to the expatriation allowance, who are in the vast majority of cases not nationals of the country in which they are employed, was not intended by the legislature but arises solely, as the Commission has recognized, from the imperfect wording of the provision in force. Consequently the applicants should instead compare their case with that of the only category of officials whom the Council intended to benefit from the double education allowance, namely persons entitled to the expatriation allowance who send their children to their country of origin. Moreover, even if the cases chosen by the applicants for the purposes of making a comparison are not marginal ( ) it nevertheless follows from the figures I have given that by far the most common situation is that envisaged by the Council as the basis for the disputed provision. It is therefore possible to say that the latter constitutes the expression of an undeniable sociological reality. If in the vast majority of cases children of Community officials undertake their studies in their country of origin ( ) that is, in fact, because there are powerful reasons encouraging them to do so. Entry into numerous careers, especially in the public service and certain liberal professions, often depends on the possession of national qualifications at the present stage in the mutual recognition of qualifications by the different Member States. Linguistic considerations may also have to be taken into account. Finally, it is clear that integration into the employment system of the country of origin is facilitated in particular from a psychological point of view, if the studies leading to it are completed in that country. IV — 1. It would therefore seem at the present stage that the requirement relating to the grant of the expatriation allowance which the Council has retained since 1975 does, on the one hand, relate directly to the purpose of the rules relating to the double education allowance and is, on the other hand, objective and uniform, that is to say it applies to all persons in the same position without any discretion to assess their individual position. Nevertheless, it seems to me that it is possible to deduce from the Court's case-law that such a requirement would be illegal if its application were to lead to an excessive increase in the number of officials not entitled to the double allowance which logically they ought to receive. Even in the absence of the requirement relating to the expatriation allowance the “introduction of any general and abstract system of rules” will of itself give rise to “borderline cases” ( ) in which officials are deprived, a priori unjustly, of the double allowance. However, that risk is increased and the persons unjustly excluded may become too numerous for their situation to be regarded as marginal any longer when the requirement relating to the expatriation allowance is added to the others. In fact the application of Article 4(1) of Annex VII to the Staff Regulations, which lays down the conditions for granting the expatriation allowance, is also capable, without doubt, of leading to injustices even if they do not amount to arbitrary differentiation. ( ) In other words where two defective criteria are superimposed they may result in the rules which lay them down being discriminatory and therefore illegal. 2. We must now ascertain whether that is actually the case in these proceedings. In my opinion it is necessary to distinguish four situations which may be regarded as abnormal. (a) The first situation is where officials are nationals of the State in which they are employed and are in receipt of the expatriation allowance (an exceptional case) such as Italians at Ispra. The statistics annexed to the rejoinder show that for the academic year 1981-82 there were nine children of officials at Ispra who were in that position out of 374 who were pursuing higher education. If there is no establishment of higher education of the country of which they are nationals or working in their language within 50 km of their place of employment such officials still receive the double allowance whether the establishment selected is situated in the country in which they are employed and of which they are nationals or in another country. Such officials may therefore be considered to be in a privileged position in comparison to their compatriots who do not receive the expatriation allowance (the normal position) and who therefore are not entitled to the double education allowance. (b) In my opinion it is proper for the latter not to receive the double allowance when they send their children abroad to pursue their studies, except in the most exceptional cases. It is not possible to speak of discrimination if that benefit is granted, for example, to a German official employed at Ispra who sends his child to a German university and is refused to an official at Ispra of Italian nationality whose child is attending the same course in Germany as that of his colleague's child. There is an objective difference in the position of those two officials inasmuch as the choice made by the former is often imposed on him while that of the latter is almost always made after due consideration. It is true that the choice of a foreign university is consistent with the principle of the freedom of choice as to establishments of higher education which the Community institutions are unable and do not intend to question. However, the principle of nondiscrimination cannot be invoked successfully to force the Council to gram the double education allowance in sucl cases when it wishes such a grant tc remain exeptional. It seems to me to be desirable that an official entitled to the expatriation allowance at the place where he is employed who loses that benefit as a result of his transfer to his country of origin should be able to continue to receive the double education allowance in respect of his child who is pursuing his studies in the former country and does not wish them to be interrupted. ( ) However, the fact that the number of officials in that position is no doubt extremely limited can lead to no conclusion other than that the situation must be regarded as marginal though certainly unfortunate. It cannot therefore be described as discriminatory within the meaning of the Court's case-law. Instead it is for the Community legislature to find an appropriate solution to bring that situation to an end. (c) A further abnormal situation is referred to by the applicants: namely that in which an official is not a national of the State in which he is employed and is in receipt of the expatriation allowance (the usual case) but whose children pursue their studies in the country of his employment and not, as envisaged by Council, in their country of origin. That is the position of the children of the non Italian officials at Ispra who are pursuing studies in Italy, in particular at Milan. Similarly it is possible to refer to the children of French officials who pursue their studies at a Francophone university in Belgium or to Dutch-speaking Belgians who are employed at the Petten branch of the Joint Research Centre and whose children study in the Netherlands. It is probable that a number of such children are the issue of marriages between persons of different nationalities or were born in the country where the relevant parent is employed after the latter entered the service of the Communities so that they feel more closely integrated in that country than in the country of which they are nationals. Their wish to pursue their higher education there would therefore appear quite understandable. It is equally true that the present scheme enables officials to receive the double education allowance not only if they send their children to their country of origin but also if they send them to any other country. That consequence, which it is known was not intended by the Council but arises solely from the imperfect drafting of the provision, is not in itself open to criticism, in particular if, inspired by European ideals, the child studies in a country of the Community other than that in which the parent is employed and other than that of which the latter is a national. However, that consequence becomes disturbing if account is taken of the different position of the officials to whom the provision was intended to apply. Nevertheless, the limited number of persons who benefit in that manner according to the figures relating to Ispra cannot lead to the conclusion that in that situation there is discrimination against those persons who do not so benefit. In addition, whilst the persons benefiting have no legal interest in complaining about the present situation, it must not be forgotten that one of the methods of terminating the present unequal treatment would be to abolish the benefit. (d) One of the unfortunate situations is that of an official who is not a national of the country in which he is employed and who yet is not entitled to the expatriation allowance (an exceptional case), ( ) but whose children are completing their higher education outside the country in which he is employed, for example in their country of origin. In 1981-82 no such case arose at Ispra. The supplementary information furnished by the Commission with regard to its staff employed in Brussels and Luxembourg enables the conclusion to be drawn that such a position is extremely rare since it applied to only two of 32 children of officials and temporary staff whose higher education in 1982-83 gave rise to an education allowance. In conclusion that summary of abnormal situations shows that they are not sufficiently extensive to result in the contested provision's being regarded as creating arbitrary discrimination. Nevertheless, it is impossible not to reflect that the wording adopted is perhaps unnecessarily complicated, in view of the large number of criteria and the reference to the expatriation allowance as one of them. Of course a completely fair scheme, which is neither injurious nor unduly advantageous to any one, is Utopian in view of the large number of variations in individual cases resulting from the considerable number of factors which come into play. However, it is conceivable that different rules might make it possible to achieve greater equity. In any event, I would suggest to the Court, for the reasons I have given, that the applications should be dismissed. Consequently the parties should bear their own costs in accordance with Article 70 of the Rules of Procedure. ( ) Translated from the French. ( ) The wording of che ECSC Staff Regulations of 1962 was identical in that respect. ( ) By Regulations Nos 30 (EEC) and 4 (Euratom) of 16.3.1965; the ECSC Staff Regulations were amended in the same manner. ( ) By Regulation (EEC, Euratom, ECSC), No 259/68 of 29.2.1968. ( ) By Article 52 of Regulation No 1473/72 of 30.6.1972. ( ) Of 18.3.1975. ( ) That exception is intended to apply to officials of Luxembourg nationality whose country does not provide a full range of university studies. ( ) Apart from the addition of the final words referred to above the changes comprise: First, the replacement of the words “educational establishment of university level” by the words “establishment of higher education” ; Secondly, the replacement of the words “country of origin” by the words “country of which he is a national or working in his language.” ( ) Published in Administrative Information No 153 of 2.5.1977, pp. 25 to 28. ( ) The final indent of Article 1 (2) b of Council Regulation (ECSC, EEC, Euratom) No 372/82 of 15.2.1982. ( ) For example: judgment of the Court of 25.10.1978 in Case 125/77 Koninklijke Scholten-Honig [1978] ECR 1991, paragraph 27 at p. 2003; judgment of the First Chamber of the Court of 15.12.1982 in Case 5/82 Maizena [1982] ECR 4607, paragraphs 16 and 17; judgment of the First Chamber of the Court of 23.2.1983 in Case 8/82 Wagner [1983] ECR 387, paragraphs 18 and 19. ( ) As was stated in the judgment of the Second Chamber of the Court in Case 20/71 Luisa Sabbatini, née Bertoni, v European Parliament [1972] ECR 345, paragraph 13 at p. 351. ( ) As was stated in the judgment of the Second Chamber of the Court in Case 156/78 Newth v Commission of the European Communities [1979] ECR 1941, paragraph 13 at pp. 1952 and 1953. ( ) As was stated in the judgment of the Second Chamber of 16.10.1980 in Case 147/79 Hochstrass v Court of Justice of the European Communities [1980] ECR 3005, paragraphs 13 and 14 at pp. 3020 and 3021, and in the judgment of the Second Chamber of 15.1.1981 in Case 1322/79 Vutera v Commission of the European Communities [1981] ECR 127, paragraph 9 at p. 138. ( ) Judgement of the First Chamber of the Court of 27.11.1980 in Joined Cases 81, 82 and 146/79 Sorasio and Others v Commission of the European Communities [1980] ECR 3557, paragraph 15 at pp. 3571 and 3572. ( ) It must be recalled that at Ispra in 1981-82 36 children of officials entitled to the expatriation allowance studied in Italy whilst 147 returned to their country of origin, which amounts to a ratio of approximately 1 -4 (to be precise 4.08333). ( ) It is possible to add to the figures already given that only four children of 1050 officials and temporary staff at Ispra who were Italian nationals were undertaking higher education outside Italy. ( ) Judgment in Hochstrass, cited above, paragraph 14 at p. 3021. ( ) Judgment in Vutera, cited above, paragraph 9 at p. 138. ( ) Thus Mr Carraro (Case 305/81), an Italian national, was entitled to the expatriation allowance and was in receipt of the double education allowance in respect of his daughter who was registered at the University of Louvain-la-Neuve, Belgium, as long as he was employed at the Geel branch of the Joint Research Centre. On being transferred to Ispra at the beginning of December 1980 he no longer received the expatriation allowance or therefore the double education allowance although his daughter continued her studies in Belgium. ( ) For example, because he has worked for a private organization in that country, even if he has not resided there, for a period of five years ended six months before he entered the service — second indent of Article 4 (1) (a) of Annex VII to the Staff Regulations.

LORD JUSTICE LATHAM: On 23rd March 2007 the respondents were convicted of certain offences in relation to two birds, a yellow cockatiel and an African Grey parrot, on prosecutions brought by the appellant. The only convictions with which we are concerned are convictions relating to the keeping of the two birds in cages which did not meet the statutory requirements. The statutory requirements are set out in section 8(1) of the Wildlife and Countryside Act 1981, which provides as follows: "If any person keeps or confines any bird whatever in any cage or other receptacle which is not sufficient in height, length or breadth to permit the bird to stretch its wings freely, he shall be guilty of an offence ..." There is no challenge to the conviction nor to the sentence that was imposed, other than a challenge to the decision of the magistrates in relation to the exercise of their powers under section 21 of that Act, which provides, pursuant to subsection (6), as follows: "(6) The court by which any person is convicted of an offence under this Part - (a) shall order the forfeiture of any bird, nest, egg, other animal, plant or other thing in respect of which the offence was committed; and (b) may order the forfeiture of any vehicle, animal, weapon or other thing which was used to commit the offence ..." On the day that the respondents were convicted, the appellant asked for the confiscation of the cages in which the two birds had been held, pursuant to the mandatory provisions of subsection (6)(a). There was no application in relation to the birds. However, on 10th March 2007 an application was received from the appellant to reopen the sentence under section 142 of the Magistrates' Courts Act 1980, so as to make a similar application regarding forfeiture relating to the two birds. On 8th May 2007 the magistrates heard that application and allowed the appellant to reopen the case. However, the magistrates concluded that the mandatory provisions did not apply to the birds. The conclusion they reached is set out in the case stated, in respect of which this appeal is brought, in the following terms in paragraph 9: "We were of the opinion that: (i) Looking at the nature of the offence i.e. keeping the birds in too small a cage, it was the cages and not the birds which gave rise to the offences and therefore, it was the cages which fell under the ambit of Section 21(6)(a) of the Wildlife and Countryside Act 1981. (ii) On the facts of this case, the birds did not come under the ambit of Section 21(6)(a) or (b). and we confirmed our sentence." The questions for the opinion of this court are in the following terms: "1) Whether we have any discretion, when sentencing the Defendants for the offences contrary to Section 8(1) of the Wildlife and Countryside Act 1981, not to order the forfeiture of the birds, the subject of the said offences, by virtue of the mandatory requirement pursuant to section 21(6)(a) of the Wildlife and Countryside Act 1981. 2) Whether, we, in making an order forfeiting the cages used to commit the offences under Section 8(1) of the Wildlife and Countryside Act 1981 were right in exercising the mandatory powers pursuant to Section 21(6)(a) and not the discretionary powers pursuant to Section 21(6)(b) of the Wildlife and Countryside Act 1981." On behalf of the appellant, it is submitted simply that on the straightforward wording of the two relevant subsections — that is section 8(1) and section 21(6) of the Act — the birds were clearly birds "in respect of which the offence was committed", so as to be subject to the mandatory requirements of subsection (6)(a). There was a subsidiary submission that the magistrates were wrong to have concluded that the cages fell within the ambit of the mandatory provisions and should have been dealt with as falling within subsection (6)(b). On behalf of the respondents, Mr Reeds submits that the magistrates were right. The Act makes provision for offences relating to the capture, holding and breeding of prohibited birds, and subsection (6)(a) should be read so as to relate specifically to those types of offence rather than the offence with which we are concerned. It seems to me that a plain and straightforward reading of the two subsections means that the offence is committed in respect of both the birds and the cage. It is the conjunction of the keeping of the birds and keeping them in the cage which produces the offence. It follows that in my judgment there is no doubt that the magistrates were required under subsection (6)(a) to order the forfeiture of the two birds in question. Accordingly, I would answer the questions asked as follows. As to the first question, the magistrates did not have any discretion in the matter. The order for forfeiture was mandatory. In relation to question 2, the mandatory provisions applied to the cages as well as to the birds. In those circumstances, this appeal is allowed and the matter must be remitted to the magistrates for them to order forfeiture in accordance with the provisions of the statute. MR JUSTICE COOKE: I agree. LORD JUSTICE LATHAM: Thank you both very much indeed. MR LOVE: I am obliged. LORD JUSTICE LATHAM: Is there any other application? MR LOVE: I am certainly not seeking to make an application for costs against the respondents, who are legally aided in any event. I am not aware that I have the right now to seek costs from central funds, as we are in the Administrative Court. LORD JUSTICE LATHAM: I am not sure I know the answer to that one. Mr Love, I think what I will do is indicate to you that if you consider it is jurisdictionally possible for this court to make an order out of central funds in relation to your clients, could you make that submission in writing -- MR LOVE: My Lord, yes. LORD JUSTICE LATHAM: -- within seven days, and we will consider the matter on paper. MR LOVE: I am obliged. LORD JUSTICE LATHAM: Thank you.

Special leave petition is granted. The tenant of Shop No. 7 in 148, Pantheon Road, Egmore, whose eviction from the premises has been ordered on the ground of wilful default is the appellant in this appeal. We do number think it necessary to narrate the events leading up to the filing of the petition for eviction. Those facts have been set out in the judgment of the Appellate Bench of the Court of Small Causes in detail. We are satisfied that on the facts and cir cumstances of this case, there has been numberwilful, default, though default there might have been. We, therefore, set aside orders of the Subordinate Tribunals and dismiss the petition for eviction. But we make it a companydition that the petitioner should deposit a sum of Rs. 5,175/- representing the arrears of rent up to 31st December, 1982 in the Trial Court within six weeks from today. We also make it a companydition that the rent for the months of January and February 1983 should be de posited before March 15, 1983, and there after the monthly rent should be paid before the 15th of these exceeding month.

Judgment of the Court (First Chamber) of 8 July 1999. - Criminal proceedings against Maria Amélia Nunes and Evangelina de Matos. - Reference for a preliminary ruling: Tribunal de Círculo do Porto - Portugal. - Financial assistance granted from the European Social Fund - Improper use of funds - Penalties under Community law and national law. - Case C-186/98. European Court reports 1999 Page I-04883 Summary Parties Grounds Decision on costs Operative part Keywords 1 Social policy - European Social Fund - Financial assistance for vocational training schemes - Improper use of funds - Nature of disciplinary measures under Community law - Not criminal penalties (Council Regulation No 2950/83, Art. 6) 2 Member States - Obligations - Obligation to penalise infringements of Community law - Scope (EC Treaty, Art. 5 (now Art. 10 EC)) Summary 1 Community legislation does not classify the improper use of assistance from the European Social Fund (ESF) as a criminal offence. It is clear from Article 6 of Regulation No 2950/83 on the implementation of Decision 83/516 on the tasks of the ESF that the consequences of using ESF assistance in breach of the conditions set out in the decision of approval are not in the nature of criminal penalties. 2 Article 5 of the Treaty (now Article 10 EC) requires the Member States to take all measures necessary to guarantee the application and effectiveness of Community law and, accordingly, to take all effective measures to penalise conduct harmful to the financial interests of the Community where Community legislation does not specifically provide any penalty for infringement or refers for that purpose to national laws, regulations and administrative provisions. The same reasoning applies where Community legislation lays down particular penalties for infringement, but does not exhaustively list the penalties that the Member States may impose. In such cases, national measures may include criminal penalties even where the Community legislation only provides for civil sanctions to be imposed. The penalty provided for by the national authorities must be analogous to that applicable to infringements of national law of similar nature and importance, and must be effective, proportionate and dissuasive. Parties In Case C-186/98, REFERENCE to the Court under Article 177 of the EC Treaty (now Article 234 EC) by the Tribunal de Círculo do Porto, Portugal, for a preliminary ruling in the criminal proceedings pending before that court against Maria Amélia Nunes Evangelina de Matos "on the interpretation of the provisions of Community law governing the improper use of financial assistance granted from the European Social Fund, THE COURT (First Chamber), composed of: P. Jann (Rapporteur), President of the Chamber, D.A.O. Edward and L. Sevón, Judges, Advocate General: F.G. Jacobs, Registrar: R. Grass, after considering the written observations submitted on behalf of: - Maria Amélia Nunes, by J. Lourenço Pinto, Advogado, Lisbon, - the Portuguese Government, by Luís Fernandes, Director of the Legal Service of the Directorate-General for the European Communities of the Ministry of Foreign Affairs, and Ângelo Seiça Neves, of the same Service, acting as Agents, - the Finnish Government, by Holger Rotkirch, Ambassador, Head of Legal Affairs in the Ministry of Foreign Affairs, and Tuula Pynnä, Legal Adviser in the same Ministry, acting as Agents, - the Commission of the European Communities, by Maria Teresa Figueira and Knut Simonsson, of its Legal Service, acting as Agents, having regard to the report of the Judge-Rapporteur, after hearing the Opinion of the Advocate General at the sitting on 20 May 1999, gives the following Judgment Grounds 1 By order of 21 April 1998, received at the Court on 18 May 1998, the Tribunal de Círculo (District Court), Oporto, referred to the Court for a preliminary ruling under Article 177 of the EC Treaty (now Article 234 EC) two questions on the interpretation of the provisions of Community law governing the improper use of financial assistance granted from the European Social Fund (hereinafter `the ESF'). 2 The questions were raised in the course of criminal proceedings brought against Ms Nunes and Ms de Matos for forgery, as defined in and sanctioned under Article 228(1) and (3) of the Portuguese Penal Code, committed in connection with a vocational training initiative carried out in 1986 and a course given in 1987. Ms Nunes is also charged with corruption, as defined in and sanctioned under Article 424 of the Portuguese Penal Code. The various training initiatives received financial assistance from the ESF. 3 At the time of the events at issue in the main action, Article 6(1) of Council Regulation (EEC) No 2950/83 of 17 October 1983 on the implementation of Decision 83/516/EEC on the tasks of the European Social Fund (OJ 1983 L 289, p. 1) provided: `When Fund assistance is not used in conformity with the conditions set out in the decision of approval, the Commission may suspend, reduce or withdraw the aid after having given the relevant Member State an opportunity to comment.' 4 Under Article 6(2), sums paid which are improperly used are recoverable. 5 In her defence before the national court Ms Nunes argued that Community legislation laid down sanctions for the improper use of Community funds by private individuals, that those sanctions, being of a civil nature, are sufficient to safeguard the financial interests of the Community and that therefore neither the national legislature nor the national court could classify the conduct with which she was charged as a criminal offence. 6 It was in those circumstances that the Tribunal de Círculo decided to stay the proceedings and refer to the Court for a preliminary ruling the following questions: `whether the Community legislation in force at the time of the acts imputed to the defendant classified such conduct as constituting a criminal offence, and whether a Member State is empowered to impose criminal penalties for conduct which, being harmful only to Community financial interests, attracts only a sanction of a civil nature under Community legislation.' The first question 7 It is clear from Article 6 of Regulation No 2950/83 that the consequences of using ESF assistance in breach of the conditions set out in the decision of approval are not in the nature of criminal sanctions. 8 Consequently the answer to the first question must be that Community legislation does not classify the improper use of ESF assistance as a criminal offence. The second question 9 Where a Community regulation does not specifically provide any penalty for an infringement or refers for that purpose to national laws, regulations and administrative provisions, Article 5 of the EC Treaty (now Article 10 EC) requires the Member States to take all measures necessary to guarantee the application and effectiveness of Community law (see, in particular, Case 68/88 Commission v Greece [1989] ECR 2965, paragraph 23). 10 For that purpose, while the choice of penalties remains within their discretion, the Member States must ensure in particular that infringements of Community law are penalised under conditions, both procedural and substantive, which are analogous to those applicable to infringements of national law of a similar nature and importance and which, in any event, make the penalty effective, proportionate and dissuasive (Commission v Greece, paragraph 24). 11 Moreover, the national authorities must proceed, with respect to infringements of Community law, with the same diligence as that which they bring to bear in implementing corresponding national laws (Commission v Greece, paragraph 25). 12 The same reasoning applies where a Community regulation lays down particular penalties for infringement, but does not exhaustively list the penalties that the Member States may impose, as is the case with the regulation on the ESF. 13 The nature of the obligation imposed by Article 5 of the EC Treaty is underlined, as Advocate General Jacobs observed in point 9 of his Opinion, by the first paragraph of Article 209a of the EC Treaty (now, after amendment, Article 280(2) EC), which expressly requires Member States to take the same measures to counter fraud affecting the financial interests of the Community as they take to counter fraud affecting their own financial interests. 14 Consequently the answer to the second question must be that Article 5 of the Treaty requires the Member States to take all effective measures to penalise conduct harmful to the financial interests of the Community. Such measures may include criminal penalties even where the Community legislation only provides for civil ones. The penalty provided for must be analogous to those applicable to infringements of national law of similar nature and importance, and must be effective, proportionate and dissuasive. Decision on costs Costs 15 The costs incurred by the Portuguese and Finnish Governments and by the Commission, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Operative part On those grounds, THE COURT (First Chamber), in answer to the questions referred to it by the Tribunal de Círculo do Porto by order of 21 April 1998, hereby rules: 1. Community legislation does not classify the improper use of European Social Fund assistance as a criminal offence. 2. Article 5 of the EC Treaty (now Article 10 EC) requires the Member States to take all effective measures to penalise conduct harmful to the financial interests of the Community. Such measures may include criminal penalties even where the Community legislation only provides for civil ones. The penalty provided for must be analogous to those applicable to infringements of national law of similar nature and importance, and must be effective, proportionate and dissuasive.

Arrêt de la Cour Case C-106/03 P Vedial SA v Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM) (Appeal – Community trade mark – Article 8(1)(b) of Regulation (EC) No 40/94 – Likelihood of confusion – Word and figurative mark HUBERT – Opposition of the proprietor of the national word mark SAINT-HUBERT 41 – Capacity of OHIM as defendant before the Court of First Instance) Summary of the Judgment Community trade mark – Review procedures – Review before the Community Courts – Procedural role of the Office – Opposition proceedings – No power to alter the terms of the dispute before the Court of First Instance (Rules of Procedure of the Court of First Instance, Art. 133(2); Council Regulation No 40/94, Art. 63(2)) In proceedings concerning an action against a decision of a Board of Appeal of the Office for Harmonisation in the Internal Market (Trade Marks and Designs) on an opposition to registration of a Community mark based on the likelihood of confusion with an earlier mark, the Office does not have the power to alter before the Court of First Instance the terms of the dispute, as delimited in the respective claims and allegations of the applicant for registration and of the opposing party. Although under Article 133(2) of the Rules of Procedure of the Court of First Instance, the Office is the defendant in proceedings before the Court of First Instance, the proceedings before that Court are intended to resolve a dispute between the applicant for registration and the holder of an earlier mark. Therefore, any finding that the Office has the power to alter the terms of the dispute before the Court of First Instance defeats the legitimate expectation of the party which was successful before the Board of Appeal, in so far as the purpose of proceedings before the Court of First Instance is, pursuant to Article 63(2) of Regulation No 40/94, to review the legality of the decision of the Board of Appeal. (see paras 26-27, 36) JUDGMENT OF THE COURT (Second Chamber) 12 October 2004(1) (Appeal – Community trade mark – Article 8(1)(b) of Regulation (EC) No 40/94 – Likelihood of confusion – Word and figurative mark HUBERT – Opposition of the proprietor of the national word mark SAINT-HUBERT 41 – Capacity of OHIM as defendant before the Court of First Instance) In Case C-106/03 P,APPEAL under Article 56 of the Statute of the Court of Justice, lodged at the Court on 27 February 2003, Vedial SA, established in Ludres (France), represented by T. van Innis, G. Glas and F. Herbert, lawyers, with an address for service in Luxembourg, appellant, the other party to the proceedings being: Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM), represented by O. Montalto and P. Geroulakos, acting as Agents, defendant at first instance, THE COURT (Second Chamber),, composed of: C.W.A. Timmermans, President of the Chamber, C. Gulmann, R. Schintgen, F. Macken (Rapporteur), and N. Colneric, Judges, Advocate General: D. Ruiz-Jarabo Colomer, Registrar: R. Grass, having regard to the written procedure, after hearing the Opinion of the Advocate General at the sitting on 15 July 2004, gives the following Judgment In its appeal Vedial SA (‘Vedial’) seeks to have set aside the judgment of the Court of First Instance in Case T-110/01 (Vedial v OHIM – France Distribution (HUBERT) [2002] ECR II-5275, ‘the judgment under appeal’), dismissing its action for annulment of the decision of the First Board of Appeal of the Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM) of 9 March 2001 (Case R 127/2000-1) in which the opposition by Vedial to registration of the word and figurative mark HUBERT sought by France Distribution was rejected (‘the contested decision’). Legal framework Article 8(1)(b) and (2)(a)(ii) of Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark (OJ 1994 L 11, p. 1) provides: ‘1. Upon opposition by the proprietor of an earlier trade mark, the trade mark applied for shall not be registered: …; (b) if because of its identity with or similarity to the earlier trade mark and the identity or similarity of the goods or services covered by the trade marks there exists a likelihood of confusion on the part of the public in the territory in which the earlier trade mark is protected; the likelihood of confusion includes the likelihood of association with the earlier trade mark. 2. for the purposes of paragraph 1, “Earlier trade marks” means: (a) trade marks of the following kinds with a date of application for registration which is earlier than the date of application for registration of the Community trade mark, taking account, where appropriate, of the priorities claimed in respect of those trade marks: … (ii) trade marks registered in a Member State … .’ Background to the dispute On 1 April 1996, France Distribution filed with OHIM an application for registration of a composite word and figurative mark comprising the name ‘HUBERT’ in black stylised capital letters bordered with white, surmounted by a bust of a chef of jovial appearance raising his right arm with upturned thumb. iVBORw0KGgoAAAANSUhEUgAAAHgAAABiCAYAAACbKRcvAAAAAXNSR0IArs4c6QAAAAlwSFlz AAAOxAAADsQBlSsOGwAAABl0RVh0U29mdHdhcmUATWljcm9zb2Z0IE9mZmljZX/tNXEAACEL SURBVHhe7d1ZkFbVtQfwIyAgKDM2cQRBZFAUlKiIxiEqDlHjEI1TBqtyU5WXVFJ5yGNiVd5S lUpV8mAqyYNJTG7MVHEe4kg0KE4IIoKIGmmRSYZGVPDu3/qyOictSDfKvf1xv1PV1V9/55x9 9l7/tf5r2Huf7rd9+/YPqtaxV0rgxhtv3KffXjmy1qA6JdACeC9XhhbALYD3cgns5cNrWXAL 4L1cAnv58FoW3AJ4L5fAXj68lgW3AN67JbDPPvvEAD/4YO8s6P2/teCuwO6tQDcdwGlpCUhP +SXv27ZtW/X2229Xr732WjVo0KDq4IMPrvr27Vv179+/cs3eYtFNBTDBb9q0qerXr1+13377 9RiEBLe9vb168MEHq+eee64aMGBAdcghh0Sbo0ePrj796U9Xo0aNCpDLREz8buajqQBmVYMH D+62z+wKztatW6vFixdXf/jDHwLcCy+8sLrkkkvCgt95553qpZdeqh599NFq0qTJ1YQJE6r3 33+vGjhwYI8VqTcpRFMBTHB10LoCWKdV59Dwxo0bK8Ci3xdffLH69a9/Xb388svVxRdfXF12 2WXV8OHDAw8gH3HEEdX8+fOrv//98eoLX7iyOuGE6U0NrnE1HcB163jvvfcCANa37777dtI2 cDdv3lzdc8891dNPP93pW1EuBgDuOeecUw0dOjSaSypGzbNnz64WLbqpuv/+ewrgh1cjRozo NmP0JsvNvjQlwABcvXp19cILL8Q4Xn311Wrq1KnVcccdFxbOctHw7bffXp144omFcieFIgBw 7NixARqL7tOnT1i3c6jYwR8fffTR1UMPPVT9/ve/r6699tpOt9AbAdxVn3o9wIQPtDodv/vu u9W8efMCpBkzZhRK/XuAAGDHs88+G9Z78sknV1//+tfDurUDUD95+M65tGK/UfYFF1xQrV// dvWPf/wjqHvOnDkRgDVjZN2rAc6oOQFCxej07rvvDlAESevXr6+OOeaYsOAE4Mknn6zGjRtX XX755Z2WWQfV51Qav1H9li1bIqL2c+ihh1aXXnpZ9fOf/zyedeCBB1bnnnvuroylV57v1QBn 1Cy6veuuuyrASZMmTpxYffWrN4TV3nzzzdX48eOrww8/POgWQGPGjKmeeeaZ6pVXXqk+9alP /YfVJrh+o3LPwAT7779/p68Felvb6KIkh1dLliyu3nzzzV4JXnc61asBJmiFCP6QH7366qtL 6vJ+9cQT8wu19q+ef35hyV/7V0cdNTHGmnQrR5bXLliwIHwuv1ovkIisV65cWb3++usRoGEA VuuadAkKHlwB30yBmvXotQADF5jyUv7v1FNPjSjZ91OmTKoOOGBwAWBrkfv2UpHaENTNvy5f vjyCLynP2WefHRZcB/ett96KAEw6hHqHDBkSINYB9tz777+/mjt3bvWZz3ymmjlzZrPi27vT JGD985//rM4888wIdjKdQcV85sSJRxZAX67+/Oc/R4lx8uTJ1W233Ra575e//OUoP9bBdQ9K f+KJJ6rPf/7z1emnnx7UnGXLrF7dcccd1SOPPBJFEEqi7WYMsGhlr7VgnQPUoEGDw8rSdwqI fM/qWCzgWaW0ycFHAwpwFML1/DKAHn/88aDtSy+9NH743jxYrLRq3bp1Qe9f+tKXqpNOOinu oxi7UxrtDWbfqwEG3qBBgp9GPRhwqlGAa2trqzo6OqLkeP7550dKBAjWmMBSAOD6Tir1i1/8 ovrsZz8b1gvceg4sXx45cmQEcix/1qxZoUAZhLUseA+o60EHHVRA3V6i2PYS0Y4Ny0LD6W9F yqzs+OOPDzCcF4gpRypSnHfeefE9Skbj2kP3rsuIO7vN4o899tgA1CwTZcm6dzNPOPRKC2Zx gEHNqkoqVSxQJD106LBShlRffrcAv7pUpYYHRaNQ1wuu+M7nn3+++tnPfhZRuEN7ypNA1j6Q 09oB6G+/165dGxF2Fk32gN7+rzbZKwFGn0mJABbktLevLFHtYwHAhAnjCiXPKinQYdXDDz9U LPbmmDgQNDncc9RRRwU9Axhww4YNC8tctmxZfO87vjz9uSiaS8iypWv2hqNXAkz4KFJeK5ia MmVKWC9LXrhwYSlqjI1zGzZsKinR4shXMxBjlTlxr8pl0gFYdUpes2ZN+G/3KU0CVWmT8rje eWCfccYZH6qENRvovRLgevGfQOWlrBi9ipaB+9hjj1V//etfo1hx8sknRSUr0x2+0zWoG5Dy aFaNdlW5TBeaZRJMHXbYYeFrFTOkWM6xfqmSfPrb3/5206ZIvTpNysAG2MDlQ6UwChSAlQ4B dOjQIWGJLF4UbAqwb98+RSm2lULG6ALWlOqaa64u1aqpndbIXytysF6fKQMfrLZtupASSJsw Rla2WlH0HuSuBJt1mSkCLKsEKvAFVNInJUn0vG3b9urOO++sVqx4tbruuqvLjNPxxec2Oggo 1S0AZ3DlOxTOHbBoB/DfeOONUKQDDjhgD45uzzbdKyl6Z0MWEEmRAJx1YhaIhk0s+M13Llq0 uNDt7dX06ceWn+kBblpgThvWixwCL+1JwZzX/ltvrY7P0qdmtd5eTdE7Alkg5UfwBEwH60Kx ChR8J4rdsGFd5M7Dh5/ROZOULMCfU5KsblEa67RE2a7R7vz5TxfL7Yj6t+9aAO9ZlulsHbUC dNWqVQGIMiTAWBn/LHAyL+w7gROwfJ8+PPNfCoHeBWxmkwRguTbLPZs2bSh17gkxLdnM4Dad BWfpUMfTIlljTkSoM5ukB5prWTUqtkIShQNUJA04+TFaphC5Nku72IEijBnT1vTW23QAAzXz 2aw3G4Tv+GJAr1ixIoATFbNkFm++l5WyThTvewwA2GSCbFuwRjnUuveGo6mCLIvlRL8KEehZ 1AtowAEo0yWUzcdu2rSxBFwvFAofUgKoo4K2WbFzFgLkAgFW7l4RukKKwEy7yRTNvAC+aQDm C1mftVF8sBzV3/UFeZmzouigp377lutWlIh4VUmlnotrKYcZJbNHLBkdS4e06X5KZKIfhdvl gM4dzTon3DQAEzIA+ExLWc0YWQyAlusrJevpT9a0N2zY0LlNBXXLka2YBBoqlvsqbqhH89FL ly6t7rvvvur73/9+ddFFF5VF8F9oWrZuKoCTMvnUG264ofrtb38bYLA6lM1CsyadiORKTJbK SlGx64cNG1HAnBHLf/hidJ3zx0BW+xaVe4Z7rrvuus7lt8kUzYB60wGcQiV0vldw5QBwLn8F WPpmv1kqv2oSXwWsYeWNgM0ME6uu72CgKNp1vXO//OUvA3zMkctsm2XPUlMCrGT5u9/9Lvxw VppEw2aCAADAnO9Vahw+fEQJqsYVC+wX6ZLihmDLPRbOZw6cDFFfx2XBnb8t1PvTn/4UlJ27 IFoW/AlLAHjKir/5zW9i9SRwc2oRFbM6Fqu4wTcDws/atWvK5P9N8Z1Zp9GjxxR6nhalzIED Gwwg+KIMLDznhZOKBVvOmeRg8dZzsfhmqHI1jQUTJhBzGk/KAwi+FdU6BFNpwa5l0UBy3Wmn nRb5sClCFN6nDyvfN67HBLfeemvk0MqTVlK6pm7JFhMA1apM1n/FFVfEFGNvB7lpAAYg6zX/ i4L9KDcCIVc81icU6uSBktev31DuXx7VLWBbx5WHaFw9GtBSJ1aOmutTlp5HQb7zne9EhP3T n/60uuqqqyKql1fXI/lPmLg+VnNNATBBs0aL7FBpFigAmlN9CbRAi/XywYIwv1nw+vVro9hx 7rlnh89l+doFzOjRB5ZAbL8Al4VnJO5Z2MFCA+1rSz38yiuvjLnnH//4x+HDrcHOlSEfC409 cHNTAGzcfK55X9Fz+sgMivjZ3OzNL/sBblvbgcUax5eUZ2KkQ4CkKF7hQEkAqZSp7nzNNVeF BVselMUNk/5Y47vf/W6IPn2yqNwyXUt8suTZW6tdHwvgOoXtAeWLJrMEaSKBQOsVpfSvhMtq gZWWecIJJ8QSWYsAGv55Yyx6R+uARcP8uDb8dr1JCVSc42KxyRb18blHzdozBWCODPJ6W468 WwDXZ3IIlyDyqAcmXYVS/zvb6KoYO5qeQ5OKFF2FmIGXNjJdcp1ChT2+/fvvWz3wwEOF1tcV IE0hDgog0TBqzjKn4Oxvf/tbuADVrLPOOitq1ZQFbXc9pFqsm/9VG0/34Fouos4we0rxu9vu bgFs4AZi/bDpNTnmoEGNHX1ZKjRYgBAiq8t1x3VFABwFqW/QritLXsvqEgwBjXsaS3O2hUUS aO5XEnAJmuxiALZrLdmZNu2YiHr5yvq0o2eohgGMVSpZCqYArN3cVprRsva4Cv6ZItSPDP4+ yTnkj8sI3QY4l7r4vXDhorL68JUigAFBb3PnPl4A3KcI8IhYeO5Q6zU7k/R35JFHdgIDUMX8 +fOfKkrwbpnKmxIzP8B1f04iZBC1dOnLxT++Hsrkuyw0UDKHHDX3FLmXjzWBYBHdOeecXfzk 8M4tLK6jJAmc+1mtmvSSJUuCpvlVB2XwJgE7HEXdlIf1WoTPV+darWSj7rASBamz3s4A1BYj obgUbXePbgPMGhtFg7Ul8HilaPnkoKdcv7xx46Zi0W+EZbkG7X3uc58LsBQHaLwVkQQpn1yw YFFpY1qsfBQ4bdw4OEBRMfIuDQB4noGy1CuvvCJSpEWLFsWUnvOAcY5SuAdwrFQglctfBVaC p46OzeW5I8N606+610EJ9RV9535iIIiUAfqtb32r+sY3vhFp0UsvLY0c2eY0R64R8zmtPNkm Lbnu1/M1Enlt9mFHzOW+jwOuPnUb4KwSoafJkycG/d50002dflHe6LUJChFARF+AePDBR4sl DIm9Ra4Rldo3dOaZZxVhV9W9994XvnLwYEtZ26pTTjml+stf/hLAeQWDtISysBa+1TNyF78p P5UnLoBysE79BEC+zMz6qqeeeqoEVYeWe4/orH5hA/fIkQGhTb6ZoIHqO5E7i/bj+jvuuLOw 0oLSRsMdcVGUU/9S0UXv2qI0aRQUhbLWLV77uceKpVLKOphdaT6Vpu7iumPV3QY46YdfQ08P P/xwTMERJsE6z3cZCEGhT69dsAvf2mXn7eqzWUzJD6ii2ltv/e8A0+CmTZterrkkghfAURT7 dM3qOEwY+PnKV74SfwNHGyybsAkp6U+/UKy+nHnm6Z0L4bPSpWq1bt3a8rMhUqr99x/UWbDI Aoq2WLa0CQu1t78ZwJtf5oL0G5ie41qyYaH64bUPgHVeEcW1Inc5tWuwHOXIKhxWoQDplpId yJECk09OrHQF+6OA7jbAKVC/dY5gCZH2GYTB0HJpCY33Xg0lPZErgJcvfyX8rtSFldJuOwfy /Ri5laRPn30CXLTL2k0q5BJZPp1bwAR2C/KFwCBQAiSkHHwWOQRNVlsed9z04i4OiH67hrDW rVsffpeiZHqV9O2ZDuNwTd++jTf1TJ06uTDYpM65aPexYNcYD5fUWCP2QWm3o+TgR4bbIDNK tWXLO/FmAsDlJAcZOk9JPLee61OA3OXoe4rmXuPqznrtbgFMIB6O6jJYMqicvQEKgAU3+f4p 9Oce/lZB32fronRu2rRpQYOiXYfO0vijj55cBP1+BE201neokCLpQy7NcR9/znJRcZYqXUMg uTvRs332XkrbWMwEUTrf2XfE3bCujPwT3FzpkX2QPmUxxYpL04bGx5XkDgvguw+4BA8M982b 91hMO6pxjxgxqrDXbZGy2SwHVFaffTZezzFmixAoi75qL/cye46YAgv4fle18G4BDATACFxQ Ftqk9QRDu5xDzwSuQ4CgrRRAhymDDgGDFfOrlIEAgeM72sw6CYb1uo+1eUZjo9mGUBCUCxT3 A5AwCNmRcYLPnkWpcseCFEiuqw7tsLeJdWYUm4v29B1QuWiPkCkvN5QRLUv9yU9+0jljlcIm B33BTj4DQDsUwViuv/76EtmfX5R7ebCd7a0UzzWCxrpiCSDdn0ZkLAzBnmeMlBZfX8GyI6re JcA0xOBoO/9BQ30GJFBY06xZpxaaHhj+bPz4sfFSFCDkbA9asZYKOIIwgiIkwsyd9sDKRe0G wqcCMX2Ra5UHCUPqQpD5pjrKxb/z2WhbxE4ZBXlZiCAQETh698MKWEy6GG0BJt9mm2khAVNE h/6rXGnbdSJu54GJGdLKKaRxASXTOsoEUBG5+rVsAYvlpjntuC9fPYHy8xWNaaVclpUmGeNk PWC3fbCGCcbLwFgWkAwk37HMig1+5swZRfB9i4Yp2g8oguVb+8V3zlMGfsh9/C+FQXG+xwAG x+JSMPJQ2zlzzTMtz9cQApogRdMUR7+0nSVM0bv7KJ6pvfSLWdzwLJ+xCBrUj1zWs99+g0q7 I6Ot9IMUjbI65MLuEQtoI/vCooYOHR6W3r9/v4i+teteMuRiKLW/WbIg1VsHWGiyT6ZEYooE zpgpSAaPFEp8oi0W7veO0qs64Du14Mw/DcYK0jlzzisBwuaIgJ3LPbeEoSM6O3XqlHjo6683 8k6dRq20lJXxm7Q3/Y7O564DwVlWvLSRC9WBnQUQjOFvOWi+HI2ma1dUL4810+N6z3QtK83C hX7nLkVuwLs9brnllnA3jYrY/mUu+JziCqYGC7heX3NxgTZzVomlGbdnaYfAcyUJi6bM+iTa zt0XzvteVE6B8s162so9yxRef/QzCzs+ux64mI4l5/M+ynqd2ynAqTmEPnv2rEJvC8OSc9sI rUepOiOvzd16tG/p0pc652yBJarW8UbANTCCj4wECdbRyG8buSIKZN0EQns9x3n38J0shnBz Kwoqz6g50znxAOtA9wSZ7kD7K1a8Ft9lcKZPDWVcX37eDqVUPVO8aWsbGZbrvLf08OX8uP7o 57333htKn8onmOIqgOge7gwLGj/AKKRXTKDqtL7GGwzag7Zzz5VnomPjoMxYSt7vb21l8WRX ZdEdApycn5rNAlgJYRsIcAFHM9EPDW9Uizo6c1qdz9kawnCe73Av35i1ZMKcOnVaobdRhb4W lih9QmgzTc+SJAFgAHm3ayZNmhLrnQVy6Ts9C33mm3bk4BRJ3zMFI3g0Sjlc5w16nu/wN/A9 0z2TJh1VFErK8n4JKueWMS4L2teW8YqCWRWXZazA1z6GysP3FD5dEDBcT1H1VUyQb5zv6NgS QFJm37nOuBV7yMxz/RZ/iAO6W6PeqQWzDgPxm9bwKXweQaY1AiFTEoLJ+q6B8bM0VocBi1ak RyiLAmVkrKOnnHJyvF3dPbSdZbjXc+qlSKCpW48cOSJ2LBAAVmCpAOK3LXNlJXwsMBu+sjFF KIZg0a7hCzPKdo41a8O7sqSD/J379WHOnHNCmeTe/DF6dK+Azn0ZCbNeyuwAKgCdR60OwLJM 7Yrov/e974VlXnfd9cUlvRrG40c/FHeMAZhY4Ic//GHI0eICysH4Mk3arSCLgNHP1772tQDF Q9Pn+ExwOkq4wKVhvsvCBeHTeAMAYi5XpSwZKeoksEeNGhl9POaYKfEaX8qUs08EieIVJdyH +hYvfrEowfJOpXCviN2sUJYcCTNfEn7YYWOjdDpt2tFBu8amH7keOqchKYtxsHxLe4wHm3A/ 3/zmN8NqzVIBgeXnRjVKYG+xGoEDuwmiLLDPVFE7jqyKsXhZCYsfO/bw0p/G24DS91NEFT1K b1w/+MEPQoZATRnvbHKjDvhHpklZK80VhG7UOECzI/5m2ejJQPno3IMLEFZLGNpAO4TnIDTC pADDhg0t2r6kCGh8GZDI2BxsYyM262IxK1e+WRRhdCjDPffcW565Pl5Iqg1Wwy+icJpPEO7F BvyWSQKCFlFnBE8hkkKT7gDjumQi42eBGQsYM3ClWdZlGbfAS5usWPvG729G4TtGkM9RS5fq Oce6Gy86nRBjxJaZmmXpFsgU1fNTecgur/soy81zOwWYdktpMvJFC6hTZ2muwVt9qPhgoAAE nlSAYHWCMFCd63NhOg0kAD8GgrKU9datW1MGcmSJetWUWXafUBhW2CiebCyU1RgwugRGVsAo gBKoQ9Tv+UBigXx/Y1Lg/VCwF19cFMySNMt69dUzMEoWGwg1MwXCJQ+MhsWw1gMPPBAA5dIf 36mYJbulG8uUjaWqoTtPTkCVSnpVoz5yK75LZdM/zxeviPjT2HYVVHUFfacA6zhwDMQEQWph Rq4oyYvFPJAADBbt6IggJV9O5jPFoAAEnTlt1lxZhYFdeOEFkdKwgq1b3+ncgS+STOpk9WvX rgv2cHhWRtgAYR3YQp/Rl3OeiS5RoxxVns59UEpj0UaWYilkVt4A715AWTKrfX1nvayND0eh lNc5CqC9TOv0D+gsWvrGd3ouH8+nYgrtTp9+XNlndUs8R83eC97IFPPpm6jdOuyuixS6Y72u +cggS8dFrzopjEdr+R4MABMCnyQPzAlzwOkMSyBwnSUos0CAcT61Ef2loOTBfBZNtmaZ0F1P ez0zS3YsVHsEmf4RTTpY7RFHTIj/mrJmTePtd5n3ei72uOaaa8IK5b+emTGEEiB3QZH1GXCe y08amypUuhQ5OmXLMiplyX3LnkMuAHffnDnnxm5Gkwy/+tWvIjfOMqoxUOZXXxVPvB/rxtyf RRjjNKbcVtNdULvlgw0cFaIW+W/uAyLoug9FJegbMPnG1xQ2wRMU6nPk220IJOnNZ2uMM+9N SkZlOeWXryOUo4rGCaOxSGBj+F5Mk0d7+xulH6s69w4DiyBz4zfXgKL9RvHAYN2pjOiS39R3 YBsvYLDCF7/4xVAa/pey6IcfSuRaBsASsQhrveiii4slTilKPK9Mi94Vz3WebCkXK6WwFDVr 334bD3om/5xe3B1wd2jBGZl5EGHSwnwLTb5Jva1tTAh/8eKXSiePDS2TWmR9Gjg0PCs0HoR+ UT0ap5m5NhlQOTme/sXfBCftOPjgg0JgQ4YMjXQHmxAkRSDELHUSmnaXLVsa4LpG2/qgL/qe uxBdB/CcO/YstKvNzAZSiaRFAB016sDystIGC1FkbVIOzyAjvymN/gAHnSsOqe49+eQLBeTn I4bQj5wowU7y2nzlcc4cUTiMYEz5n2R66nt3GmSlTzIIeZeH0OoMRvw9Y8bMziWqtK2xjGdZ Z7pEgP5TSRbS+S3aK92htXxyrqGqz6L4nOuWuQA+SrsLFy4usyhzIsXxgrPC3p2pAgtg4fqt HxghixuE7K07WCjrzTkTxTIoCOFSvj/+8Y/BMHw+5XYvK5OHmj1TiBkwYN+Sr74cz6J0QNBn isiK7ZnS/4xXBKinnXZqiS9MU75d4osFna+PUI2jFJ6TuyIALAPQD+yUhZndtd4PWTAtyeUx rACYOiL/Awp/SUNnzToxBmK3gHTGQHWIsHSSpdC81157PfqG/uzMU6gQ7QLa37kowD20nnX4 PXPmSWXT9eXhCzdt2lxoqq2AtzrY4oILzg8wgOk5+purJ3P6kRWyknHjxhdFOz8A0X+WIad0 nhCNz3hy0QDFpMyu99nGb6/0dy2lcZ2ADYA5P8sKvYZYO4In1TFuS9+M55FHHo00bfbsk4qS r4i+Yj/Zh89+yJplp+vCPvrPeHKyf3dB/o8gCz1nIo1CaRCqotUGkrMp6YfWrFkdkwI6YlFa ltPcRwgLFjxbIsjjw1JUkX70ox/FIPznMYUDg5MTZiTqH2wIdMaNOyyslNWzZH2RWqhxy2s9 01qu7dsb79ugCIRG6fgtvlVgwz9rx6oQ/RHNChq5E8WUnIHKSQ5KmspBDixfFAsoiwWAmitF gUIR9A0gfgSb2CTnygVh8+Y9UQAfGyVY11IwPh47qKhpn0K4JydVLJBob38rvu9OMeOjwP9Q FK1TOcsjD9ZhFEbwuSwHrdBA9PXMM88Xy7Wnp7F/B1gEvXHjhtiiafuIgwXkxi3TeKgThYte c1203JcwvcSMhUpDuAmDNMUmxUDxFrUPHz4yih1btnR01sBdL+CjkKgOHXd0rAmFykK/lE6x 3wRBbi8FHLoEdJYvKTM/Kw/lr1m7MaD2zZs7wrIov2tyQkBdwEoRDJOBF1fn3+RNmPBfwV6U 1tiNU0qoP8ZP4RiGbMN212HDhgQL7K7v3aUPTpCzJpvlSBpuUARoELQy35BO63P7yLjD26ph I8aU5zRei+8gFFoOCHSfb6eTNhAWING8gQEp9/865zmCNJSMvqyNAiYLTorNoIqSCpp8j3ny LbVeroI1Gv936avRFsvPmnVOHgABwOjYAjv5Ptawxvrqq6+N71etao8+snKMMHduY620qhoG 8ZxGGtUvXJE6OWAZBcNhJNwGcLO4QpHIVSBq/ZjvuQoyJbvdseb/sGBAEAowM7HOJB5ANFwn cm1vpkP5IrLsAGrpVwbnNQl1DfTZgPhg1wi0ctWC5/jJKDSXorgnV30ANOeYfZ/TZnltAgU4 FJhTdvrpnHo0q0aL/s6Zsdzz5DruhwKuWrU61n+fcMKMWM4r2LvrrrsjnrBDEYDKpitXtheF a8QHWSHjt70kJleLGLNyLLlSToqGhcxdK1k2ZG1BwcygaoxAEfI/pzIqSrM7/vhDPtgA65pS B8j3OYdZ/74OeFJDGO2/LLfuI7IUl2ubUaIjn5m/u1IT5XLOT27VzGlNz8/dENrK2nm9LZ8x Ap+e9WGCz3TE83JxGwUxuzV79slhkYBCveg2J9/9VrxAtcceO7UwxfhiqUsiBgDUkiXLiqt5 IywSGwhWKQUX4xp1czECa8aAGSAK1HLpsb7pKytmCB8b4Lqgd+a4d+QTeuonuirHv5Wisd93 R0dX4OtKmMDnvck+XdlDu/kah/ozuipZYwlt4z1bqdRYB91rM3+04TOlxyIsv1GgGRbbUfVj +/ZtBWx7nx4oLuWQYBHAAfLJJ+dHlqCaRc+3bu2I2AbtZ1aRlbbs485w2dn3u1x019MGe3p9 T5WjO4q3qzYz78y2uv6dlJ8ApuLXv+/aD8/MaNpnlgdspUlz1xYpSKewCKawlBZojQV73tz3 bsQKAwcOCMVyTnzAerkylJ2M1RMZ/58D3JPOflLX7koBdvSc7tzTlTFYYdKw5UjWj2eMkys1 /71Qwr/Rbfzr23RjAKYQWcbtTh+69v3/JcCflKLsqh0Wl9tNEjig15nh325xx++lRv85AbKr 5+3ofAvg3ZFaD+7panU7SnU+yjJ3x2rr3WsB3AOwmvHSFsDNiFoP+twCuAfCasZLWwA3I2o9 6HML4B4IqxkvbQHcjKj1oM8tgHsgrGa8tAVwM6LWgz63AO6BsJrx0hbAzYhaD/rcArgHwmrG S1sANyNqPehzC+AeCKsZL+134403/utfJzdj91t93pUE/gf7fhLIDlERgAAAAABJRU5ErkJg gg== The goods in respect of which registration was sought are in Classes 29, 30 and 42 of the Nice Agreement concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks of 15 June 1957, as revised and amended. On 6 January 1998, Vedial filed a notice of opposition under Article 42 of Regulation No 40/94 against the mark applied for in respect of some of the products covered by the mark, namely, ‘milk and milk products’ in Class 29 and ‘vinegar, sauces’ in Class 30. The earlier mark is the national word mark SAINT-HUBERT 41 for ‘butters, edible fats, cheeses and all dairy products’ in Class 29. It is composed of two words connected by a hyphen and including the number 41. Upon rejection of its opposition by a decision of 1 December 1999 by the Opposition Division, Vedial filed an appeal with OHIM against the decision of the Opposition Division pursuant to Article 59 of Regulation No 40/94. In support of its appeal, the applicant annexed to its statement of grounds several documents intended to establish the reputation of its mark in France. That appeal was dismissed by the contested decision. The First Board of Appeal of OHIM essentially considered that, even though there was a high degree of similarity between the goods in question and even though, for the purposes of the application of that provision, it was possible to take account of the reputation of the earlier mark demonstrated to it by Vedial, there was no likelihood of confusion in the mind of the public concerned since the conflicting marks did not display strong similarities. Procedure before the Court of First Instance and judgment under appeal By an application lodged with the Registry of the Court of First Instance on 23 May 2001, Vedial brought an action for the annulment of the contested decision on the sole ground of infringement of the concept of likelihood of confusion for the purposes of Article 8(1)(b) of Regulation No 40/94. Before the Court of First Instance, OHIM acknowledged that if it were legitimate to regard the earlier mark as reputed, it would be appropriate to conclude that there was a likelihood of confusion with the mark applied for. None the less, since it was not possible, in OHIM’s view, to accept the reputation of the earlier mark owing to the appellant’s failure to provide evidence of such reputation within the period granted for that purpose by the Opposition Division, it was appropriate to examine the case without the adjunction of that factual element. In that regard OHIM considered that, if the Court of First Instance were to find that the dominant component of the earlier mark is the Christian name ‘HUBERT’, it would be difficult to deny the existence of a likelihood of confusion between the marks in question. Conversely, if the Court of First Instance were to hold that the earlier mark is not particularly distinctive and forms a whole in which no component is dominant, the differences between the marks should be sufficient to demonstrate that there is no likelihood of confusion. OHIM leaves it to the discretion of the Court of First Instance to resolve that point of law brought before it. France Distribution, which was a lawfully constituted party to the proceedings before the Opposition Division and the Board of Appeal, did not intervene in the proceedings before the Court of First Instance. The Court of First Instance first recalled, at paragraphs 35 to 39 of the judgment under appeal, the Court’s case-law concerning likelihood of confusion between the mark applied for and the earlier mark. The Court of First Instance then went on, at paragraphs 40 to 59 of the judgment under appeal, to compare on the one hand the goods concerned and on the other the conflicting signs. Thus it found that the ‘dairy products’ and ‘edible fats’ in respect of which the earlier mark had been registered were identical, respectively, with ‘milk and milk products’ and similar to ‘vinegar, sauces’ covered by the trade mark application in question. On the other hand, it considered that the earlier mark and the mark applied for ‘are not similar visually’, that they are ‘dissimilar from an aural point of view’ and that there ‘is no conceptual similarity between the conflicting marks’. Finally, at paragraphs 60 to 66 of the judgment under appeal, the Court of First Instance adjudged there to be no risk of confusion between the earlier mark and the mark applied for. It held in particular at paragraph 63 that ‘even though there is identity and similarity between the goods covered by the conflicting marks, the visual, aural and conceptual differences between the signs constitute sufficient grounds for holding that there is no likelihood of confusion in the mind of the targeted public’. At paragraphs 65 and 66, it went on to state that, ‘in this case, the conflicting signs cannot in any way be regarded as identical or similar from the visual, aural or conceptual points of view’ and that, consequently, ‘one of the essential conditions for applying Article 8(1)(b) of Regulation No 40/94 has not been satisfied’. Accordingly, the Court of First Instance dismissed the action for annulment of the contested decision. The appeal In its appeal, in support of which it raises three pleas, Vedial claims that the Court should: – set aside the judgment under appeal; – give final judgment on the dispute by granting the forms of order sought at first instance or, in the alternative, remit the case to the Court of First Instance; – order OHIM to pay the costs. OHIM contends that the Court should dismiss the appeal and order Vedial to pay the costs. First plea Parties’ arguments In its first plea Vedial submits that in the judgment under appeal the Court of First Instance infringed the general principle of Community law under which the parties delimit the subject-matter of a case, which was upheld by the Court in its judgment in Joined Cases C-430/93 and C-431/93 Van Schijndel and Van Veen [1995] ECR I-4705). It states that, under that principle it is for the parties alone to determine the scope of the dispute. It precludes the court from raising an issue not referred to in the parties’ submissions. Thus, where on a given point there is no dispute between the parties or where they expressly acknowledge the existence of a legal, relevant and specific fact, the court cannot act of its own motion except if the agreement between the parties on the specific point is contrary to public policy. In the present case, during the procedure before the Court of First Instance, Vedial and OHIM were agreed as to a similarity, if only a phonetic one, between the earlier mark and the mark applied for, and as to a risk of confusion if it were not possible to criticise the Board of Appeal for taking the view that the earlier mark was very distinctive, if only owing to the reputation gained by it in France. According to Vedial, that delimitation of the dispute was not contrary to public policy. Accordingly, the Court of First Instance, it is claimed, infringed the principle under which the parties delimit the subject-matter of a case by considering, contrary to the agreement between the parties on that point, that the conflicting marks displayed no similarities. OHIM contends that the first plea is unfounded. The abovementioned principle applies in civil law but not to the predominantly administrative law disputes concerning the Community trade mark. Moreover, OHIM has no locus standi of its own, since it was not a party to the proceedings before the Board of Appeal. When an action comes before the Court of First Instance it must determine whether OHIM, that is to say the Board of Appeal, correctly applied Regulation No 40/94 and, if it concludes that OHIM infringed that regulation, it must set the decision aside. OHIM points out that in its action before the Court of First Instance Vedial maintained that the contested decision infringed the concept of likelihood of confusion and expressly requested the Court of First Instance to examine the conflicting marks and to determine that there was a likelihood of confusion. Accordingly, the Court of First Instance was right to examine that concept and to apply Regulation No 40/94. It cannot therefore be said to have infringed the principle under which the parties delimit the subject-matter of a case. Moreover, OHIM contends that in the present case there was no agreement between Vedial and itself. In its view, apart from the fact that the view of OHIM is expressed in the view taken by the Board of Appeal, as was adjudged by the Court of First Instance in the judgment under appeal, France Distribution, which could have acted as an intervener before the Court of First Instance, in no way assented to Vedial’s interpretation of the likelihood of confusion. However, in disputes relating to industrial and commercial property the Rules of Procedure of the Court of First Instance confer on the intervener a position which is almost identical to that of the other parties. Findings of the Court Even on the supposition that the principle under which the parties delimit the subject-matter of a case applies in proceedings such as those at first instance concerning an action against a decision of an appeal board of OHIM on an opposition to registration of a mark based on the likelihood of confusion with an earlier mark, OHIM does not in any event have the power to alter before the Court of First Instance the terms of the dispute, as delimited in the respective claims and allegations of the applicant for registration and of the opposing party. In fact, although under Article 133(2) of the Rules of Procedure of the Court of First Instance, OHIM is the defendant in proceedings before the Court of First Instance, the proceedings before that Court are intended to resolve a dispute between the claimant for registration and the holder of an earlier mark, as is borne out by the following provisions in Regulation No 40/94 and the Rules of Procedure of the Court of First Instance. First, under Article 63(2) and (3) of Regulation No 40/94, that action seeks to examine the lawfulness of the decision of the Board of Appeal which decided the dispute concerning registration of the mark applied for and to obtain, in an appropriate case, the annulment or alteration of that decision. Yet before both the Opposition Division and the Board of Appeal, the dispute is between the applicant for registration and the party opposing it, without OHIM being a party to the dispute. It is important to note, in particular, that under Article 42(1)(a) of Regulation No 40/94, only owners of earlier marks may oppose registration of a mark on the relative ground of refusal provided for in Article 8(1)(b) thereof. Thus, OHIM does not have the power to oppose registration of a mark on such a ground. Nor, secondly, is the action before the Court of First Instance against the decision of a Board of Appeal on an opposition open to OHIM. In fact, under Article 63(4) of Regulation No 40/94 such an action ‘shall be open to any party to proceedings before the Board of Appeal adversely affected by its decision’. Thirdly, the capacity of defendant conferred on OHIM is limited in its effects. Conversely, the parties to the proceedings before the Board of Appeal, other than the applicant, entitled, under Article 134(1) of the Rules of Procedure of the Court of First Instance, to participate in the proceedings before the Court of First Instance as interveners, are accorded in that connection extensive rights such as to assimilate them to actual defendants. Thus, Article 134(2) of the Rules of Procedure states that: ‘The interveners referred to in paragraph 1 shall have the same procedural rights as the main parties.’ Moreover, contrary to the ordinary rule in regard to intervention set out in Article 116(4)(a) of the Rules of Procedure, Article 134(3) thereof provides that ‘[a]n intervener … may, in his response …, seek an order annulling or altering the decision of the Board of Appeal on a point not raised in the application’. By dint of a contrario reasoning under the latter provision OHIM is not entitled, for its part, to formulate such forms of order. Finally it is clear from Article 134(4) thereof that, in derogation from Article 122 of the Rules of Procedure, even if OHIM does not respond to the application in the manner and within the period prescribed, the default procedure is not to apply where a party to the proceedings before the Board of Appeal other than the applicant intervenes before the Court of First Instance. Therefore OHIM cannot be granted power, by partially concurring with the analysis put forward by the applicant, or acquiescing in its appeal, to alter the terms of the dispute before the Court of First Instance. Any other finding would defeat the legitimate expectation of the party which was successful before the Board of Appeal, in so far as the purpose of proceedings before the Court of First Instance is, pursuant to Article 63(2) of Regulation No 40/94, to review the legality of the decision of the Board of Appeal. In this case the Court of First Instance was in no way bound by the agreement between Vedial and OHIM as to the similarity or even the likelihood of confusion between the conflicting marks. The Court was therefore correct to consider, in the judgment under appeal, whether the contested decision infringed the concept of likelihood of confusion, as Vedial alleged in its application, and to apply Regulation No 40/94. The first ground of appeal must therefore be dismissed. Second ground of appeal Arguments of the parties In its second ground of appeal Vedial argues that the Court of First Instance infringed the rights of the defence by failing to act in accordance with its legitimate expectation as to the parameters of the dispute agreed by the parties. Having regard to the position adopted by OHIM in its response submitted to the Court of First Instance, it withdrew its request to be permitted to submit a response and limited its arguments to the parameters defined by OHIM’s statement of its position. According to Vedial, even if the Court of First Instance was not bound by the principle under which the parties delimit the scope of the case, it should have ordered that the matter be reopened and notified the parties that it did not concur with their view as to the aural similarity of the conflicting marks. OHIM considers that the second ground of appeal presupposes that the Court of First Instance infringed the abovementioned principle, which in its view it did not. It adds that, both in its application and at the hearing, Vedial set out its views at length, as well as explaining its interpretation of the regulatory provisions and relevant case‑law. Findings of the Court As regards the second ground of appeal, even on the assumption that Vedial and OHIM were agreed that there was some similarity between the conflicting marks or even that there was a likelihood of confusion, it must be borne in mind first of all that, as analysis of the first ground of appeal makes clear, the Court of First Instance was in no way bound by that view, but had a duty to determine whether, by finding that there was no similarity between the two marks, the Board of Appeal had infringed Regulation No 40/94 in the contested decision. Secondly, the Court of First Instance did not base its decision on facts or arguments extraneous to the issue. Accordingly, the Court of First Instance in no way failed to act in accordance with the legitimate expectations of Vedial, nor was it bound to reopen the matter in order to notify it that it did not agree that there was aural similarity between the earlier mark and the mark applied for. The second ground of appeal must therefore be dismissed. Third ground of appeal Arguments of the parties In its third ground of appeal, which was submitted in the alternative, Vedial argues that the Court of First Instance infringed the concept of likelihood of confusion within the meaning of Article 8(1)(b) of Regulation No 40/94. By the first limb of this plea, Vedial claims that the Court of First Instance erred in finding, at paragraph 62 of the judgment under appeal, that there was no likelihood of confusion between the earlier mark and the mark applied for without establishing, as it should have done, whether there was a risk that the public might believe that the goods or services in question originate from undertakings which are linked economically only. By the second limb of the same plea, Vedial alleges that the Court of First Instance was wrong to find, at paragraph 63 of the judgment under appeal, that the visual, aural and conceptual differences between the earlier mark and the mark applied for constituted sufficient grounds to discount any likelihood of confusion. According to Vedial, the question is not whether there are differences between the conflicting marks, but whether those marks are identical or similar and whether, taken together with the identity or similarity of the goods or services concerned, the extent of those similarities is such that there is a likelihood of confusion. By the third limb of this plea, Vedial argues that the Court of First Instance did not apply the rule of interdependence in a clear manner. It erred in failing to state that the alleged slight degree of similarity between the earlier mark and the mark applied for was counteracted by the high degree of similarity between the goods concerned and by the strong distinctiveness of the earlier mark. By the final limb of the third plea Vedial argues that the Court of First Instance was wrong, at paragraph 62 of the contested decision, to restrict the relevant persons to the ‘target public’, which is to say purely to consumers likely to purchase the marked goods. In Vedial’s submission, the relevant public for the purposes of assessing the likelihood of confusion is composed of all persons likely to come across the mark. OHIM argues that the third ground of appeal should be dismissed as unfounded in regard to all limbs. Findings of the Court For the purposes of applying Article 8 (1)(b) of Regulation No 40/94, the likelihood of confusion presupposes both that the mark applied for and the earlier mark are identical or similar, and that the goods or services covered in the application for registration are identical or similar to those in respect of which the earlier mark is registered. Those conditions are cumulative (see to that effect, on the identical provisions of Article 4(1)(b) of First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks (OJ 1989 L 40, p. 1), Case C-39/97 Canon [1998] ECR I-5507, paragraph 22). Contrary to Vedial’s claim, the Court of First Instance did not rely on the visual, aural and conceptual differences between the earlier mark and the mark applied for in deciding that there was no likelihood of confusion. After making a comparative study, at paragraphs 48 to 59 of the judgment under appeal, of the two marks in the visual, aural and conceptual senses, the Court of First Instance concluded, as stated at paragraph 65 of the judgment, that the marks could in no way be regarded as identical or similar for the purposes of Article 8(1)(b) of Regulation No 40/94. Having found that there was no similarity between the earlier mark and the mark applied for, the Court of First Instance correctly concluded that there was no likelihood of confusion, whatever the reputation of the earlier mark and regardless of the degree of identity or similarity of the goods or services concerned. The third ground of appeal is therefore unfounded in regard to each of its limbs and must be dismissed. Accordingly, the appeal must be dismissed in its entirety. Costs Under Article 62(2) of the Rules of Procedure of the Court, applicable to appeal proceedings by virtue of Article 118 of those rules, the unsuccessful party is to be ordered to pay the costs if they have been asked for in the successful party’s pleadings. Since OHIM sought such an order and Vedial has failed in its appeal it must be ordered to pay the costs. On those grounds, the Court (Second Chamber) hereby: 1. Dismisses the appeal; 2. Orders Vedial SA to pay the costs. Signatures. 1 – Language of the case: French.

LORD JUSTICE MUMMERY: This is an appeal by the Lincolnshire County Council (the Council) from the decision of the Employment Appeal Tribunal dated 17 December 1998, allowing in part an appeal by Mr Capek. His principal appeal was from the ruling of the Employment Tribunal that he had failed to show that the tribunal had jurisdiction to entertain his claims against the Council for breach of his contract of employment. The rest of his appeals were dismissed. The appeal tribunal directed that his breach of contract claims be remitted to a fresh tribunal for a hearing on their merits. The critical point is whether the combined effect of Articles 3 and 7 of the Industrial Tribunals (Extension of Jurisdiction) Order 1994 (SI 1994/1623) (the 1994 Order) is to confer on an employment tribunal jurisdiction to entertain a complaint of breach of contract presented by an employee to a tribunal before the effective date of termination of the contract giving rise to the complaint. The tribunal held, in their extended reasons sent to the parties on 10 October 1996, that there was no jurisdiction. The appeal tribunal disagreed. Permission to appeal to this court was granted on 19 April 1999. Background to the 1994 Order The 1994 Order was made under section 131 of the Employment Protection (Consolidation) Act 1978 and now has effect as if made under section 3 of the Employment Tribunals Act 1996. The 1994 Order followed on the decision of the House of Lords in Delaney v. Staples [1992] 1 AC 687 in which it was held that the industrial tribunal had no jurisdiction to adjudicate on a claim for payment in lieu of notice, as such a payment was not within the definition of "wages" in the Wages Act 1986 and the tribunal had no general jurisdiction over claims for breach of a contract of employment. Lord Browne-Wilkinson said at p. 697H "This conclusion produces an untidy and unsatisfactory result. On any dismissal, the summary procedure of the industrial tribunal under the [1986] Act will be exercisable in relation to unpaid wages (in the ordinary sense), holiday pay, commission, maternity leave etc. but claims relating to the failure to give proper notice will continue to be brought in the county court. The employee is therefore forced either to bring two sets of proceedings or to proceed wholly in the county court on a claim for damages. To be forced to bring two sets of proceedings for small sums of money in relation to one dismissal is wasteful of time and money. It brings the law into disrepute and is not calculated to ensure that employees recover their full legal entitlement when wrongfully dismissed. The position is capable of remedy by an order under section 131 of the Employment Protection (Consolidation) Act 1978 which enables the minister to confer jurisdiction on industrial tribunals to deal with claims for breach of contract. As the judgment of Lord Donaldson of Lymington M.R. in the present case shows, the courts have been suggesting that this power be exercised for nearly 20 years, so far without success......I believe that all your Lordships are of the view that the present unsatisfactory position calls for fresh consideration by the minister." The unsatisfactory state of affairs described by Lord Browne-Wilkinson not only affected claims under the 1986 Act. The same problem of dual proceedings arose when a dismissal from employment giving rise to a claim for unfair dismissal, which was within the exclusive jurisdiction of the tribunal, also gave rise to a claim for wrongful dismissal, which could only be brought in the county court or, in the case of larger claims, in the High Court, because the tribunal had lacked general jurisdiction over breaches of contracts of employment. The 1994 Order was made to remedy this state of affairs. As Keene J said in Sarker v. South Tees Acute Hospitals NHS Trust [1998] ICR 673 at 680 "...[the 1994] Order extending the jurisdiction of industrial tribunals is intended to avoid the situation where an employee (or for that matter an employer) is forced to use both a tribunal and a court of law to have all his or her claims determined. In simple terms ,the purpose of the extension of jurisdiction was to enable an industrial tribunal to deal with both a claim for unfair dismissal (which we take as an obvious example) and a claim for damages for breach of the same contract of employment. Two sets of proceedings are thus avoided." Terms of the 1994 Order Article 3 provides that "Proceedings may be brought before an industrial tribunal in respect of a claim by an employee for the recovery of damages ....if (a)...... (b).... (c) the claim arises or is outstanding on the termination of the employee's employment." The tribunal thus has jurisdiction over claims for breach of contract in cases where there is a termination of the employment. Article 7 is concerned with time limits and prohibits the tribunal from entertaining complaints in respect of certain contract claims. It provides that " An industrial tribunal shall not entertain a complaint in respect of an employee's contract claim unless it is presented- (a) within the period of three months beginning with the effective date of termination of the contract giving rise to the claim, or (b) where there is no effective date of termination, within the period of three months beginning with the last day upon which the employee worked in the employment which has terminated, or (c) where the tribunal is satisfied that it was not reasonably practicable for the complaint to be presented within whichever of those periods is applicable, within such further period as the tribunal considers reasonable." THE FACTS From 1 January 1989 Mr Capek was employed as an Emergency Duty Social Worker. After an incident at the end of April 1994 he was suspended. The Council's disciplinary procedure was implemented. Following a disciplinary hearing on 10 October 1994 he was dismissed with e ffect from 2 January 1995. He appealed to a panel of Councillors against the decision to dismiss him. That appeal was not determined until July 1995. The effective date of termination of his employment was altered to 7 July 1995. In the meantime Mr Capek, who has acted in person throughout, presented three applications to the employment tribunal on 9, 24 and 25 November 1994 making complaints of unfair dismissal, of failure to provide written reasons for his dismissal and of various breaches of contract by the Council in respect of his employment. The Council accepts that the tribunal had exclusive jurisdiction to determine the unfair dismissal complaint presented between the giving of notice and the effective date of termination of his employment. That situation was expressly covered by section 67 (4) Employment Protection (Consolidation) Act 1978 since re-enacted in section 111 (3) Employment Rights Act 1996. The Council contends, however, that the tribunal has no jurisdiction to determine the breach of contract complaints as they were not presented "within the period of three months beginning with the effective date of termination of the contract giving rise to the claim" : Article 7(a) of the 1994 Order. The complaints were premature as they were presented before the effective date of termination and not within the specified period beginning with that date. Such claims could only be brought by Mr Capek in the County Court. The complaints are of failure to pay full salary during his period of suspension from 26 April 1994 including his notice period from 15 October 1994 (paragraph 3 in application of 25 November 1994) ; arrears of salary due in respect of management failure to conduct proper re-grading evaluation or assessment in December 1991 in accordance with agreed procedures and fair principles and compensation for loss of earnings in the period from 1 October 1990 (paragraph 5(i) of application of 14 November 1994); arrears of telephone allowances in the period from May 1990; and failure to pay "miscellaneous expenses" in the period from 1 June 1994 to 30 September 1994. During the hearing in this court Mr Capek accepted that the two last items are not recoverable under the Wages Act provisions now contained in the Employment Rights Act 1996. His internal appeal was heard and his dismissal confirmed on 7 July 1995. It was, however, agreed by the Council that Mr Capek should be re-engaged in an alternative social work capacity. Mr Capek pressed on with his complaints against the Council and, indeed, presented further applications to the tribunal on 24 July 1995 and 18 June 1996. The main issue on this appeal is whether the "contract claims" made in the complaints presented in November 1994 are outside the jurisdiction conferred on the employment tribunal by the 1994 Order on the ground that they were made before, instead of within the three month period beginning with, 7 July 1995. In argument Mr Dean, on behalf of the Council, agreed that the effect of his construction of Article 7 was that, for example, a breach of contract complaint presented by Mr Capek on 8 July 1995 would have been within the jurisdiction of the tribunal, but that such a complaint presented by him on 6 July 1995 would not have been and it would have been necessary for him to start separate proceedings in the county court. This is a jurisdictional point which the tribunal had taken of its own motion. The point cannot be resolved by an agreement between the parties to confer on the tribunal a jurisdiction which it does not have. The Decisions of the Employment Tribunal Mr Capek's various complaints were heard by three different tribunals. A. The tribunal's decision of 10 October 1996 dealt with the applications made in November 1994, in July 1995 and in June 1996. It was held that his dismissal was fair and that there was no unreasonable failure by the Council to provide written reasons for his dismissal. On the issue of jurisdiction under the 1994 Order the Tribunal rejected the Council's submission that Mr Capek could not bring a claim for breach of contract in the tribunal as he was still employed by the Council, although in a different capacity. The tribunal stated that " Although there is reference to the fact that termination of employment is required before the....tribunal has jurisdiction to consider such a claim, it seems to us that that reference relates to termination of the employment under the original contract. It seems to us that particularly the wording of Rule 7 of the Order which talks about "the effective date of termination of the contract giving rise to the claim" is clearly showing that we as a tribunal must look at the particular contract of employment and not at employment in a general sense ." There was no cross appeal to the appeal tribunal on that point. Indeed it went out of its way to say that that ruling was correct in law. The employment tribunal went on, however, to take the point of its own motion that the claims for breach of contract were outside its jurisdiction "...because they were brought in the period after the applicant had been given notice of the termination of his employment, but before his employment terminated." It was held that under Article 7 the tribunal "....does not have jurisdiction to consider a complaint brought before either the effective date of termination or, if there is no effective date of termination, the last day upon which the employee worked in the employment. In this case there is no doubt that the applicant was given notice to terminate his employment. He was not required to work his notice, but his employment terminated at the end of the period of notice which, at the earliest, was 2 January 1995. Accordingly, those contract claims brought by his applications presented in November 1994 were premature and we have no jurisdiction to consider them." The tribunal also rejected his application to extend time for the presentation of the complaints on the grounds that it was reasonably practicable for him to present them within the period specified in Article 7 (a) and that, in any case, it only had power to extend the period to a later date and not to an earlier date. B. Soon after the tribunal decision in A. above Mr Capek presented a sixth application to the tribunal (on 18 October 1996) repeating the contract claims first made in the applications in November 1994 and rejected by the tribunal on the ground of lack of jurisdiction. On 9 April 1997 the chairman of the tribunal (Mr TR Capp) dismissed that application on the ground that it was out of time and he refused to extend time on the ground that it was reasonably practicable for Mr Capek to present those complaints in time. C. There was a further decision of the tribunal on 2 June 1997. That concerned a complaint presented by Mr Capek on 11 February 1997 in respect of alleged unauthorised deductions from wages in the period beginning 7 July 1995. Those complaints are not relevant to this appeal. Mr Capek also made unsuccessful applications to the employment tribunal for the review of all the above decisions against him. The Decision of the Employment Appeal Tribunal The appeal tribunal dismissed all Mr Capek's appeals from the three tribunal decisions on all points save the contract jurisdiction issue arising under the 1994 Order. It held that the employment tribunal did have jurisdiction under the 1994 0rder to entertain the breach of contract complaints presented in November 1994. The causes of action complained of arose prior to termination. There was an effective termination of employment on 7 July 1995. That gave the tribunal jurisdiction to consider the breach of contract claims which were outstanding on that date. These complaints were outstanding at that date. The proceedings were not premature. The tribunal had jurisdiction to hear and determine them. The Council appeals against that decision. Mr Capek cross appeals against the dismissal of his appeal from the decision of Mr Capp and the failure of the Appeal Tribunal to consider his Wages Act claims. The Legal Position In my judgment the legal position on the appeal and the cross appeal is as follows. 1. Jurisdiction under 1994 Order. The employment tribunal did not make an error of law in its decision on jurisdiction under the 1994 Order. The tribunal was prohibited by Article 7(a) of the 1994 Order from entertaining, in exercise of the contract jurisdiction conferred by that Order, the complaints of breach of contract presented by Mr Capek in November 1994. I would have preferred to reach the contrary conclusion and I was initially inclined to do so. The appeal tribunal related the legislative history and compared this case with the treatment of premature applications for unfair dismissal and complaints under TUPE. The clear purpose of the extension of the Tribunal's jurisdiction over contract claims was to reduce the need for duality of proceedings in the courts and in the tribunals arising out of the same dismissal. The effect of upholding the tribunal's construction of the 1994 Order is that in this case Mr Capek cannot claim for breach of contract in the tribunal. His November 1994 applications were held to have been presented too soon. An extension of time was refused. His October 1996 application founded on the same contract claims was held to have been presented too late. An extension of time was refused. Subject to the provisions of the Limitation Act Mr Capek can only proceed in the county court. That is not a satisfactory state of affairs. There is not the shred of a suggestion that the Council was or could have been prejudiced by the premature presentation of a complaint in a case such as this, in which a decision to dismiss was taken and the employment was terminated . Nevertheless I see no escape from the language of the 1994 Order. I agree with the appeal tribunal that the contract claims were "outstanding on the termination of [ Mr Capek's] employment" on 7 July 1995 within the meaning of Article 3 (c). But Article 7 expressly prohibits the employment tribunal from entertaining complaints which do not satisfy one of three sub-paragraphs. As for (a) it is true that in some contexts the expression "within the period of" a specified time is, as a matter of ordinary language, capable of meaning "before the expiration of" the specified time. If, for example, a court ordered A to supply to B a copy of a document within a period of 7 days beginning with the date of the service of the order, A would have complied with the order if he knew of the terms of it before it was served and immediately supplied the copy of the document to B ahead of the service of the order on him. In the context of the 1994 Order, however, there are clear indications that if, as here, there is an effective date of termination, the jurisdiction of the tribunal is confined to those cases in which the complaint is presented within the period between two fixed points of time i.e. the start date (the effective date of termination) and the end date (the end of the period of three months beginning with the contract termination date). These complaints were not presented within the period between those two points of time. They were presented before the start date. As Laws LJ pointed out in the course of argument, Article 8 (c) (i) of the 1994 Order, which relates to time limits on contract claims by employers, uses the same expression "within the period of" as in Article 7 (a) and in a way which plainly confines the jurisdiction of the tribunal to entertaining contract claims by employers presented within the period after a stated date (the day on which the employer received from the tribunal a copy of the originating application in respect of a contract claim of the employee) and before the end date (the end of the period of six weeks beginning with that start date). The use of the expression "within the period of" in the 1994 Order may be contrasted with many sections in the Employment Rights Act 1996, re-enacting the provisions of the Employment Protection (Consolidation) Act 1978, which set time limits for the presenting of a complaint "before the end off" a specified period beginning with a specified act or event: see sections 23, 34, 48, 51, 54, 57, 60, 63, 70 and 111 of the 1996 Act. It is also significant that, as already indicated, the contract jurisdiction only exists in cases where the employee's employment has been terminated. The tribunal does not have jurisdiction to entertain complaints for breach of contract which are alleged to have been committed during the currency of a contract of employment if no termination of that employment occurs: see Article 3 (c). That suggests that it was not contemplated that an employee should be entitled to invoke this jurisdiction of the tribunal before his employment was terminated. The Employment Appeal Tribunal relied by way of analogy on the cases concerning premature complaints under the TUPE Regulations: see BIFU v. Barclays Bank plc [1987] ICR 495 and South Durham Health Authority v. UNISON [1995] ICR 495. There is, however, no real analogy, as there are significant differences in the language, context and purpose of those Regulations. A complaint made before a transfer about the consultation process is not premature, as the transfer is not itself an ingredient of the cause of action relating to consultation. Further, it would defeat the purpose of the consultation process if no complaint of lack of consultation about the proposed transfer could be made before the transfer had in fact taken place. For those reasons the Regulations set an end date, but not a start date, for presenting a complaint. In contrast Article 3 of the 1994 Order provides that a termination of employment is necessary to trigger the jurisdiction of the tribunal. In those circumstances it makes sense that the time prescribed for presenting a complaint should begin with, but not before, the date of termination and that a start date as well as an end date should be specified for presenting a complaint. Mr Capek's alternative contention, which was not determined by the appeal tribunal, as it was in his favour on Article 7(a), was that he is entitled to rely on Article 7(b). He submitted that, if he was wrong on Article 7(a), he could succeed on Article 7 (b) because when he presented the complaints in November 1994 there was no effective date of termination. That date was not ascertained until 7 July 1995 when his internal appeal failed. So, he submitted, the tribunal had jurisdiction: he had presented the complaint within three months of the last day upon which he worked in the employment which has terminated. Mr Capek says that he last worked in this employment in October 1994. The Council disputes this construction and also says that he last worked in April 1994. I would reject Mr Capek's construction of Article 7 (b). There was an effective date of termination. It was found to be 7 July 1995. That was not challenged by Mr Capek. So Article 7 (b) cannot apply. I should add that, even if Article 7 (b) did apply, there is a factual dispute, which was not resolved by the employment tribunal, as to what was the last day on which he worked. Mr Capek said that it was 10 October 1994 when he attended for the disciplinary hearing. The Council contend that it was when he was suspended in April 1994. 2. Extension of Time. There is no error of law in the refusal of Mr Capp to extend the time for bringing the October 1996 proceedings. A chairman sitting without lay members is entitled to hear and determine applications to extend time. On the evidence Mr Capp was entitled to conclude that it was reasonably practicable for Mr Capek to present his contract complaints in the three months beginning with the 7 July 1995 i.e. before the 6 October 1995. The question of exercising his discretion to extend time did not therefore arise. 3. Wages Act Claims. In his cross appeal Mr Capek takes the point that, if the Council succeeds (as, in my view ,it does) on the 1994 Order issue, it is necessary to decide what has so far not been considered, namely whether the contract claims fall within the jurisdiction of the tribunal to determine disputes on unauthorised deductions from wages now contained in Part II(ss 13-27) the Employment Rights Act 1996 re-enacting the provisions of the Wages Act 1986 which were in force at the relevant time. A "deduction" from wages occurs when the worker is paid on any occasion less by his employer than the total amount of wages "properly payable" by the employer to the worker on that occasion: section 8 (3) Wages Act 1986, now section 13(3) of the 1996 Act. The amount of the deficiency is treated as a deduction made by the employer from the worker's wages on that occasion. A worker may present a complaint to the tribunal that his employer has made a deduction from his wages in contravention of section 1(1), now section 13(1) of the 1996 Act. The resolution of the issue of what is "properly payable" may involve a decision by the tribunal on the contractual rights and duties of the parties to a contract of employment affecting entitlement to wages such as entitlement to overtime or to regrading. Non-payment of wages properly payable by the employer may be a breach of contract which the tribunal has jurisdiction to entertain independently of the jurisdiction conferred by the 1994 Order. Mr Capek contends that that is the essence of his remaining breach of contract claims. He submits that the tribunal did not lack jurisdiction to determine that claim simply because he labelled his complaints as "breaches of contract" rather than "Unauthorised deduction of wages contrary to the Wages Act." A failure to attach the correct label or all the correct labels to the facts relied on in the originating application does not deprive the employment tribunal of jurisdiction which it may have to determine a complaint. In my judgment, this point was not adequately considered by the employment tribunal. In the extended reasons of 10 October 1994 the tribunal rejected Mr Capek's "fresh application" to add a Wages Act claim to his five existing applications (see paragraph 1 of the extended reasons). But the possibility that his existing breach of contract claims were in substance claims which the tribunal had jurisdiction to entertain under the Wages Act was not considered. Not surprisingly, in view of the way in which Mr Capek himself described his claims, the tribunal treated his characterisation of all the relevant complaints as related to breaches of contract, without considering whether the breaches of contract were of a kind which involved unauthorised deductions from wages which it had jurisdiction to entertain. Having rejected jurisdiction under the 1994 Order, save in respect of an unsuccessful claim for payment of an office allowance made in the application presented in time on 24 July 1995, the tribunal ought to have considered whether it had jurisdiction under the Wages Act. I do not criticise the tribunal for not having done so. Mr Capek was conducting his case in person. He was unable to give as much assistance to the tribunal as a legal representative would probably have been able to give. The fact is, however, that this aspect of the case has not been properly investigated. Mr Capek raised the point as Ground No 2 in his appeal to the Employment Appeal Tribunal, but the appeal tribunal was in his favour on the 1994 Order issue, so that this ground was only dealt with briefly and was not as fully explored in argument as it would have been if a contrary conclusion had been reached on the 1994 Order (see pages 18 and 19 of the transcript which do not deal fully with this aspect of the case). As I am of the view that the Council is correct on the 1994 Order, it is now necessary for the employment tribunal to investigate the factual and legal position as to alleged deductions from wages. I would therefore give permission for and allow Mr Capek's cross appeal on this point and remit this aspect of his claim for investigation and consideration by the tribunal. As Mr Capek is acting in person it would assist the court if Mr Dean, who appears on behalf of the Council, prepares a draft order which includes a summary of the breach of contract claims which require consideration by the tribunal as involving alleged deductions from wages, without, of course, any admission on the part of the Council as to the merits of the claims. LORD JUSTICE LAWS - I agree. LORD JUSTICE PILL - I also agree. Order: Cross- Appeal of Mr Capek allowed, draft minute to be prepared by Mr. Dean and submitted to the court for approval. (Order does not form part of the approved judgment)

Mr Justice Ouseley: INTRODUCTION This case concerns a policy, DP10, in the adopted Wiltshire Structure Plan 2011 providing for the development of land in the south of Swindon for a major new housing development, the Southern Development Area, to accommodate at least 3800 dwellings. J.S. Bloor Limited, the first Claimant, has options over some 200 hectares of land at Kingsdown on the north eastern edge of Swindon, the larger part of an area of some 350 hectares which, with a number of landowners, it wishes to develop for some 3500 houses as an urban extension to Swindon. Mr. King, who became a party to Bloors’ application for costs reasons instead of pursuing his own, is a resident of the rural area to the south of Swindon, and chairman of the Front Garden Action Group, “FRAG”. The “Front Garden” is the name in Swindon by which the Southern Development Area is more pleasingly known. He supports Bloors’ case in so far as it seeks that major residential development should not take place to the south of Swindon. Swindon Borough Council is a Unitary Authority, following local government reorganisation. It has both structure and local plan powers for its area. It has a very substantial property interest in the Front Garden, which it inherited from Wiltshire County Council on local government reorganisation. Wiltshire County Council is the structure plan authority for the rest of Wiltshire. Together, as requested by the Secretary of State on reorganisation, they have acted as Joint Structure Plan Authorities to produce and adopt the Wiltshire Structure Plan. Swindon Borough Council will subsequently produce a Local Plan for its area which will have to be in general conformity with the Structure Plan. Bryant Homes Ltd. which appeared in support of the two Councils is a prospective developer of the Southern Development Area. The Secretary of State for the Environment, Transport and the Regions also appeared because it was thought that the Claimant’s case involved a challenge to the compatibility of the Structure Plan process with the Human Rights Act 1998. In the end, no such case was advanced, although it was contended that on the facts, Article 6 ECHR was engaged and breached. The challenges are brought pursuant to Section 287 of the Town and Country Planning Act 1990. In summary it is alleged that the inclusion of Policy DP10 in the Structure Plan was outside the powers of the Act because it was not a “general” policy; it was too “detailed” a policy, requiring too detailed a level of consideration for inclusion in the Structure Plan; it should have been dealt with through the later Local Plan process. Alternatively, its inclusion in the Structure Plan was procedurally in error because the Councils failed to consider whether it would be appropriate to use the Local Plan process with its different and more intense level of independent scrutiny and objector participation, or to adjust the Structure Plan processes to meet the needs of the situation. A variety of criticisms were made of the adequacy of the Councils’ reasons for their decisions in relation to issues such as urban housing capacity, the capacity of the Southern Development Area, and constraints there such as the floodplain and a proposed relief road. Policy DP10 as adopted reads: “At Swindon, the Northern Development Area should be the main location for development of new housing, employment land, associated shopping and services. This should be supplemented by use of suitable sites within the existing urban area, in particular land and buildings that have been previously developed and by development of land in the Southern Development Area identified to accommodate at least 3800 dwellings, being the balance of growth required within the plan period.” It is the reference to the Southern Development Area which is controversial. The explanatory text describes how the requirement of at least 3800 dwellings was arrived at. The starting point was the requirement of 23000 dwellings over the Plan period, from which was deducted completions (6900), the further scope in the Northern Development Area (8800), development of previously used land (2700) and unidentified non-strategic sites of over 10 dwellings (800). It comments in paragraph 4.66: “This area is considered to be the most sustainable option for large scale greenfield development of the town to 2011, as was demonstrated through the Swindon Development Appraisal Study. Whilst it is important to give particular attention to the release of brownfield land for housing development as a priority, it is considered that the phased release of the Southern Development Area is not necessary, as there should be no delay in bringing forward the area if the Structure Plan requirements are to be met.” Other uses e.g. employment and community facilities, and environmental considerations in relation to the development of the SDA are referred to in general terms. The factual background It is unfortunately necessary to set out at some length the history of the Structure Plan in relation to Swindon in order to set the competing considerations in context. In 1981 the North East Wiltshire Structure Plan had contained a policy which gave directional guidance as to the location of major housing development in Swindon. H4A stated that the new housing should adjoin “the western edge of the Swindon Urban Area”. This was a policy or proposal inserted by the Secretary of State for the Environment who in those days was responsible for approving the Structure Plan. (The 1971 Act contained a broadly similar distinction between “general” and “detailed” policies to that found in the 1990 Act). In his approval letter, he said at paragraphs 4.15 and 4.16: “It was contended that the locational guidance which it provided was too detailed for a structure plan ... He accepts that the general location of major new growth is a matter for the structure plan to consider and he is satisfied that participants in the examination in public were afforded an adequate opportunity to express such views on the issue of the broad location of new growth at Swindon as they considered relevant and necessary.” Indeed, as a footnote, although in Edwin H Bradley & Son Ltd. v Secretary of State for the Environment 1983 JPL 43, Policy H4A, which had been accepted by the Councils on the recommendation of the Panel (chaired by a junior planning barrister, Michael Howard), was challenged in the High Court, it was not suggested by Mr. Spence QC in the course of that challenge that H4A was unlawful for the reasons now advanced by Mr. Holgate QC for Bloors. Though of some historical interest, that case cannot be an authority by silence even from Glidewell J and Mr Spence QC on the point now raised. Policy H3 of the Alteration No. 1 in 1990 referred to housing in the Northern and Western Development Areas, which were shown diagrammatically on the Key Diagram, and those were approved by the Secretary of State. I note in passing that this Alteration introduced the concept of a rural buffer to the West, North, South and South-East of Swindon to protect communities from coalescence and to preserve the open countryside from major development “until the future long term scale and direction of growth of Swindon can be considered as part of a subsequent review of the Structure Plan.” In the 1993 Alterations No. 2, policy H1 dealt with housing in Thamesdown, as Swindon Borough’s area was once beguilingly known, thus: “Thamesdown Borough Council, about 15100 (of which about 8,500 dwellings to be in the Swindon Northern Development Area)”. There was again debate as to whether that policy was intruding on the function of the Local Plan. The Secretary of State’s approval letter records the Panel’s conclusion that, in general, housing figures quantified below the level of a District: “impinged on the function of local plans by limiting the scope for local choice and restricting the flexibility of the system. The Panel considered the housing proposal at the Northern Development Area of Swindon and the employment land allocation at South Marston to be of strategic importance.” The Secretary of State agreed, saying: “7.3. The Secretary of State notes the County Council’s view that the deletion of sub-district figures would remove appropriate strategic guidance, hinder the implementation of relevant policies, and fail to ensure a proper balance and distribution of development. The Secretary of State does not accept that these reservations are well-founded. The limited circumstances in which quantified housing or employment provisions below district level may be appropriate in structure plans are set out in Planning Policy Guidance Note 12 (PPG12). He is not persuaded that such circumstances apply in Wiltshire, other than in the two locations identified by the Panel. He considers that district-wide local plans are generally the most satisfactory means by which to determine the precise quantified distribution of development within a district. The preparation of local plans allows for detailed site appraisals and for the exercise of local choice.” Accordingly, this level of detail in a Structure Plan was seen as exceptional, and appropriate only because of the “strategic” importance of the allocation. The 1996 Deposit Draft of the Wiltshire Structure Plan 2011 provided in Policy DP10 that major development at Swindon after 2001 should not take place in the AONB or the Swindon Rural Buffer. The Rural Buffer was extensive but did not cover the north-east section of Swindon’s more rural outskirts where Bloors now propose housing. The Deposit Draft stated that further major provision totalling 6000 dwellings would be required and that “Further scope should therefore be identified in the review of the Local Plan,” and should not take place in the Rural Buffer or AONB. The extent of the Rural Buffer was largely unchanged: the Front Garden was in it, Kingsdown and the North-East were not. It is also necessary to set out the gist of certain representations made to the first EIP held into the Deposit Draft because the Councils and Bryants submitted that Bloors’ dissatisfaction with the processes stemmed from disappointment at the outcome rather than from any intrinsic problem in the process: so long as the Structure Plan process looked as though it would favour development in the north-east it was, submitted Bloors’ opponents, a process which Bloors commended. Dreweatt-Neate, chartered surveyors for Bloors, suggested in their statement to the Panel that, by way of providing the appropriate strategic framework for Local Plans, the Structure Plan should indicate the “general location of individual developments likely to have a significant effect on the Plan area”. They recommended that the “arc” between the eastern edge of the NDA and the existing Marston Industrial Estate should be identified in the Structure Plan as a major growth area. However, any guidance thus expressed in practice would guide the Local Plan not just to a broad north-east sector but to a quite circumscribed part of the north-east, around Stanton Fitzwarren. So Mr. Holgate pointed out that in their earlier representations Dreweatt-Neate had referred to “land to the east of the A419” as that which should be specifically identified. I detected a certain sensitivity on this point. The conclusions of the Panel at the first EIP on this issue are important. The Panel commented that there was very little positive guidance given in the Structure Plan on the location and direction of future growth in the area around Swindon. There was extensive negative guidance in the form of policies which identified areas where development was not to take place, for example the rural buffer. The Panel pointed to the potential danger that because of the extent of the rural buffer, the buffer policy might identify areas for development by default. In particular the Panel was conscious that one of the side effects of the buffer policy might be to close off development options on all but the eastern side of Swindon. The Panel took very seriously the concerns of Thamesdown Borough Council that the “present imbalance towards negative guidance may lead to planning by default”. The Panel pointed out that the rural buffer was intended to provide protection until a review of the plan rather than permanent protection. Local government reorganisation had created a major problem for the Panel such that they considered that they were “not in a proper position to specify where strategic scale development should take place based on any full assessment of the future long term direction of growth of Swindon”. Although a number of developers and landowners, including the North East Swindon Consortium who own much of the land in which Bloors is interested, submitted documentation to the Panel in support of individual projects, the Panel considered that on the basis of the information currently available “no individual scheme has such clear merits as to commend itself above the others. We consider that in the absence of a wide ranging comparative appraisal of potential options, we should not express a firm preference either in favour or against one or other of these schemes”. The Panel considered how the issue of directional guidance as to the location of strategic housing development should be resolved. “4.40. The issue of directional guidance is one that has both a strategic and a local dimension. Because of its scale it is a strategic decision but, since it impacts on a particular locality, it has particular importance to groups and organisations that would be directly affected. ... 4.41. In their original submissions the Borough Council had taken the view that the determination of appropriate areas for future development should be resolved through the Local Plan Review. At the EiP as an alternative the Borough Council suggested that the matter might be referred back to the Structure Plan Authorities for further consideration prior to formal deposit of proposed modifications to this draft structure plan”. The panel then commented as follows: “4.42. We consider that the question of the direction of growth of Swindon is one that should be addressed in a Development Plan in which the new Swindon Unitary Authority has a leading role. We regard this as a matter of considerable urgency. While it could be dealt with in the context of a review of the Local Plan, it is a matter of strategic significance and one that in the context of a plan led system ought to be resolved at a relative early date. This is in part because of the lead time required before a substantial new development area will start to come onstream and in part because from the representations made at the EiP it is clear that various groups of landowners and developers are coming forward with proposals and, in our view, the absence of clear directional guidance add impetus to this activity. 4.43. Relying on a future Local Plan Review could result in delays that would make it impossible to bring forward a substantial area of housing land for development within the life of this structure plan. If the quantity of material submitted to the EiP by some of the participants is anything to go by, a Local Plan would be extremely protracted and extremely wasteful of time and effort, especially on the part of competing private interests. 4.44. Some local interests may not regard such consequences to be a matter of concern particularly if there were no great expenditure of public resources. Delayed housing provision might also be seen as beneficial by those who consider that Swindon is suffering from excessive rates of growth. However it must be remembered that if there are delays in bringing forward land for development through the Development Plan process, the pressures to allow the release of sites outside this process will intensify. It is readily conceivable that one or more of the interested parties may seek to short circuit the planning process by mounting a bid to secure planning permission in advance of a Local Plan Review. For these reasons and because of the importance that we attach to securing additional housing within the Plan period we consider that the determination of strategic directional guidance should not be left to the review of the Local Plan. ” Accordingly the Panel recommended that the two structure planning authorities, which now included Swindon Borough Council where previously Wiltshire County Council had been the sole structure plan authority, should take advantage of that new shared responsibility because it provided: “an appropriate context for bringing forward positive guidance on the directional growth of Swindon. A comparative appraisal of areas with potential for expansion should be put in hand as a matter of urgency with the aim of incorporating its results in a modification to the Structure Plan. Policy DP 10 would then be modified to provide sufficiently clear directional guidance to form the basis for more detailed Local Plan proposals”. The Panel commented further on the rural buffer and accepted the criticism that by default the Swindon rural buffer gave a directional lead, favouring development somewhere east of the A419, but as an unintended consequence of the rural buffer concept. The Panel commented that although the comparative appraisal of potential development options might lead to the selection of a site east of the A419 it considered that such an important strategic issue should not be left to emerge by default. It was of course to some extent that default position upon which Bloors had relied in seeking a more positive form of directional guidance in the Structure Plan than that contained in Deposit Draft Policy DP 10 and in urging that the direction in which development should be guided was to the North East. In summary the Panel said that the Plan’s guidance for major housing development was inadequate. “It relies unduly on a negative policy that applies to a widely drawn area. There is insufficient positive guidance on the direction of growth for new housing on the periphery of Swindon. More positive guidance is needed to resolve uncertainty and so that land for development can be brought forward sufficiently early to achieve the new housing that we consider will be needed over the Plan period. We conclude ... that a suitably formulated Policy DP 10 will help in the achievement of overall numerical and distributional housing targets that are of strategic significance. It is in our view essential to the achievement of the overall strategy of the structure plan that Policy DP 10 be revised to give firm guidance on the future direction on growth at Swindon”. “4.54. We consider that Local Government Reorganisation in Wiltshire and the proposal for joint Structure Planning has created an opportunity for the introduction of positive strategic guidance through a modification Policy DP 10. ... responsibility for bringing forward positive proposals for the direction of the future growth of Swindon should be directed towards the new Swindon Borough Council, with strategic directional guidance to be provided in the modified Structure Plan such that individual land allocations can be subsequently identified by Local Plan Reviews.” In October 1997 the two Councils accepted the recommendation of the Panel that a full comparative appraisal be undertaken jointly; and Swindon Borough Council also wanted to re-examine the total County housing figures and the proportion allocated to its area on the Panel recommendations. They recognised the force in the Panel’s points as to why the issue of the location where major development should take place, should not be left to the Local Plan Review: delay to the plan process prompting pre-emptive planning applications. It was also agreed that the appraisal exercise should not be confined to Swindon Borough Council’s area but that equal consideration should be given to the adjoining area of North Wiltshire District which would involve Wiltshire County Council as Structure Plan Authority for that area. A Joint Working Party approved the appraisal process: the “Swindon area” to be covered was the Swindon Borough Council area plus the nearby Wootton Bassett sector of North Wiltshire District. It was to extend beyond an examination of current developer’s schemes and was to include public consultation. It was recognised that the appraisal would have to be conducted at a detailed level. Mr. Holgate pointed out that the Chief Planning Officers’ Joint Report to the JWP stated: “5.11. Indeed the important point to note is that the appraisal process that has been developed is capable of continuing beyond the needs of the Structure Plan to facilitate the Local Plan review process. In order to be confident in identifying the direction(s) in which the expansion of Swindon should take place it will be necessary for the appraisal process to examine potential development areas in a detail more akin to a Local Plan review.” The process undertaken is set out in detail in a number of documents which I can summarise from the witness statement of Ms. Jewell, a Principal Planner with the Borough Council. Miss Jewel describes the process as taking the form of a detailed sustainability appraisal including environmental assessment. The first stage was an initial assessment undertaken in order to identify and compare potential development locations in order to narrow down the area for more detailed consideration; this was done by the use of broad zones based on sustainability principles and environmental criteria, the outcome of which indicated that a strategy of urban concentration would be the most appropriate for Swindon. The second stage involved a “more rigorous assessment of the periphery of the town ... to enable a more detailed comparative assessment to be carried out”; the assessment was looking at the potential for development rather than the need to find a required number of dwellings. The periphery of Swindon was divided into ten broadly homogenous areas which were tested against a “strategic sustainability matrix”. From this process five options were identified as worthy of further testing: the Front Garden, Kingsdown and Lydiard Millicent, and two more radical long term solutions, “South of Wootton Bassett”, and “East of the A419”, an area which lay to the south and in part to the east of the Kingsdown area. There was an extensive public consultation exercise in relation to these five options, which was then used to produce the third stage of assessment. The culmination of stage three was a report to the members of both Councils in December 1998, to which was appended a Technical Supplement detailing the process and methodology employed, considerations and conclusions on the appropriate level and distribution of housing throughout the County, an assessment of dwelling potential through the recycling of land and buildings, a report on public consultation, a report on the rural buffer study and area profiles of each of the five locations referred to. Mr. Holgate referred to the statement of public consultation in which at paragraph 4.4.23 a Mr. David Potter on behalf of the Borough is recorded as saying that the fact that the Councils had to work within existing legislative structures and procedures “would not prevent the Councils from taking opportunities to “blur boundaries” between the Structure and Local Plans where this would benefit public debate and involvement”. I do not attribute anything sinister to that remark because it was recognised as indeed would obviously be the case, that a study carried out at this level of detail would be relevant to both the Structure and Local Plan processes. It would be artificial in such a study to define precisely the level of detail at which the approach would be fit exclusively for one level of plan rather than another. The public consultation responses included a lengthy response from the Front Garden Action Group raising a number of points concerning the constraints on development to which the Front Garden was subject, and the previous Council policy of protecting the area from development because of its role as a green setting for Swindon. Mr. Holgate pointed out that the area profile of Kingsdown recorded that the public consultation option for that area suggested a development potential of between 4,000 - 8,000 homes, that the assessment of the area had been carried out within the context of those figures and its suitability for development had been tested against figures within that range. This was important because Bloors were proposing no more than 3,500 houses in that area. This was said to be important in terms of agricultural land quality because the area examined was therefore larger than that which Bloors contemplated for development. The area profile referred to Kingsdown as containing some of the highest grade agricultural land of all the development areas and the highest proportion of high grade land to developable area. This led to MAFF confirming that the land should only be developed if there were an overriding need for development that could not be met on land of lower quality. The area profile concluded in paragraph 5.3.42 by saying: “whilst the area would initially appear to be well related to the urban area its relative isolation would not lead to easy integration with the town. On balance it is felt that the potential benefits do not outweigh the potential loss of high grade agricultural land and impacts on other locally important environmental assets. This area would not therefore provide the best option for future strategic scale development”. By contrast it was concluded in paragraph 5.2.42 that “on balance the Front Garden provides the best potential to meet the sustainable development principles.” Various constraints including the flood plain were referred to. Development of the Front Garden would have an impact on the landscape setting of the town. “This could however be minimised by sensitive development of the eastern part of the area and protection of the escarpment. Taking into account these factors it is considered that the area could accommodate 4,000 - 5,000 dwellings”. In the overall conclusions to the study, Wootton Bassett and the area east of the A419 were considered to be unsuitable for major development at this stage although their capacity to accommodate lesser growth to 2011 was considered. However, it was still concluded that Wootton Bassett failed to meet any of the sustainability criteria and that it had limited potential for short term growth within the preferred urban concentration strategy. In paragraph 7.2.4 it was stated: “the Kingsdown area has the most significant environmental features of all the areas under consideration. The assessment considered whether the area had any overriding benefits which might outweigh these environmental factors whilst the area does appear to meet the overall strategy of urban concentration there are considerable practical problems with integrating it into the town due to its physical separation. The assessment was therefore concluded that this area is not appropriate for strategic development at this point in time.” The long term potential of the eastern area south of Kingsdown was considered but it was not thought appropriate for smaller scale development. The conclusion overall was that: “The assessment has shown that of all locations the Front Garden performs the best against the greatest number of sustainability criteria. It is the location which is most likely to reduce the need to travel, encourage alternatives and provide easy access to jobs and facilities. In addition it is capable of making relatively efficient use of infrastructure for example water supply, sewerage and other community services,” paragraph 7.2.8. The constraining environmental factors were recognised but it was still concluded that the area could accommodate 4,000 - 5,000 homes. Whilst it was recognised that the area was valued by some as the undeveloped setting to Swindon and that development would need to be sensitive to that issue, the landscape factor was not seen as sufficiently important to outweigh the wider sustainability benefits of this area. It was concluded that the Front Garden should be identified in the Modifications Policy DP 10 as the future direction of growth of Swindon to 2011. At the meetings of the relevant Committees in December 1998, Officers also presented a report containing recommended proposed Modifications to the Deposit Draft Structure Plan, which reflected the outcome of the study: following substantial completion of the Northern Development Area, development of land to the South of Swindon should take place. The scale of the additional housing requirement for Swindon had been re-examined and a requirement for about 4,000 - 5,000 dwellings from this new Development Area was recognised. Although this was less than the 8,500 dwellings recommended by the EiP panel, that recommendation of 8,500 had been made in the context of the Panel’s recommendation that the total Swindon Borough housing requirement of 23,000 in the Deposit Plan be raised to 25,000 but which the Officers recommended be reduced to 22,000 in these proposed Modifications. The next stage was that the proposed Modifications themselves were put on Deposit for the purposes of objection and representations. Dreweatt-Neate on behalf of Bloors objected to the proposed Modifications on the grounds that the technical justification for the reduction in the level of housing provision had serious weaknesses. Whilst welcoming the acceptance of the need for positive locational guidance, they commented that the guidance was inadequate because it failed to accommodate the necessary level of housing provision, over estimated the capacity of the Front Garden and brownfield sites and failed to acknowledge and support the development potential of Kingsdown. In their criticisms of the Southern Development Area, Dreweatt- Neate recognised that whilst the area might have some potential “(perhaps for the development of up to 1,500 dwellings)” the scale of development implied by the proposed Modification would be well beyond the area’s environmental capacity. They also pointed out the difference between Bloors’ proposals for 3,500 homes at Kingsdown and the scale of development used to test the capacity of the area more generally, which at between 4,000 - 8,000 homes was, they said, an obviously inappropriate scale of development. Mr. King on behalf of FRAG commented on the proposed Modifications also. The representations made on the proposed Modifications were reported back to the respective Committees of the Councils in June and July 1999. No alterations of significance to this case were proposed to those proposed Modifications. It had already been recognised in February 1999 that the nature and detail of the Swindon Development Appraisal Study, together with the need to progress the Structure Plan quickly through the various statutory stages, meant that it would be appropriate to anticipate that the objections to the proposed Modifications would require a reopened EiP. Officers had referred to the detailed new work and said that the EiP should be re-opened because: “the matter is of particular importance to the proper planning of Swindon. Consequently it merits full and proper examination, in public, of all the information considered by the Councils in selecting this direction of growth for the town”. They also said that there “are clear benefits if the list of matters and participants [at the EiP] is agreed by the Panel, as this will help to give weight to the independence of the Panel and the fairness of the EiP process given the controversial nature of some of the issues. The number of participants will inevitably have to be limited to facilitate an informal discussion round the table.” Mr. Holgate sought to exploit the way in which the EiP had been managed in order to support his contentions that the policy in question was a detailed policy rather than a general policy, and that if the Councils had a choice, they ought to have chosen the Local Plan route or at the very least ought substantially to have modified the way in which the EiP was conducted. I now turn to the facts relating to that issue. An initial draft of suggested participants and issues was sent by the Councils to the second Panel. This second Panel did not have the same membership as the first Panel. It responded with its own suggestions on each matter for debate and participants, which were then agreed by the Councils. This agreed list of issues and participants was then sent out for public consultation. A preliminary meeting was held on 16th September 1999 at which the Panel Chairman pointed out that the EiP was a mechanism to provide more information to the Structure Plan Authorities on selected issues, and that the key criteria for the selection of participants was the contribution which they might make to the discussion, although achieving a balance was important. The number of participants would normally be limited to 30 and it was important, he said, to appreciate that an EiP was a round table probing discussion: “It is not like a traditional planning inquiry, which is adversarial in nature”. He required that submissions on any particular issue should not exceed 2,000 words and said that it would rarely be necessary for them to be accompanied by appendices. If written submissions were received from those whose request to participate had not been accepted, these would be circulated to other participants for their information and the Panel might refer to them during their discussion. Discussions at the EiP should be short and to the point. The EiP was concerned with strategic matters and was not an opportunity to encroach on matters which ought to be dealt with through Local Plans. The Panel recognised that the Swindon housing issue was likely to be subject to the most time pressure and a further half day would be allocated to it if was necessary. Issue 1 related to the overall County housing requirement, Issue 2 to its distribution, Issue 3 to the role of previously developed land and Issue 4 concerned development at Swindon. The fundamental issue was described as “Does development of the Front Garden on the basis set out in modification 11 represent the most sustainable and realistic strategy to accommodate the future expansion of Swindon?” This issue was divided into three sub topics. The first sub topic was general matters. These included a consideration of how robust had been the process of identifying the preferred direction of growth and the realistic contribution to the overall housing requirement to be made by brownfield and small scale greenfield development. Both Bloors and Bryants were participants. The second sub topic to which a day was allocated was the Front Garden in which the capacity of the area and the environmental and other constraints would be examined. The notes of the preliminary meeting also referred to an allowance for some “unprogrammed time and consequent flexibility.” Bloors were not invited to participate in this topic but Bellway Estate and Wimpey Homes who also had interests in the Kingsdown area were invited, along with Hallam Land Management who had an interest in South Marston, a potential development area close to Kingsdown. FRAG were invited to participate in this issue. The third sub topic was “other locations;” the question which the Panel wished to be considered was whether, from those reported on in Stage 3 of the Swindon Development Appraisal Study, there were “better locations for strategic development, or locations for smaller scale development as an addition to that proposed at the Front Garden should capacity there be insufficient?” The same headings of environmental and other constraints and capacity were to be examined though the Panel said “in less detail than for the Front Garden”. Bloors, but for example not Bryants, were invited participants in relation to the consideration of the Kingsdown area. Neither of those were invited to be participants in the consideration of the area “East of the A419” where David Wilson Homes were a prominent potential developer. FRAG were not participants at either the Kingsdown area debate or the debate over the area “East of the A419”. None of them participated in the debate on Wootton Bassett and Lydiard Millicent. Bloors complained that they had been omitted from Issues 1 and 2; they were told that they could however put in a written representations. They were told by the Panel secretary that it was considered that their point of view was already well represented on those issues. They did not request to participate in the discussion of Issue 4ii the Front Garden. In the end no written submissions were put in by Bloors in relation to those issues. Mr. Steven Smallman of Dreweatt-Neate produced a supplementary witness statement dated 25th June 2001 in which he stated that he believed it to be true that “on behalf of Bloor I contacted the EiP Panel to express Bloor’s concern that they were not invited to attend the EiP sessions dealing with the Front Garden. Given that Bloor were the principal promoters of the Kingsdown site I believed that it was inequitable and seriously prejudicial to my client’s interest for them not to have been invited to this EiP session”. In fact no such request was made and indeed Mr. Smallman did not take the opportunity available to him to put in a written representation even as a fallback dealing with the Front Garden. No explanation was forthcoming before me. I cannot help in consequence but take a pinch of salt when I read his protestations as to the unfairness of the procedure which was adopted and some of his other trenchant criticisms of the way in which the Councils and the Panel considered matters. Perhaps more time spent on getting the facts right and less time on advocacy would have been time well spent. Mr. Smallman provided a statement on behalf of Bloors for the EiP in relation to Issue 4 “Development at Swindon: General Matters”. In it he said that: “he strongly endorsed the recommendation of the first EIP Panel that the Structure Plan should include more specific guidance on the direction or directions which peripheral expansion of Swindon should take in the second half of the Plan period ...”. But his statement referred to the difficulty in formulating guidance at a strategic level, because the strategic guidance had to be sufficiently robust that it could not be undermined at a later Local Plan Inquiry on the grounds that a more detailed analysis revealed serious constraints not previously taken into account. “The strategic assessment leading to locational guidance must therefore be based on a comparative assessment of the constraints to and opportunities for development and a careful weighting in a strategic context of those constraints and opportunities”. He said that the Swindon Development Appraisal Study was seriously flawed “because it reaches strategic judgments which are unsupported by a thorough and detailed analysis of constraints and opportunities and is based largely on erroneous assumptions”. A number of other criticisms were made of the Study including the ranking exercise and the use by the Councils of a development figure of between 4,000 and 8,000 houses in assessing the impact of development at Kingsdown when Bloors proposed a maximum of 3,500 houses. The assessment was described as being “subjective and partisan” and the most appropriate site for further peripheral development was said to be Kingsdown. It was pointed out by the Councils and Bryants that this statement by Mr. Smallman did not contend that the Structure Plan process was not the right level in the overall Structure and Local Plan making process at which directional guidance in relation to housing development on the periphery of Swindon should be given. Whilst the statement recognised the problem of determining an appropriate level of detail, the concern was rather that the Structure Plan process should have more detail and that the Study was inadequately detailed. However on the basis of the material which Bloors provided, they were still urging the selection of Kingsdown as the appropriate direction which should be identified in the Structure Plan. A considerable amount of criticism was directed by Mr. Smallman to the way in which the Councils had assessed the potential contribution of brownfield land at Swindon to the meeting of housing needs. The significance of the assessment of the number of houses that might be produced on brownfield land, lay in its potential for reducing the quantity of housing required on peripheral green field major development sites. This was Issue 4(ic) at the EIP. Dreweatt-Neate were again critical of the Councils’ assessment; they contended that the Councils’ figures were unrealistic and that when following a request from the Panel the Councils provided details of the Swindon brownfield sites which underlay their assessment of brownfield capacity, it was clear from the nature of those sites that they would not in fact yield any housing development; they were in existing and important uses such as educational establishments, hospitals, car parks and the Magistrates Courts. Dreweatt- Neate said that they had carried out their own “detailed assessment of the potential for brownfield and previously undeveloped sites within urban areas in the Borough to contribute to Structure Plan housing requirements.” They concluded that it would be reasonable to allow for no more than 1,800 additional dwellings from unidentified sources within the urban areas during the Plan period. It was pointed out by Bryants that although Bloors said that they had carried out a detailed assessment, they only presented to the EiP a couple of pages; Bryants contrasted this with the lengthy material which they themselves provided to the EIP. Issue 4(iii)(a) was the Kingsdown area’s potential for development. The Dreweatt-Neate paper to the EIP on this topic said that its analysis would demonstrate that “the Kingsdown area (North East Swindon) represents a better location for strategic development in accordance with the adopted compact urban form strategy than the Front Garden. However, given the environmental capacity of both Kingsdown and the Front Garden we believe that if the Borough’s housing requirement is to be met in full, the proposed modifications to the Structure Plan will need to identify both Kingsdown and the Front Garden as Major Development Areas”. The statement referred also to the agricultural land quality of the proposed development area at Kingsdown. It said that a recent field survey carried out by ADAS on behalf of Bloors confirmed that 44% of the site was sub-grade 3a and 50% was sub-grade 3b; a copy of the ADAS Report was available to the EIP. This survey was contrasted with a previous land quality survey carried out by MAFF for the Borough Council at a reconnaissance scale which identified 68% of the site as being sub-grade 3a and 29% as sub-grade 3b. They concluded: “we therefore recommend that Kingsdown (3,500 dwellings) and the Front Garden (3/4000 dwellings) should be identified as MDA’s.” Of course, it is clear that Bloors maintained that Kingsdown was preferable to the Front Garden and the recommendation that both sites should be MDA’s stemmed from the different view taken by Bloors as to the potential contribution of brownfield sites and to a lesser extent also from a different view as to the total housing requirement which the Structure Plan would contain. Bellway Homes put in a statement to the EIP which repeated many of the same themes including pointing out that the Kingsdown agricultural land quality assessment on behalf of the Council wrongly included grade 2 land, because that assessment looked at a wider area than was proposed for development by the housebuilders. DPDS, planning consultants to Bryants also put in statements to the EIP dealing with the various issues. It also provided, as a document for the EIP library, its Environmental Statement in relation to the Front Garden and attached extracts as an appendix to its statement, notwithstanding the guidance of the Panel in that respect. It also attached as an appendix its own Swindon Urban Capacity Study containing the methodology and an “executive summary” of the outcome of its Study which, by a different route, supported the more optimistic approach of the Councils as to the potential contribution which brownfield housing development would make to meeting Swindon’s housing needs. Mr. King also put in written material to the EiP. The Councils provided position statements to the EIP on a number of issues, and in addition, following a request from the Panel, set out more information about the assumptions which they had used in assessing completions, commitments, windfalls, brownfield site potential and small-greenfield site potential around Swindon so that the Panel could better understand its basis for identifying the residue to be provided in strategic greenfield sites. This was followed up with a further requirement from the Panel in a letter of 27th September 1999 to the Councils requiring a breakdown of the unidentified large sites relied on by the Councils in their briefing note in response to the first request. Mr. Holgate drew attention to the fact that the Panel wished to see the technical work undertaken by the Councils regarding the reassessment of brownfield potential. He also drew attention to the detail which was sought by the Panel in relation to the Front Garden including traffic generation figures, the breakdown of trip generation by mode and a copy of the illustrative master plan for that development. He also pointed out the Panel wished to know precisely the boundaries of the areas that were being considered in Issue 4 and wanted a map more detailed than that which had already been supplied. The Panel commented it would be useful to have a larger scale map with “detailed boundaries annotated to show the various developer interests and representations received.” Mr. Holgate submitted that that indicated the level of detail to which the Panel, inappropriately for a Structure Plan EIP, were descending. In their position statement on general matters arising under Issue 4.1. the Council referred to the development appraisal exercise as being one which went “into a level of detail sufficient to reassure the two Structure Plan Authorities that the Local Plan process would be capable of taking the selected sites forward.” The Councils contended at the EiP that the exercise had looked in some depth at issues affecting a broad range of sustainability criteria and that their approach was “considerably more robust than would normally be undertaken at a strategic level”. However to have provided a detailed Transport Impact Assessment and an Environmental Impact Assessment for individual areas “would have taken the time and resources normally dedicated to a Local Plan. It would be inappropriate for a strategic exercise and would have unduly delayed the preparation of the Structure Plan”. Although the Council did eventually provide for the Panel and participants the sites which in the Council’s view exemplified the brownfield potential of Swindon, the Council continued to emphasise that these were merely examples of what might come about and were not a definitive list of definite sites. Nonetheless Ms. Jewell in her witness statement points out that a number of these have in fact subsequently come forward. Although Mr. King in his witness statement made a number of criticisms about the conduct of the EIP particularly related to the extent to which he was able to make the contribution which he would have wished, nonetheless in a letter of 20th November 1999 he wrote to the Chairman of the Panel referring to certain items of fact rather than discussion which he felt they had been unable to cover or respond to and attached those points for the benefit of the Panel. He also courteously thanked the Chairman for the: “very fair and even handed approach you ensured at the examination and in particular the way you allowed amateur groups to be as much as possible on an equal footing with the heavily supported professional developers, Councils etc.” In its Report the Panel set out its summary of the conclusions. It concluded that an additional 1,000 houses should be allocated to Swindon over the figure in the proposed Modifications, to reflect a variety of matters including the Government emphasis on brownfield development. In relation to development at Swindon it said that: “development at Swindon was a key issue at the EIP and a total of four days were spent in examination of matters relating to it. The selection of the Front Garden as the SPAs’ preferred direction of growth was particularly contentious in view of the long standing policy to protect the area from development. “Although we are critical about some details, we are satisfied that the general process which sought to identify the preferred direction of growth was not sufficiently flawed to render its outcome questionable. “With respect to the specific locations we reject Kingsdown, Lydiard Millicent and Wootton Bassett for the reasons explained later in this report. We find that the arguments relating to the Front Garden and the eastern area were more finely balanced than suggested in the SDAS. We have particular concern about the loss of the Front Garden as an amenity for Swindon and note the public support for its retention. However we believe we must place greater weight on the need to meet the development needs at an early stage without further delay and in a way that it does not prejudice choices about longer-term development or achieving the most sustainable transport solutions. We do not believe this is possible East of the A419. Our conclusion therefore is that the preferred direction of growth 2011 is the Front Garden.” I now turn to the Panel’s conclusions in relation to Issue 4. The first topic under “General Matters” was the robustness of the process of identifying the preferred direction growth. In relation to this the Panel concluded: “4.1.12. Having considered all the criticisms we are satisfied that the general process was not sufficiently flawed to render its outcome questionable. We acknowledge the difficulties faced by the SPAs in carrying out such an assessment at strategic level. We accept that the approach to identifying sites was a systematic one in accordance with guidance offered in draft PPG3. It was transparent and for the most part logical in our view but some confusion did arise over the consideration of two quite different strategies. This might have been overcome by a different approach as described in paragraph 4.1.19 below. Nevertheless we do not consider that had this element of confusion been avoided the outcome would necessarily have been different though there might have been more useful consultation results. Our main concern is with the degree of subjectivity in the detailed assessment of locations. Again we consider that some subjectivity is inevitable at this level but it does make a comparison between locations more difficult if specific conclusions can be challenged. Testing the SPAs assumptions is a primary function of the reopened EiP. These detailed matters are taken on board in looking at the various locations and making comparisons between them.” The conclusions in relation to the potential for development on brownfield land reflected the controversy at the hearing itself. “4.1.22. For their part SPAs have put forward a figure of 2589 additional dwellings on previously unidentified recycled land which they describe as realistic rather than optimistic.” [The Panel then referred to the detail of the assessment and to the provision by the Councils of a detailed list of sites which the Councils stressed were examples rather than definitive proposals which should not be examined in detail]. The SPAs “assessment was generally supported by an urban capacity study undertaken by Bryant Homes which estimated that 3,000 new dwellings appeared to be a realistic prospect, 1998 - 2011, allowing as the SPAs had done for uncertainty and probability”. The Panel referred to the approach of others who thought that 4,000 dwellings might be provided through urban regeneration but stated that there were good planning reasons for taking a more cautious approach, heeding the advice in this respect of the Councils. The Panel stated that the developers had not discerned as many opportunities and contended that far too much reliance was placed on brownfield development. “Overall they have serious misgivings about the deliverability of anything more than put forward at the last EiP based on small and windfall sites. ... between 1240 and 2400 dwellings”. The Panel specifically referred to the reservation that Bloors had about the prospective residential use of existing employment sites and commented upon it. The Panel reached its conclusions in relation to this issue saying: “4.1.27. In considering what might be achievable in reality, we accept the SPAs’ point but many of the components referred to by the local groups have been taken on board in their assessment, including housing potential on the former railway works. In general terms we think the SPAs’ assessment of the urban potential in Swindon is robust and that they are being realistic rather than an aspirational in their assumptions. The work of Bryant Homes adds credibility to their findings. We accept that there will need to be policy and financial changes. Even so we do not think it feasible in physical or political terms to achieve the higher level of development (2658) in terms of what might come forward except in the town centre which we consider low. We do believe however there is potential from increased density and reduced vacancy rates and this is also explored below.” Having considered the town centre density and vacancy rates, the Panel set out its overall conclusions on brownfield potential. The Panel referred to changes since the last EiP, new Government policies, the work done by the Councils and stated that it believed that sites would come forward. They said that they did not share the developers’ pessimistic stance “but we are encouraged by the indications that they have given that they are gearing up to respond to urban regeneration in a positive way.” The Panel stated that it generally concurred with the Councils’ assessment of brownfield potential although there was scope for a further 1000 dwellings from town centre improvements and regeneration, increased densities and reduced vacancy rates. “Rounding up of the 2589 dwellings identified by the SPAs, these additions give a total brownfield figure of 3600”. Having considered the various sources of development potential other than strategic greenfield development, the Panel concluded overall that taking their recommendation for a dwellings requirement of 23000 for Swindon, the residue to be provided by way of strategic greenfield development was about 3,800. That was the figure against which they assessed the locations for development. The Panel then turned to the issue of the Front Garden. In its commentary on the background the Panel recognised that Swindon Borough Council was reversing its policy regarding this location. The reasons why Swindon Borough Council had changed its view upon a fresh assessment of the potential directions for growth were recognised, but the Panel whilst accepting that the historical context was not a constraint, also concluded that many of the reasons for past protection of this area remained valid and had to be assessed against the advantages which it might be thought to possess. Mr. Holgate and in another context Mr. King drew my attention to the recognition by the Panel that the traffic issues in relation to the Front Garden were complex and that much conflicting information was available. This was used to support the submission that the Structure Plan process could not cater for the level of detail which a proper analysis of the demerits of the Front Garden and the merits of Kingsdown required. Mr. King pointed out that the Panel noted that the Southern relief road was programmed post 2007 “but it would be brought forward and funded through the development for which it could act as a distributor road”. The Panel concluded on traffic and transport in relation to the Front Garden that the situation was not as straight forward as the Councils had suggested. Whilst recognising its advantages, the Panel concluded that the advantages would be off-set by the impact of increased congestion on the already high congested local network. It agreed with David Wilson Estates that the ranking of the Front Garden as “straight As” in the Technical Supplement from the Councils was not justified. However the Panel concluded that: “Nevertheless we believe that the sustainability advantages could be delivered as the location has much going for it because of its relationship to the urban area”. The Panel examined the Front Garden’s development from the point of view of its effect upon human activity and enjoyment, recreational use and countryside access, visual and landscape considerations, coalescence with Wroughton and access to community facilities. The Panel’s overall conclusions on matters of human perspective was: “4.2.33. We agree with Bellway Estates and Purton Parish Council that sustainability is not just about reducing the need to travel, although various Government Policy Statements do add weight to this particular aspect. It is clear to us from the level of opposition to development from many quarters that the people of Swindon place great value on this area for its visual amenity and recreational potential and these two factors are very strong points in favour of keeping this area of land open. They deserve as much weight as the transport benefits in our view. Whether Swindon can afford to lose the Front Garden on these grounds alone will depend on how it compares with other locations overall; there are many different matters to consider in making that comparison. On the matters of coalescence and access to community facilities, however there are no convincing grounds for taking the view that development here might not be appropriate”. The Panel then turned to environmental matters under which heading they considered flooding, which was of particular concern to FRAG. In paragraph 4.2.38, the Panel referred to the flooding as a major issue identified by local residents, with support from David Wilson Estates. In particular, no detailed mapping exercise had been undertaken to determine the full extent of the flood plain. The Environment Agency told the Panel that they would resist any development in the 1 in 100 year flood plain. They confirmed that there was no specific up to date data for this site but that the information available indicated a larger area of flood plain than was previously thought. Detailed hydrological modelling would be required of Bryants. Bryants and the Environment Agency agreed that the work provided by the Institute of Hydrology did suggest more flooding, but could not be used to indicate the areas subject to flooding. The Panel concluded: “we agree that flooding is a constraint but find no convincing evidence to show that the required amount of housing could not be acceptably accommodated.” The Panel’s overall conclusion on environmental matters was that whilst it noted Wimpey’s concern that not enough weight had been given to environmental constraints “we consider that the SPAs had taken these matters seriously and have gone as far as they can at the strategic level to identify environmental constraints and to ensure that there are no surprises. We accept that more work is required in certain areas and are satisfied with the commitments to undertake this. These issues are likely to arise in every location. We do not consider that there is anything here to suggest that the development could not take place on environmental grounds and we are satisfied that features of importance could be given sufficient protection.” The Panel then considered the effect of a whole range of constraints upon the dwellings capacity of the Front Garden. The Panel noted the view of objectors that in the light of constraints “the Front Garden would be one of the last places to put major development”. However the Panel did not agree that the Front Garden could be ruled out, but recognised that the constraints would impose severe restrictions on what was possible. Wimpey and Bellway Estates estimated that as little as 2000 - 2500 dwellings would be possible. David Wilson Estates put forward 3750 dwellings on 148 net developable hectares, though it would be possible to develop more houses if 30 - 40 hectares of employment land were included for residential instead of unjustifiably being put to a potential employment use. Bryants claimed that 6,000 dwellings would be possible on 160 hectares at 37.5 dwellings per hectare. They sought to maximise the dwellings potential on the site. However the Panel concluded that this position “appears to be somewhat optimistic”. The SPAs remain convinced “that 4500 is the minimum dwellings potential based on 145 hectares for development ... we agree that the SPAs’ approach is the most realistic but their figures would need to be adjusted to reflect our view about limiting development at the eastern end of the site.” Overall the Panel concluded that there was the potential to accommodate the 3800 dwellings which it had concluded needed to be made available in strategic greenfield development, in a way which recognised all the identified constraints. The Panel added: “There may indeed be some spare capacity.” In its overall conclusions on the Front Garden, the Panel set out the variety of advantages and disadvantages which it had as a location for strategic development. It said: “4.2.50. We cannot dismiss the location as a key contender for accommodating strategic growth on the evidence supplied to and heard at the EIP but we do not have the same enthusiasm for the location as the SPAs. Our primary concerns are with congestion on the surrounding roads and with the loss of an amenity which does appear to be cherished by a large number of people. This latter point could be quite significant in respect of Swindon’s long term growth and future structure. We agree that a number of the rankings given it by the SPAs in appendix 5.3 of the Technical Supplement [to the Swindon Development Appraisal] are questionable in the light of evidence examined, although we make no general attempt to suggest what they might be. It would however be inappropriate to place too much weight on the rankings, which the SPAs concede in paragraph 5.1.17 of the Technical Supplement were only part of the assessment, and the results did not in themselves determine the preferred direction of growth. We refer to the ranking simply to illustrate our conclusion that the superiority of the Front Garden over other locations might not be so marked at the SPAs claim.” The Panel then turned to the other locations which were put forward as strategic alternatives and considered whether any of them: “represents a better locations for strategic development or might be suitable for some lesser scale of development to supplement what is proposed at Front Garden if that were necessary”. They examined four general locations including the Kingsdown area under the same general headings under which they had examined the Front Garden. By way of background the Panel dealt with the various estimates for development needs. “The SPAs looked at an area to the North East of the town, beyond the A419, with potential for up to 8000 or so dwellings. Those promoting development here (Bloor Homes, Bellway Estates and Wimpey) are proposing something much smaller, 3000 - 3500, recognising physical and environmental constraints in this location and they see it as a development which would complement that at the Front Garden. The SPAs ... considered that the area would be less appropriate than the Front Garden due to its relative distance and isolation from the range of choice of employment and communicative facilities in the town, the potential effect on best and most versatile agricultural land and other important environmental features. They originally concluded that these constraints limited development potential to less than 1,000 dwellings but at the EiP revised this estimate assessment to 1500, possibly a few more”. On traffic the Panel noted the strong reservations of the Highways Agency to development at Kingsdown. The Agency said that it would discourage development here even on the basis of 3500 dwellings. The Panel considered constraints and capacity at Kingsdown and considered at some length the agricultural land quality position. The Panel said: “4.3.18 The developers have recognised the various constraints in this location in putting forward their proposal for a much more modest development than envisaged in the SDAS. However, the one key factor that they have not been constrained by is the incidence of best and most versatile agricultural land. A MAFF survey for the Borough Council indicated that 49% of the land was sub-grade 3A which comes within the best and most versatile category and MAFF has reservations about development in this location as a consequence. Bloor Homes commissioned a more detailed survey by ADAS which revealed only 37% to be sub-grade 3A and that this land is in pockets and on the edge of the urban area. According to the SPAs FRCA for MAFF has accepted these findings but has still reservations since a significant percentage of the site remains sub-grade 3A”. The Panel referred then to Government policy for protecting the best and most versatile agricultural land which required an overriding need for the development with sufficient land in lower grades being either unavailable or subject to a statutory environmental designation. The Panel noted the argument put forward by the developers that the long term protection of agricultural land was increasingly being questioned but stated: “We see no justification, however, for deviating from the advice proffered in PPG7 and take the view that the loss of best and most versatile agricultural land remains an overriding consideration. We do not support the developers’ view that locating public open space and the best quality agricultural land so that it is not irretrievably lost offers a solution; once subsumed in an urban environment it would be very difficult to bring back into use”. The Panel referred to the SPAs’ belief that the capacity of this location, once all important features were protected and development on best and most versatile agricultural land avoided, was only 1500 dwellings or possibly a little more. The Panel noted the SPAs’ claim that at this level development would not support the provision of on-site amenities and said: “We would not see such a development as strategic.” The Panel noted that the developers thought that 1500 was unduly cautious but commented: “Though further studies might be required in respect of the archaeological features, we would broadly accept the SPAs’ analysis unless there is a clearly demonstrated need for development in this location.” Having set out the advantages and disadvantages of Kingsdown as a location for strategic development, the Panel concluded overall in relation to Kingsdown: “4.3.23. There is no doubt that a very marketable residential development could be created at Kingsdown but this is precisely because of the quality of the environment in this location which in our view is the most attractive of all those considered at the EiP.” The contribution of this countryside on the fringe of Swindon to the town “should not be under-rated and carries some weight in our view”. This factor would not by itself rule the site out “but when coupled with its relative isolation and the likely impact of development on the A419 there is a mounting case against development here.” The potential for strategic development was noted “if needed and if it offers advantages over other locations. However, the constraint imposed by the incidence of best and most versatile agricultural land in the context of PPG7 is such that this potential should only be pursued in our opinion if other locations not so constrained and otherwise acceptable also offer that potential, and have sufficient capacity to accommodate our identified need for strategic greenfield growth.” The Panel then considered the area known as “East of the A419” and agreed with the Councils that this was the only realistic alternative to the Front Garden in terms of overall scale of development and that it had potential as a location for strategic growth in the Plan period. It was however concerned about its relative isolation, its traffic implications and the probable delays in bringing about an acceptable development. The Panel set out its overall conclusions on the preferred direction of growth as follows: “4.4.1. Having rejected Wootton Bassett and Lydiard Millicent as potential locations for strategic development, the three options before us are the Front Garden, the Kingsdown area and the area East of the A419. Since neither the Front Garden or the area East of the A419 are constrained by best and most versatile agricultural land but offer sufficient capacity we also reject the Kingsdown area. There can be no justification for considering development there at this time because need cannot be demonstrated in the context of PPG7. “4.4.2. The choice is thus between the Front Garden location preferred by the SPAs and the area East of the A419. The balance between the two is finer than the SDAS results suggest, since the comparative advantages of the Front Garden are not so evident when subjected to examination. Indeed as regards overall public transport opportunities, there is little different between the two in our opinion. Both locations have advantages and disadvantages as our summaries have indicated. The key question is where does the balance of advantage lie? “4.4.3. The loss of the Front Garden as a major recreational and visual asset nevertheless remains a primary concern and we give much weight to this particular advantage of the location”. The Panel referred to the serious concerns which it had about the relative isolation of the size of community which would have to be accommodated in the short term, were development to the East of the A419 chosen, and about the likely traffic impact on the road network; there was also concern at the delay pending investigations into these matters which was something which the Panel felt it could not risk so late in the Plan period. It continued: “It is our view that the combination of these factors outweighs the loss of the Front Garden and that it would be premature to propose the Eastern area for strategic development. “4.4.4. Our conclusion therefore is that the preferred direction for growth that 2011 should be the Front Garden. In reaching this conclusion we have also had regard to two other factors. Firstly, even if no development were proposed, the character of the Front Garden and its amenity and recreation value would be affected in due course by the SRR if this were eventually to go ahead. Secondly, if only 3800 dwellings are to be accommodated in accordance with our findings on what is required in strategic greenfield development, there is scope for reducing the impact of development compared with what is proposed by the developers.” The Panel accordingly recommended that the dwellings figure for the County should be 67000 additional dwellings in the Plan period and that the figure for Swindon Borough should be amended to about 23000. It recommended also that at Swindon the Northern Development Area should be supplemented by the use of suitable sites within the existing urban area “and by development of land in the Southern Development Area identified to accommodate at least 3800 dwellings, being the balance of growth required within the Plan period”. They also recommended that rural buffers should be maintained to protect the separate identities of towns and villages, and should be represented on the Key Diagram by means of a symbol next to rural buffer settlements, one of which was Stanton Fitzwarren. This had the effect of putting the Kingsdown area into the rural buffer. The next stage in the Structure Plan process was for the Councils to consider the Report of the Panel. Before the Councils in fact considered their response to the Panel’s recommendation, Mr. King on behalf of FRAG sent in detailed comments on the Panel Report to the Councils for their assistance. He was critical of the technical appraisal of development strategies which had been placed before the Panel; he contended that the technical appraisal was biased and queried whether the Councils’ ownership of land at the Front Garden had led to bias. Mr. King concluded that the Panel had accepted that the process was flawed but had failed to realise quite how badly flawed the technical appraisal was. He stated that no proper environmental or ecological study had been carried out and that the SPAs could not possibly conclude that the Front Garden had fewer assets than elsewhere. He also drew attention to the flooding problem as a major issue to which far too little attention had been paid in the light of local knowledge. He challenged the Panel’s point about the effect of the Southern Relief Road saying that its effects would be far less than those caused by the housing and pointing out that the Council had stated that the SRR could only be built if paid for by the developer. In June 2000 the Councils accepted the Panel recommendations with the benefit of an Officers’ Report recommending that outcome. In turn the further proposed Modifications which resulted from acceptance of the Panel’s recommendations were subject to public consultation. Mr. King on behalf of FRAG made a number of comments about the inappropriateness of development at the Front Garden and the overall number of dwellings, 23000, which the Councils had accepted. No further point at this stage was made in relation to the Southern Relief Road. Bloors responded in two ways. First, CMS Cameron McKenna, solicitors to Bloors wrote to Swindon Borough Council on 22nd June 2000 complaining that the second EiP Panel had descended into examining the individual components of planned housing provision at the sub-district level and related site specific matters, without fully investigating matters “at an appropriate level of detail” for such an exercise, and contended that the process was therefore flawed. They warned the Councils that Bloors would consider challenging the adoption of the Plan if the flaws in the process leading to its adoption were not rectified. They said that the examination of housing numbers was “based on superficial and inadequate analysis”, that the Panel had been improperly advised and had therefore misdirected itself as to the appropriate definition of “previously developed land” within PPG3, and also that the Panel’s recommendation against Kingsdown “rests mainly on an assumption that the agricultural land quality of the site is greater than the alternative locations”, in respect of which the Panel did not have available “adequate technical information to exercise that comparative judgment”. The rectification of the flaws involved a comprehensive urban capacity study, the provision of full details by the Councils of their previously developed land analysis and an agricultural land classification assessment for the Front Garden site in comparable terms to the assessment carried out for Kingsdown. The Borough Council responded in August 2000 to the effect that it considered that the work had been done at the appropriate level for a Structure Plan, that the definition of brownfield land had been set out in material before the EiP and that the technical work underlying the SDAS and associated technical studies had been carried out to an appropriate level of detail. In response to the Borough Solicitor’s invitation to them to let him know if he could assist further, Cameron McKenna wrote on 13th October 2000 to say that his replies were inadequate and glossed over the points raised. A meeting with Officers was offered by the Council but the developers took the view that a further meeting with Officers before the full Council meeting of 23rd November 2000 would be unlikely to progress matters. The other front upon which Bloors advanced its objection to the further proposed Modifications related to their substance. Dreweatt-Neate put in a written objection stating that the: “residual balance of housing required in addition to the Northern development area and existing commitments, is, on the basis of information relied on by the Strategic Planning Authorities and the EiP Panel, impossible to establish within any acceptable degree of accuracy. The EiP Panel’s analysis in this respect was fundamentally flawed and the further proposed modifications reliance on that analysis is therefore unacceptable. The second (re-opened) Examination in Public was unusual in that it required the EiP Panel to examine issues one would normally expect to be dealt with at a Local Plan level. Once the Structure Plan process had descended to examining in detail matters such as the residual housing requirement it was incumbent on both the Panel and subsequently SPAs to deal with those matters properly and fully. It is clearly the case that the second EiP Panel made recommendations without fully investigating matters at an appropriate level of detail and that the process was therefore flawed”. They expressed substantial doubt about the Panel’s assessment of brownfield land development because the Councils had not carried out the appropriate urban housing capacity. They criticised the approach to the Front Garden saying that the site was heavily constrained and had a sustainable development capacity of perhaps between 2500 and 3500 dwellings. “The EiP Panel did not have sufficient level of technical detail to be able to make a reasonable assessment of the site’s development capacity. It is therefore wholly unacceptable and misleading to suggest that more than 3800 dwellings could be developed on the Front Garden site”. The comparative analysis was said to be seriously flawed. The example was given of the rejection of the Kingsdown site which it was said rested “solely on an assumption that the Agricultural Land Quality of that site was greater than alternative locations, notwithstanding the Panel did not have available adequate technical information to exercise that comparative judgment”. The changes sought on behalf of Bloors were in summary: more extensive and detailed work should be done in relation to urban capacity and the potential alternative locations; and Kingsdown should be preferred to the Front Garden, which should only be used to accommodate any residual strategic greenfield requirement. In November 2000 the two Councils concluded their consideration of the objections and representations to the further Proposed Modifications, again with the benefit of an Officers report which set out what those objections were and what the recommended response to them was. The Councils adopted the Wiltshire Structure Plan incorporating the first Proposed Modification and the further Proposed Modifications without further change in response to those representations and objections. In essence, the Councils accepted the Panel’s recommendations, as their Officers advised they should. The legal framework I now turn to the legal framework for the decision and submissions. The contents of structure plans are set by section 31 of the Town and Country Planning Act 1990: “(2) A structure plan shall contain a written statement formulating the authority’s general policies in respect of the development and use of land in their area. (3) The policies shall, subject to subsection (4), include policies in respect of - (a) the conservation of the natural beauty and amenity of the land; (b) the improvement of the physical environment; and (c) the management of traffic. (4) Regulations under this section may prescribe the aspects of such development and use with which the general policies in a structure plan are to be concerned, in which case the policies shall be concerned with those aspect and no others. (6) In formulating their general policies the authority shall have regard to - (a) any regional or strategic planning guidance given by the Secretary of State to assist them in the preparation of the plan. (b) current national policies; (c) the resources likely to be available; and (d) such other matters as the Secretary of State may prescribe or, in a particular case, direct.” Section 31 (10) adds that “policies”, except in section 31(6)(b), includes “proposals”. Mr. Holgate places very substantial reliance on the phrase “general policies”. He contrasts that approach with the provisions related to local plans which deal with “detailed policies”: Section 36 provides: “(2) A local plan shall contain a written statement formulating the authority’s detailed policies for the development and use of land in their area. (3) The policies shall include policies in respect of - (a) the conservation of the natural beauty and amenity of the land; (b) the improvement of the physical environment; and (c) the management of traffic. (4) A local plan shall be in general conformity with the structure plan. ... (6) A local plan shall also contain - (a) a map illustrating each of the detailed policies; and (b) such diagrams, illustrations or other descriptive or explanatory matter in respect of the policies as may be prescribed, and may contain such descriptive or explanatory matter s the authority think appropriate .. (9) In formulating their detailed policies, the authority shall have regard to - (a) such information and other considerations as the Secretary of State may prescribe or, in a particular case, direct ... (11) For the purposes of this section “policies” includes proposals.” Mr. Holgate reinforces the distinction which he draws, by reference to the provisions for Structure Plan Key Diagrams contained in Regulation 5 Town and Country Planning (Development Plan) (England) Regulations 1999 No. 3280. “(1) A structure plan shall contain a diagram, called the key diagram, illustrating the general policies formulated in the plan’s written statement. (2) A structure plan may also contain a diagram, called an inset diagram, drawn to a larger scale than the key diagram, and illustrating the application of the general policies to part of the area covered by the structure plan. ... (4) No key diagram or inset diagram contained in a structure plan shall be on a map base.” Local Plan maps are to be on a map base, by contrast. The same distinction between “general” and “detailed” policies is found in sections 12(3) and 12(4) of the 1990 Act which deal respectively with Parts I and II of a Unitary Development Plan. Those provisions apply where a single planning authority is given those powers and a single Development Plan is produced. Swindon Borough Council is not one of those authorities, and in the absence of an agreed Joint Structure Plan with Wiltshire County Council, would produce both a Structure Plan and a Local Plan for the area of its Borough. There are not many authorities in that position as a result of local government reorganisation. Mr. Holgate’s submissions on the appropriate Plan level, structure or local, at which to analyse the selection of the future direction of growth in Swindon, are made in this unusual context: the Borough Council as a Structure Plan Authority could itself decide and certainly was party to the decision as to whether its own Local Plan was the appropriate vehicle for making that selection. A Structure Plan Authority is rarely faced with that decision; it would normally decide whether it or another authority would make the selection, as opposed to one authority deciding which of the Plan options potentially available to it, it would select. He further reinforces the distinction, emphasising the level of abstraction at which he submits a Structure Plan operates, by reference to the different procedures which precede the adoption of Structure and Local Plans, in particular at the point of independent scrutiny. It is unnecessary to set out in detail the statutory processes which underline what I believe to be an uncontroversial but brief description of the differences upon which Mr. Holgate relies. A Structure Plan is examined at an Examination in Public. The topics for examination are determined by the local authority. The independent and expert Panel which holds the examination and the authority together select the participants to be invited to attend for the examination of which topic; there is no right to participate or to be heard although written representations from non-participants are received and considered. The examination takes the form of a probing discussion led by the Panel around the table of participants; it rarely involves any direct questioning of one participant by another. The time allotted for oral discussion is determined by the Panel rather than by what the participants feel they have to say, although there is a very great deal of reading which is done in advance. The Panel Report has to be considered by the Council which has to give reasons for its decisions on the recommendations. The Department of the Environment “Guide to Procedures” advises that the Authority should select those issues on which they need to be more fully informed by means of public discussion in order to reach their decisions. Accordingly the basic criterion in selecting participants will be the significance of the contribution which they can be expected to make to the discussion of the matters to be examined. The Guidance specifically states that “as the purpose of an EiP is to discuss the selected issues, rather than to hear objections, it is not intended that all those who have objected should be invited to the examination. ... the aim will be to select participants ... who between them represent a broad range of view points and have a relevant contribution to make.” The Guidance identifies that there will be an opportunity for those who wish to do so to comment on the selection of issues and participants. The function of the Chairman is to lead the discussion, draw attention to the issues on which information is required and to order the discussion. The Chairman will ensure that the selected issues are examined in appropriate depth so as to enable the Panel to make recommendations without lapsing into a level of detail inappropriate to the plan or EiP. Legal representation is discouraged. It is the objections to a Local Plan which are considered by an Inspector at an Inquiry at which objectors have a right to be heard, witnesses are called and cross-examined often by Counsel. The process is altogether more formal, and more detailed. Many objections are dealt with in writing. It is increasingly common for general issues common to many objectors e.g. housing need, to be dealt with at less formal round table sessions conducted by the Inspector. The Inspector’s report has to be considered by the Council and reasons given for the decisions reached by the Council in relation to the Inspector’s recommendations. PPG12 “Development Plans” December 1999 revision, sets out Government policy in relation to the different functions of Structure and Local Plans. The 1992 version was not significantly different. “Structure Plans produced by County Councils and some Unitary Authorities in many cases on a joint basis set out key strategic policies and provide a framework for Local Plans”. “Local Plans in which more detailed policies are set out to guide development in a particular local authority area. The Plans cover the whole of a Local Authority area and may include detailed proposals for specific sites”. (Para 1.7). Paragraphs 3.7 and 3.8 contain more specific guidance which is of relevance when examining the phrases “general policies” and “detailed policies” in their statutory context, looking at the purpose of those phrases. “3.7. The main function of the Structure Plan is to state in broad terms the general policies and proposals of strategic importance for the development and use of land in the area, taking account of regional and national policies. The Structure Plan should avoid over elaborate or detailed policies and should concentrate on providing a strategic framework within which detailed policies can be framed in Local Plans. They should not include detailed development control policies. While there may be justification for extending the scope of Structure Plan policies in particular cases, the Secretary of State may use his powers of intervention to delete policies which he considers are not strategic in nature or the level of detail is not justified. “3.8.Structure Plans and Part I of the UDPs should provide a statement of the overall strategy for development and the use of land in the area. This should be set within the context of sustainable development objectives (as set out in paragraph 4.1 below), and should indicate how development will be served by transport and other infrasture. Policies should therefore be limited to strategic policies and proposals which provide an appropriate framework for local plans and development control, by: setting out the local authority’s policies on each of the topics required by legislation (see paragraph 3.2 above) and those listed in the box below, where they are appropriate to the area; indicating the scale of provision to be made in the area as a whole, including, for example, figures for housing in each district and, where appropriate, the broad location of major growth areas and preferred locations for specific types of major developments (eg retail, leisure and employment); indicating the general location of individual major and strategic developments likely to have a significant effect on the plan area (eg a new settlement): and indicating broad areas of restraint on development. Housing or employment provisions below district level should only be included in structure plans where it is necessary to distinguish between the needs of different areas within a district for strategic purposes (eg by making housing provision within a given distance of a main employment centre, or in order to assess the general conformity of plans).” The vires of the inclusion of Policy DP10 in the Structure Plan as a “general” Policy Mr. Holgate QC submitted that section 31(2) provided for a duty on a structure plan authority to include its “general policies” in the Structure Plan, and by necessary implication precluded such an authority including them in favour of “detailed policies” in a Structure Plan, omitting them from a Local Plan which is where in law they should be. Mr. Holgate further submitted that policy DP10 was not a “general policy” of the Structure Plan authorities but was a “detailed policy” of one of them, Swindon Borough Council, which should be in that Borough’s Local Plan, pursuant to section 36(2). He said that the question of where further major housing development should take place to meet Swindon’s housing requirement was a matter of the Council choosing between specific sites. The differences between the candidate sites involved finely balanced planning judgements, which turned upon a careful and detailed analysis of a range of issues, some of which were quite technical. This selection process could not be revisited at the Local Plan stage, because the Local Plan would have to conform generally to the Structure Plan. The procedural differences between Structure and Local Plans showed the scope of the difference between a “general” and a “detailed” policy; a general policy had to be one fit for debate and resolution through the EiP process. Such a process is neither meant to resolve nor is it capable of resolving the detailed issues which underline the selection of major housing sites. The choice of site was also strongly influenced by the calculation of the residual greenfield housing requirement, itself a matter for detailed scrutiny. The issues were essentially Swindon Borough issues rather than ones involving other parts of the County. He supported his submission by reference to the fact that paragraph 4.48 of the Deposit Draft of the Structure Plan had said that “Further scope [for major housing provision] should therefore be identified in the review of the Local Plan”. This view was rejected by the Panel which held the first EIP for what Mr. Holgate submitted were the impermissible reasons of timescale and resources, as set out in paragraphs 4.42 to 4.44 of its Report; paragraph 17 above. Mr. Holgate submitted that the question of whether a policy was a “general” policy or a “detailed” policy was a question for the Courts. The provisions of section 31, as indeed of section 36, imposed an obligation on local authorities to include their “general” or “detailed” policies within the appropriate plan. It was for the Courts to decide whether that duty had been complied with, which entailed the Court reaching its own decision as to the nature of the policy. The Act does not use in this context some phraseology such as “those policies which the Council considers to be general” or “those policies which the Council considers appropriate for inclusion in the Structure Plan”. An application under section 287 of the 1990 Act challenges a decision on the grounds that it is not within the powers contained in the Act. A decision as to whether action by an authority is within its powers may involve the determination by the Court itself of factual or evaluative issues. Mr. Holgate supported his submission by reference to Westminster City Council v Great Portland Estates plc 1985 1AC 661 House of Lords, and to a decision of mine in Kingsley v SSETR and Cheshire County Council (2001) 82 P&CR 85. In the former case, the relevant issue was whether the Westminster City Council Local Plan had breached the provision equivalent to Section 36(2) in that its policies: “for office development, albeit couched a exclusions to a general prohibition and described as non-statutory policies were improperly excluded from the local plan and its statutory processes”. Lord Scarman said at page 674D-G: “But what is the position if it can be shown, as in this case, that the reference to exceptional or special circumstances is a cover for policies excluded from the plan? The statute requires that a local plan shall formulate in such detail as the council thinks appropriate their proposals for the development and use of land: section 11 and Schedule 4, paragraph 11(2) of the Act of 1971. If a local planning authority has proposals or policy for the development and use of land in its area which it chooses to exclude from the plan, it is, in my judgment, failing in its statutory duty. An attempt was made to suggest that the non-statutory guidance in this case went only to detail, as to which the council is given a discretion. But the council provides the answer to this point: it speaks in its guidelines of its non-statutory policies. In the Court of Appeal, Dillon L.J. demonstrated by his quotations from paragraphs 3.2, 3.3 and 3.4 of the non-statutory guidelines that they do indeed, as the council itself says, contain matters of policy relating to the control of office development outside the central activities zone. It was the duty of the council under Schedule 4 of the Act of 1971 to formulate in the plan its development and land use proposals. It deliberately omitted some. There was therefore a failure on the part of the council to meet the requirements of the Schedule”. Mr. Holgate submitted that the House of Lords itself had undertaken the task of assessing whether the non-statutory policies were indeed policies which should have been in the Plan, even though that task was made very straightforward because of the Council’s own description of them as policies. He also submitted that that was the approach which in Kingsley, I had attributed to the House of Lords and therefore pursuant to which I had undertaken the task of assessing whether the contentious words in the Explanatory Memorandum were policies, even though again my task had been made easy by the nature of the policies and the rather weak arguments to the contrary. Mr. Drabble QC for the Councils and Mr. Lockhart-Mummery QC for Bryants both submitted that the correct approach for the Court was to ask whether the Councils had concluded reasonably that the SDA policy was a “general” rather than a “detailed” policy. The Courts were not the body charged with deciding on the content of Structure Plans, and on the demarcation between Structure and Local Plans. The planning authorities’ judgements should be accepted unless they involved a clear misdirection in law. The Courts were not intended by the 1990 Act to resolve issues of planning judgement. The House of Lords had not explicitly held that it was for the Court to decide what was policy. Its decision, in view of the Council’s own description of the material as policy, should be seen as compatible with their submissions in this case as to the approach to be adopted. The result in Kingsley was, they submitted, likewise consistent with that approach. If there were nuances to my reasoning which were inconsistent with that approach, they were, with all due deference and respect, wrong. The Policy was a“general” Policy because of its strategic nature; it was an area for major growth likely to have a significant effect on the plan area. The Councils’ approach was consistent with past practice in Wiltshire in relation to Swindon, as approved by the Secretary of State, who also made no complaint about the current Plan, notwithstanding his power to do so. It was consistent with PPG12. It was not disputed by Mr. Holgate that if that approach were correct and that if the Councils had taken into account the relevant considerations in reaching that conclusion, it was not an irrational conclusion. I now turn to my analysis of this issue. The question for the Court on this part of the challenge is whether the inclusion of the disputed policy was beyond the powers provided by section 31(2) of the 1990 Act. The power, indeed the duty is to put into the Structure Plan a statement of “the authority’s general policies”. The duty under section 31 can properly be contrasted with the duty on Local Plan authorities under section 36(2) in relation to their “detailed policies”. Section 31(5) deals with other illustrative, descriptive or explanatory matters by way of regulation. The Town and Country Planning (Development Plan) (England) Regulations 1999 No. 3280 Regulation 5 (4) requires that the key diagram and any inset map should not be on a map base, as did its 1991 predecessor. It is the function of the Court to construe the statutory provisions including the phrase “the authority’s general policies,” in section 31. The meaning of that phrase in its statutory context is a matter of statutory construction and hence of law. It is a phrase repeated in section 31(6), and is to be contrasted with the language of section 36 on local plans. The task of statutory construction here requires a court to discern and express the meaning of the statutory provisions, their scope or limits, or defining characteristics. I put it that way because the phrases in question do not readily permit of the expression of their true construction by a process of substitution of more or different words. It is easier to set out what are the characteristics which define the concept, in its statutory context, or rather to identify whether a particular characteristic is within or without the statutory concept. Once the Court has determined, as a matter of law, the scope of the phrase “general policy,” the decision whether a particular policy is within its scope is a matter for the decision-maker provided that he has correctly directed himself as to its scope, or its defining characteristics and not by reference to irrelevant characteristics or considerations, and has reached a decision which falls within the scope of the phrase as a matter of law. It is not a question of whether his interpretation is reasonable and therefore right. It is a question first of statutory construction and then of application: what is the scope of the statutory phrase? Does the policy fall within its scope? Both questions are for the Court but the latter is answered by a review of the application of the true scope of the phrase to the facts, rather than a primary decision by the Court. If the policy is reasonably regarded as falling within the true scope of the phrase, there is a duty to include it in the Plan. I have set these matters out at some length, first because the Westminster City Council case appears to me to suggest and my decision in Kingsley actually holds that the issue of whether a document is a policy document was one for primary decision by the Court. In both the Westminster City Council and Kingsley cases, the considerations which I have set out above would not have affected the results because the result of the proper application of the statutory provisions could only have led to one result. Arguments along the lines of those successful in R v London Borough of Hillingdon ex parte Puhlhofer 1986 AC 484 were not specifically considered in the Westminster City Council case, though appear to have been raised in argument. There does not appear always to be a consistent approach in the authorities to this issue. However, I have had the opportunity to examine the matter in greater depth in this case than I did in Kingsley. I accept the submissions of Mr. Drabble and Mr. Lockhart-Mummery that a different approach to the application of the phrase, once properly construed by the Court, is called for. I have set out above what I consider the appropriate approach to be. I have also reached the conclusion that a number of specific features of the statutory provisions in question reinforce that approach. The most important is that there is a specific obligation in section 31(6) on the authority to have regard to the Secretary of State’s regional guidance and national policies in formulating its general policies. PPG12 is a national policy document; it gives guidance as to the relationship between Structure and Local Plans, between general and detailed policies, which I have already referred to in paragraph 94 above. Of course, the Secretary of State cannot by guidance turn a detailed policy into a general policy. However, the very existence of his role in that respect suggests that the role of the Court in applying the phrase “general policy” once properly construed, is not the primary one. Second, the very nature of the judgment called for in this statutory context points strongly to it being one primarily for the planning authority rather than one for the Court. Whilst I deprecate any attempt to imply into a statutory duty words which turn the duty into a matter of discretion, the very breadth or vagueness of the concept involved here, the multitudinous range of circumstances which policies cover, and the consequential obligations on local planning authorities to produce local plans which generally conform to the structure plan and to make planning decisions which accord with it, reinforce the primary assessment or evaluative role as belonging to the planning authority. A rather lesser indication but pointing the same way is the reference to “the authority’s general policies.” The possessive indicates that it is their general policies at stake rather than those which a Court may determine are their general policies. It is relevant that the Council has to decide whether or not to have a policy. I do not accept that the ouster provision in section 284 or the basis of challenge in section 287 themselves offer any guide as to how the error of law is established in relation to the construction and application of an Act. I now apply that approach to the issue of whether Policy DP10 is a “general” or a “detailed” policy. The concept of a “general” policy as opposed to a “detailed” policy is not easy to encompass in a single sentence or two in a way which fits all circumstances. The very word “general” can denote universality, normality the essential features or gist of something or vagueness to be contrasted with specificity, or detail. The word takes its colour here from its contrast with “detailed”. Guidance is also to be found in the function which a structure plan performs in setting the framework for local plan making and development control decisions. General policies are those which should be determined at the structure plan level in that plan-making hierarchy. PPG12 uses the phrase “strategic” policies, which is an apt reflection of that structural function. They are important for the structure or framework for development of the area in question. All of those are aspects of a general policy which can be present to a greater or lesser degree depending on the circumstances and in relation to which an authority’s conclusion that a policy is a general policy should be judged. I also consider that the differing procedures through which Structure and Local Plans pass, in particular the different forms of independent scrutiny, can be of some assistance in understanding the scope of the phrases “general policies” and “detailed policies”, because the former have characteristics appropriate for independent scrutiny at an EIP, the latter have characteristics appropriate for objections to them to be dealt with at an Inquiry. There is rarely a problem in discerning whether a policy is a detailed as opposed to a general policy or vice versa. The problem potentially arises where as here, the Structure Plan contains a policy about the location of e.g. housing development at a sub-District level. In effect, submits Mr. Holgate, there is no room for doubt as to where the Southern Development Area is. However the Southern Development Area is described, the policy in reality goes beyond indicating a mere general direction as to the future growth of Swindon, and by its nature is or is close to being site specific. This was therefore a decision, he submits, which was one for Swindon Borough Council alone to take at the Local Plan level. There are however circumstances in which a general policy, in the sense of a structural or strategic policy, may require a structure plan policy at a sub-District level. A single major development e.g. a new settlement may be required in the County; a number of general locations in one or more Districts may be considered; the Structure Plan could legitimately contain a “general” policy which identified not just the District but the general location within the District for such a development. Indeed the selection of the District may in effect identify the preferred development location if it were the only one discussed in that District during the Plan process. The same would be true of the general location of a major development which could have influences beyond the boundary of the District in which it is sited, whether e.g. by reason of proximity to the boundary with another District or by reason of, say, the impact of its traffic upon roads serving both Districts. However, I do not consider that an impact beyond the District boundary or a choice of sites for major development in two Districts are the necessary ingredients for a policy to be “general” in the sense of strategic or structural. To my mind, the key characteristic relevant here is scale or significance to the County or Structure Plan area. A policy can be a “general” policy, not just because it may resolve an issue which may be contentious as between Districts or because of a specific impact across district boundaries, but because the general location of the County’s major developments, within a particular District can properly be regarded as of structural or strategic significance. Dreweatt-Neate’s phrase at the first EIP as to what was strategic or structural is of assistance: “the general location of individual developments likely to have a significant effect on the Plan area.” A major housing development, of some 3800 houses intended to serve the needs of Swindon is also serving a County need. The general location of that development and the general direction of growth of one of the County’s major towns which that entails, can properly be seen as a structural or strategic matter, even though the choice is about what happens within one Borough. The level of detail here is not self-evidently greater than would be involved as the result of a choice between major growth areas in different districts, yet the latter would be expressed in what would undoubtedly be a “general” policy. It undoubtedly was the case that the question of the future direction of growth involved the examination, between the first EiP and the first Modifications, of a range of possibilities of which one, Wootton Bassett, was outside Swindon Borough Council’s area. However that was not the reason why the policy was strategic. Indeed, if it had been the reason, once that option had been rejected and the only remaining areas contemplated were within Swindon, it would have been possible to provide in the policy merely that the 3800 dwellings had to be provided within Swindon’s own area, leaving any greater level of locational precision to the Local Plan. It is my judgment however that the general location, though not the specific development site boundaries, of major residential development and the associated direction of growth of a major town can itself be seen as strategic or structural in relation to a county, and “general” in that sense. I do not consider that the difference between general direction and general location means that only the former ranks as a “general” policy. Adopting the approach which I believe to be correct in law, that feature or characteristic of Policy DP10 means that the Councils could conclude, without any misdirection of law that it fell within the scope of section 31, as a “general” policy. The Councils can properly be influenced also by the consistent way in which the direction of development of Swindon has been seen as structural or “general” in earlier Structure Plans, and also by the stance adopted by various bodies, including Bloors, at the two EiPs. I would have been reluctant to regard as unreasonable what appeared to be a generally agreed common approach. The Councils’ approach was also consistent with the advice in PPG12, to which they had to have regard, as to the drawing of the line between general and detailed policies; paragraph 94 above. The evidence of Mr. Durrant for Bryants described the way in which similar policies for the location of major growth were dealt with in other counties’ Structure Plans e.g. Hampshire in 2000, also a Joint Structure Plan. This too would be relevant to the Councils’ considerations. It is a fallacy underlying Mr. Holgate’s submission that the policy is site specific. It is direction specific, though at the Front Garden there are obvious natural and man made boundaries which as a matter of common sense define the location within which the development site boundaries will be found. That degree of definition of the general location, however, is merely the consequence of the selection of this general location; such obvious definition of the general area would not necessarily have existed in other locations. There is also no greater degree of locational specificity than might have been necessary had the two competing locations been in different Districts and thus their location incontestably a matter for resolution at the Structure Plan level. I appreciate that Mr. Holgate, perhaps as the necessary logical consequence of his argument did contest it, but his argument served to highlight the fallacy rather than the strength in his case. If a major development is needed and could be located in one or more Districts, the notion that the Structure Plan should identify a need, and then as a matter of vires leave directional guidance to a joint Local Plan Inquiry involving one or more authorities, is one which involves such an abdication of responsibility by the Structure Plan authorities that it betrays a misinterpretation of section 31. If the issues had been between the Front Garden and Wootton Bassett, a development appraisal study would have been appropriate and a selection made. It cannot sensibly be said that that had to go before a joint Local Plan Inquiry or that the general definition in DP10 had to be abandoned in favour of a general reference to Swindon, when everyone would know why Swindon rather than North Wiltshire had been referred to. This is not an uncommon problem e.g. in relation to new settlements. It is, or can properly be regarded as a structural matter, with whatever practical requirements that may impose as to how the matter is efficiently considered before, at and after an EiP. There is one further point I note here. The Structure Plan is a single Plan for the whole of Wiltshire and Swindon Borough, but its preparation satisfies the Structure Plan making obligation unusually imposed, as a result of local government reorganisation, on a Borough. It may be that that can affect the level at which a policy is seen as “general” as opposed to “detailed”. However that was not a point raised before me as a justification for the inclusion of policy DP10. However, I conclude that there is no necessary misdirection as to the meaning of “general policy” in a conclusion that policy DP10 has a necessary defining characteristic to be such a policy. There may be a number of such characteristics, which permit the conclusion that a policy is a general policy on different bases depending on the circumstances. In these circumstances, such a characteristic is present. This is not to say that in all circumstances, a Council must conclude that the general direction or location of a large development is a structural matter; it depends on the view taken as to its structural or strategic significance. Mr. Holgate however submitted that the basis upon which the Councils in fact concluded that the policy was a general policy was that it was quicker and more efficient to include it in the Structure Plan in order to reduce the cost of a Local Plan Inquiry and to avoid pre-emptive speculative planning applications leading to section 78 appeals. This type of consideration, submitted Mr. Holgate, is entirely irrelevant to whether a policy is or is not a general policy. I accept the principle of this submission. There may be advantages in saving of time and money in dealing with a policy at the Structure as opposed to Local Plan level. But I cannot see how that can be something which falls within the scope of the phrase “their general policies”. If taken into account, it involves a clear misdirection as to the scope of the phrase or as to the considerations relevant to its application to the facts. I emphasise that the statute does not give to planning authorities a discretion to choose whether to put a policy in a Structure or Local plan according to some general criteria of what they believe to be reasonable in the interests of proper planning. No discretion is given at all. Certainly, a judgment is involved as to whether a policy is “general” or “detailed”, strategic or local and that judgment involves the proper consideration of planning matters, but only of those relevant to the application of the concept of a “general” policy, properly understood, to the circumstances involved in the interests of proper planning. If a policy is a general policy within the true scope of that phrase in its context, there is a duty to include it in the Structure Plan, and if it is a detailed policy, there is a duty to include it instead in the Local Plan, when it is produced. Policy DP10 was undeniably one or the other. There is no power to conclude that it is a detailed policy but better dealt with at Structure Plan level. There is no discretionary basis for including detailed policies in the Structure Plan, not least because the appropriate form of independent scrutiny would thus be side-stepped. It is perfectly clear that the first Panel recommended that the matter be dealt with at the Structure Plan level in part for reasons which have nothing to do with whether DP10 would be a general policy or not. Their Report, at paragraph 17 above suffices for that. Swindon Borough Council certainly accepted the recommendations of their Officers on 13th October 1997 that they should accept the Panel’s recommendations that firmer positive directional guidance be given in the Structure Plan for reasons which included the delay and pre-emptive speculative applications which could be expected were this matter to be left to the Local Plan. However, the Council also wanted to extend the area to be examined so that it covered North Wiltshire District, and in particular the Wootton Bassett area. The Joint Structure Plan Working Group recognised the soundness of that point and the significance of the outcome of the process for Swindon and its surrounding settlements. The Councils’ decisions as to the proposed modifications which were to be considered by the second EiP, although recognised to be of particular importance to the planning of Swindon because of Policy DP10, simply carried forward the considered output of the Swindon Development Appraisal Study which flowed from the acceptance of the first Panel’s recommendation. At the second EiP, the Councils in their position statement were justifying the level of detail at which the issues of urban capacity and location for major greenfield development were considered by reference to the strategic nature of exercise, and leaving the more detailed analysis, with Transport and Environmental Impact Assessments to the Local Plan. They did recognise that the Development Appraisal had been done at a level more detailed than necessary for a Structure Plan, but that more detailed work was both a valuable back-up to the general judgment at Structure Plan level and would be useful in later Local Plan work. The delay which would be created by researching the issues in more detail was referred to but that does not indicate an error in the approach at that stage as to whether this was a general policy. The second Panel itself looked at the level of detail necessary to reach what it saw as a series of strategic decisions on housing requirements at County and District level, urban capacity in Swindon, the residual greenfield requirement and the location for the direction of the future growth of Swindon. The whole thrust of its approach was that it was dealing with what it considered to be strategic, at Structure Plan level, and it did not do so for reasons of urgency, let alone because it felt obliged to carry through some inappropriate exercise embarked on following the recommendation of the first Panel. That thrust is embodied, I consider, in the extracts of its Report set out above and in particular in paragraphs 64 - 76. The recommendations were accepted as sound, and the Plan was adopted accordingly. There is little explicit reasoning given for the use of the Structure Plan process for this policy after the consideration of the first Panel’s report. There is nothing remarkable in this because it was not the case for Bloors or for Mr. King before or at the EiP that the Local Plan should have been used. Bloors were concerned that the Panel did not have enough detail but were not arguing that the Panel should decline to recommend the direction of growth in deference to the Local Plan in view of the detail involved. Even after the EiP when the further Proposed Modifications were being considered, the criticism was the same: the Panel had not examined matters in the detail necessary for them to reach the conclusions which they did, and the problem which a Panel would face in conducting an EiP at that level of detail was referred to. However, it was not suggested that the policy in question was one which had to be dealt with in the Local Plan because it was in law a “detailed” and not a “general” policy. Mr. King did not make that point either. Obviously, that does not prevent the Claimants now raising this point as to the nature of the policy. But it does help explain why no explicit consideration was given to whether this was still a “general” policy, if the need for speed were irrelevant. For example, there was no explicit consideration of how this policy fitted with the relevant guidance in PPG12 as to the split between Structure and Local Plan policies. However, I do not consider that it would be a fair reflection of the facts to treat the irrelevant consideration of the need for speed as continuing to taint the way in which the Councils regarded the policy right up to the moment of adoption. The second Panel looked at this policy as a strategic policy because it was the major growth location for a major town; the Panel was conscious of the need to examine the policy at a strategic level. It did not suggest that the policy contained an inappropriate level of detail for a Structure Plan; I am quite sure that it would have said so if it had thought so. The Councils in following its recommendations were implicitly accepting its approach. It was not more explicitly expressed for the simple reason that there was no contrary express suggestion; the complaint was rather that the Panel had had insufficient detail. If at the point of adoption, the Councils had been asked whether Policy DP10 was one of “their general policies”, the answer would have been “yes,” rather than “no,” it was one of their detailed policies but put in the Structure Plan because it was quicker and more efficient to do that. The next issue raised by Mr. Holgate in relation to the “general” or “detailed” nature of the policy is that, if the Councils had a discretionary judgment to reach as to whether a policy was a “general” or a “detailed” policy, they either failed to consider the matter at all or to have regard to certain relevant considerations. Those considerations included the question of fairness to objections such as Bloors and Mr. King. Fairness to objectors was a matter for the Councils to have regard to, as held in the context of a decision whether or not to reopen a Local Plan Inquiry, by the Court of Appeal in Warren v Uttlesford D.C. 1997 JPL 1130, p 1135 per Schiemann LJ. Particular aspects of fairness in Bloors’ submissions related to the differing forms of independent scrutiny, notably the differing levels of detail into which an EiP would go compared with a Local Plan Inquiry, and the right to attend, to present and cross-examine witnesses at a Local Plan Inquiry compared with selected participants engaging in a time-constrained, inquisitorially chaired round-table discussion at an EiP. Mr. Holgate and Mr. Morgan for Mr. King referred to details of matters which their clients would have wished to contest through a detailed examination of witnesses, from urban housing capacity to the effect of various environmental constraints. Mr. Holgate referred to areas of discussion in which Bloors were not invited to participate. Mr. Holgate supported his submission by reference to the Human Rights Act 1998. Bloors’ human rights were engaged by these policy decisions because of the crucial effect which this Structure Plan policy would have on the Local Plan process, since the Local Plan could not generally conform to the Structure Plan without a Southern Development Area for 3800 dwellings. This in reality would mean that section 54A would preclude the grant of planning permission for major residential development on land where Bloors had property rights. The role of independent scrutiny was thus particularly important; the more likely it was that a general policy would have a determinative effect, the more important that each “human’s” rights should be protected through a process of individual and detailed analysis in which it could participate fully. He did not suggest that the Structure Plan process itself was incompatible with the ECHR, but his argument was supportive of the need for the Councils to consider fairness to objectors in deciding which form of Plan process should be adopted, and if it were to be the Structure Plan process, then what particular features the EiP or related processes should adopt in the interests of fairness. This need was given added acuity because of Swindon Borough Council’s ownership, post local government reorganisation, of much of the Front Garden. The problem with these submissions is that their premise is wrong, for the same reason that means that it is irrelevant to whether a policy is a general policy or not, that it might be quicker and more efficient in plan making to put it in the Structure Plan. I emphasise again, the true nature of the legal question. It is for the Courts to determine what the phrase “general policy” means, it is for the Councils to apply that rationally to the given facts or circumstances. The determination of the scope of so broad a phrase in this context may be done by identifying features which are necessary, or which define it by contrast with its contextual opposite “detailed”, or by features which are relevant. The differing form of scrutiny available is relevant: a general policy will tend to be suitable for analysis via an EiP; that gives some colour to the concept. However, none of that amounts, as a matter of simple statutory construction, to a discretionary power to include in a Structure Plan those policies which the Councils consider it reasonable to include in a Structure Plan or to exclude them from it for later inclusion in a Local Plan, having regard to all those usual considerations relevant to the exercise of a discretionary procedural power. The Act is not so formulated. The relevance of the form of scrutiny to a sense of the true meaning of “general” as opposed to “detailed”, does not convert the duty to include “general” policies into a broad discretionary procedural power. It does not import some separate consideration of fairness. Section 31 contains a positive duty and is a very different provision in nature from that which was under consideration in Warren v Uttlesford D.C. That case did concern a discretionary procedural power, in the exercise of which fairness was material. Section 31 is no such thing. The concept of fairness has nothing directly to do with whether a policy is a “general” policy or a “detailed” policy, any more than speed and efficiency have anything to do with that issue. There is no scope for that concept to be a feature of “general” or to enable “general” to be contrasted with “detailed”. A general policy is not the less general because it might be fairer if it were a detailed policy, nor is a Council able to treat a “general” policy as one for the Local Plan because that might be fairer : its duty is to include it in the Structure Plan. The obligation to consider fairness along the lines of Warren v Uttlesford D.C. does not exist. I accept that there might be circumstances in which actual or prospective unfairness as a result of the procedure adopted was a potent indicator that a Council had misinterpreted the scope of “general” or “detailed”. However I do not consider that that situation applied here, and I shall deal with that later. On the key issue, I consider that the Councils did not act beyond their powers in including Policy DP10 in the Structure Plan as a “general” policy. I do not consider that they had a discretionary power to exclude it because of any consideration of procedural unfairness. It would have been as irrelevant to whether a policy was “general” or “detailed” as was the question of speed and efficiency. I appreciate the attraction of the point that the Secretary of State exercised none of his powers of direction in section 35(2) of the 1990 Act or of call-in in section 35A in relation to this policy and its consideration. It is a power rarely exercised and cannot assist on the true scope of “general” - it may assist on the justification for the application of the phrase to this policy. But I have not found it of significance because the power is so rarely exercised. It may lend weight to the argument that the primary decision as to whether a policy falls within the true scope of “general”, properly understood, is for the planning authorities rather than the Court. Procedural fairness, the level of detail, the consideration of issues at the EiP and the reasons. Mr. Holgate’s submission that if matters were to be examined at an EiP, the procedures ought to have been specifically adapted to provide fairly for the necessary examination, is closely bound up with the level of detail into which he submits it was necessary for Panel to go in order to deal fairly with the points raised, to consider the relevant matters and to enable the Councils to reach reasoned decisions on its recommendations and on the subsequent objections to the proposed Modifications. I have already adequately described the procedures adopted at an EiP in paragraphs above. Section 35B(1) provides for the EiP to examine “such matters affecting the consideration of the proposals as they consider ought to be examined.” Section 35(4) states that no person has a right to be heard at an EiP, and in section 35(5)(b) provision is made for participation by those invited by the Panel or local authority. No procedural regulations have been made. It is however clear that the essential features of an EiP are set by statute. The real scope for variation according to particular circumstances rests with the timetabling and degree of detail allowed, which are matters for the Panel’s discretion. I do not consider that the actual progress of the EiP and subsequent reasoning of the Panel and Councils show that a markedly different procedure from that which the Panel in fact followed was required for fairness, or indeed effectiveness. The Town and Country Planning (Development Plan)(England) Regulations 1991 S.2794 provided that following the EIP the authority is under a number of duties: i. to consider the Panel report and prepare and make available for inspection a statement of the decisions reached in the light of it and the reasons for those decisions, reg 16(1), (2) & (3); ii. where the panel report recommends modifications which the authority do not intend to accept, to make a list of those recommendations available for inspection and given an opportunity for objection, reg 16(4); iii. where the authority propose to modify the Structure Plan to prepare and make available for inspection a list of modifications, advertise the modifications and give an opportunity for objection, reg 18(1). Any objections, made in the proper form, to Panel recommendations which the authority do not intend to accept or to any proposed Modifications, must be considered prior to adoption and, unless the authority cause a further EiP to be held, it must prepare and make available for inspection a statement of its decisions as respects all the objections and its reasons for them; regs 17 and 16(4)(e) and 18(6). The reasons must be adequate, intelligible and deal with the substantive issues raised. The 1999 Regulations superseded these 1991 Regulations on 4th January 2000 but are not materially different. I start from the premise that policy DP10 is a “general” policy and that the essential features of an EiP are part of a fair way of examining general policies so that independent scrutiny is provided, and sensible policy decisions can be made on a properly informed basis. Mr. Holgate did not suggest otherwise as a general proposition. Those features include selected participants and an absence of cross-examination, in the context of an inquisitorial roundtable discussion. I do not consider that Bloors can complain that procedural fairness at the EiP required that they be invited to Issues 1 and 2. These were general issues related to the overall County housing requirement and its distribution between Districts. Bloors had no specific interest in those issues which was not adequately represented by other housebuilder interests; they also could put in written representations which it can be taken were or would have been conscientiously read by the Panel. I have already referred to their absence of objection to not being invited to the second sub-topic within issue 4, dealing specifically with the Front Garden and to the absence of even written representations from Bloors as an alternative. Other developers with the same interest in developing at Kingsdown were present. Bryants were not more favourably treated; they were not invited to the Kingsdown session. As explained above in paragraph 45, Bloors did not oppose development at the Front Garden although it considered its site at Kingsdown to be better; it considered the requirement for greenfield development to be sufficient for both. I do not consider that the overall time allotted to issue 4 can be seen as showing an unfair and unduly time constrained approach. A responsible Panel knows whether it has the necessary information at the appropriate level. A deficiency in that respect would probably be apparent from the Report, because of failures to understand points raised or ineptitude in the conclusions. For reasons which I shall come to, I do not consider that to be the case. It is also necessary to remember the amount of reading which a Panel does by way of preparation. The Panel also had the Development Appraisal Study around which debate, whether critical of the study or as a source of background work, could focus on the decisive issues. Although criticism was made of the Study, its detailed accuracy, its methodology and conclusions, it was nonetheless a process in which the public, landowners and developers could and did participate. The nature of that consultation process, underlying the work presented for examination by the Panel, is relevant in judging the fairness of the whole Structure Plan procedure as well as its effectiveness. I do not consider that there was unfairness in more time being given to the examination of the Front Garden than to any other individual locations. The Front Garden had emerged from the Swindon Development Appraisal Study as the preferred location; it was the proposed Modification. The front runner had to be examined at greater length to see if it were soundly chosen, and the existence of a variety of other potential locations led to a variety of objections to it being considered. I have not been persuaded that a more prolonged analysis of Kingsdown might have redounded to its advantage. I wondered at one stage whether Mr. Holgate had a sound point that the level of detail or time had caused the Panel to fail to consider the possibility that at Kingsdown the scale of development proposed by Bloors, which was just below the low end of the range used in the Development Appraisal Study, meant that the impact of development especially on best and most versatile agricultural land had been unfairly misappreciated. However it was plain from a plan produced to me by Bloors’ opponents that Bloors’ development would overlie large parts of such land. The relevant material would all have been available to the Panel, though not that particular plan. Finally, on procedural fairness in the context of this EiP, I do not consider that cross-examination was necessary. Obviously it would not normally happen and the Structure Plan process is not said to be inherently unfair in relation to the examination of general policies, or incompatible with the ECHR even on the basis that the process engages human rights. Moreover, cross-examination could not be confined to one site or one party. It would have covered inevitably the underlying urban capacity figures. It would have covered all the topics dealt with at the EiP and some lesser ones as well. It would have been difficult to go to the level of detail envisaged without site definition and analysis. Indeed it was of the essence of Mr. Holgate’s arguments that the variety of considerations, which needed to be examined in depth in order to reach a sound view on Policy DP10 as to where development should take place, meant that something akin to a Section 78 or Local Plan Inquiry was required, for both fair and considered decision making. It is difficult to imagine some sort of compromise procedure, to be wished upon a Panel with the benefit of hindsight, and not raised with the Panel before or during the EiP, which could usefully marry the two approaches, having say a day or two’s cross-examination. If some such point were to be taken, it should have been raised at the time and made explicit then and before me. The logical consequence of Mr. Holgate’s argument is that this policy could only be dealt with through a long Inquiry; this is his first argument in another guise, namely that it is not a “general” policy. I have already rejected it. Nothing about the way in which he says the issues had to be examined persuades me, in the light of the Report, that he is right that it is a “detailed” policy or could only be seen as one. In any event, I do not accept that planning policy issues of this nature can be fairly and properly resolved only by prolonged and detailed examination. There are normally significant features such as proximity to a town centre, or to employment, major roads and major environmental designations or constraints e.g. of landscape or agriculture which will be the significant aspects of a decision as to general location, even at the level of generality involved here. The Panel had a large amount of background material, and also the work done in the Development Appraisal Study, which could be criticised or supported, but which was of obvious value in focusing the debate; other issues such as archaeology and ecology were considered at the EiP. The Councils were concerned to ensure that detailed examination at the Local Plan stage would not throw up significant surprises. Mr. Holgate’s arguments came dangerously close to precluding a local authority making a decision on a large and complex development application, to which there might be rivals, without having a Public Inquiry. I do not accept such an approach. The level of detail available to the local authority might include an Environmental Impact Assessment but the rival proposal would not necessarily be covered in the same detail. A decision would certainly not require cross-examination or an Inquiry, in order to be informed and fair. I recognise that the Panel’s view was more finely balanced than the Councils’ initial views based on the Swindon Development Appraisal Study; it is always possible that a different body, with a different process and with voluminous detail might come to a different view. But that possibility does not show that the process in general or in particular here was flawed. I have also considered the financial interest in this policy which Swindon Borough Council had recently obtained through its acquisition of the Front Garden from the County Council. I do not consider that this financial interest tells in favour of one form of independent scrutiny over another or in favour of a greater depth of scrutiny with more formal procedures than in fact the policy received. A Local Plan Inquiry would be unlikely to examine the financial benefit as an issue in any greater depth, because in itself it is irrelevant to the planning merits; it would only examine briefly its potential role in distorting the Council’s view, because it would want to concentrate on how the relevant arguments fared. Miss Jewell’s witness statement in response to Mr. King referred in paragraphs 89 - 92 to the statutory procedural steps taken by the Council, to the separation of landowning and planning functions using independent advisers, and to the advice given to planning members on the irrelevance of land ownership. I accept what she says; there has been no positive evidence to refute it and there are no obvious contrary inferences to be drawn. This financial interest means at its highest that the Court should examine the Council’s approach with particular care, or anxious scrutiny. There was no evidence that this had had any actual effect on the decision, or that any consideration had been given to it at all. It requires someone with a close knowledge of advanced conspiracy theory to read the Swindon Development Appraisal Study as consciously or subconsciously distorted by its authors towards an end to which their genuine view of the planning merits did not lead. This was not a case in which the Panel recommendation was being rejected: the change from protection of the Front Garden to its development was supported by the Panel because of the housing land which had to be found, even though the Panel thought the issue more finally balanced than did the Study. I have also considered in this context Mr. Holgate’s human rights submissions. I have not found that they advanced the argument usefully. I have examined above at some length, specific procedural aspects in the context of his submission that Policy DP10 engaged Bloors’ civil rights because it made the prospects of their obtaining planning for a major residential development at Kingsdown distinctly less rosy, but also recognising that this is a plan-making process and function, the compatibility of which with the Human Rights Act is not in issue. However, in view of the fact that, beyond his saying that the effect of Bloors’ human rights being engaged was to enhance his arguments on procedural fairness, Mr. Holgate did not put any distinct weight on this point, I hope I shall be forgiven for not dealing with the substance of Mr. Mould’s excellent submissions for the Secretary of State, in this long judgment. It would be more appropriate for those issues to be resolved after full contrary argument by a “victim”; the effectiveness of Mr. Mould’s impressive display of firepower really needs an actual target to be judged fairly, whereas on this occasion Mr. Holgate, perhaps wisely, opted for discretion. I record only that he disputed that human rights were engaged or that if so, there had been any breach of them. I have assumed, without deciding this somewhat debateable issue, that human rights were engaged in the Structure Plan process. I have concluded that, if so, they were not breached. In reaching that conclusion I have examined not only the two EiPs but also the role of public participation in the Swindon Development Appraisal Study, the full statutory modifications process and the range of powers available to this Court on a statutory challenge. Mr. Morgan for Mr. King did not advance any human rights points in the end; he submitted that the circumstances called for particular scrutiny. I now turn to deal with Mr. Holgate’s submissions about the substance of the Panel Report, bearing in mind what it is said to show for the fairness of the procedures adopted. The legal basis for Mr. Holgate’s submissions is that the Panel and Councils either ignored material considerations or reached irrational conclusions, or that their reasons were legally inadequate. In effect, the Councils adopted the Panel’s reasoning for its recommendations, as their reasoning for accepting them. Urban Housing Capacity Mr. Holgate submitted that, in assessing urban housing capacity, the Panel and the Councils had ignored PPG3 paragraphs 24 and 29 which gave guidance as to how such a capacity study should be done, and that the Councils gave no reasons for ignoring it when Bloors raised the point by way of objection to the further Proposed Modifications. The Panel had no evidence to justify their conclusions, which were irrational, inadequately reasoned and not based on a proper investigation of the Councils’ figures. A particular complaint was that the Councils’ assessment in the Technical Supplement to the Development Appraisal Study was not site specific and so could not be tested against reality, and that when the Panel called for site specific information, the sites disclosed were in active, civic uses, and were obviously implausible candidates for recycling for urban housing purposes. They included hospitals, car parks, educational establishments, the bus station, the police station and the Magistrates’ Court. A further complaint was that the Panel added 1000 dwellings to the urban capacity figures produced by the Councils, in response to local groups, which the Councils were wrong later to accept. The level of residual requirement for greenfield development was important in the selection of the Front Garden, and as a base against which to assess whether the Front Garden could provide for the numbers of houses actually needed. I do not accept these submissions. They endeavour impermissibly to reargue the planning merits, which could only be resolved in Bloors’ favour if I were to assess the value of the participants’ evidence. That is not my task. The Development Appraisal Study was concluded before the draft PPG3 was issued and it was not until after the second EiP that the final version was published. PPG3 refers to a good practice guide annexed to it. A systematic approach to the assessment of redevelopment potential is required. It is however clear that an urban capacity study can be carried out at the Structure Plan level with the aim, not of identifying or allocating specific sites, but of identifying the potential scale of such sites so as to plan for no greater major greenfield development than is necessary. The Panel considered the assessment of capacity in relation to PPG3, in paragraph 4.1.12, paragraph 53 above, and reached its conclusion in the light of it. The Councils also considered PPG3, not just through their consideration of the Panel Report but additionally their document, “Reasons for Decisions on the EIP Panel Recommendations,” concluded that the Panel recommendations were consistent with the final version of PPG3, and that the required systematic approach had been provided. The Panel and Councils were entitled to conclude at least by reference to the material ultimately provided, that the level of detail was sufficient for consideration of the issue at the Structure Plan level. Bloors were able to make their criticisms of the likelihood of the sites relied on coming forward with the implication that the trend based figures were unreliable. The Panel considered evidence from a variety of sources which are referred to in paragraphs 53 to 57 above. In particular the Council’s figure was supported by Bryants’ study, with its supporting material. The Panel was entitled to be sceptical about some larger figures. It took the increased figure of 1000 from town centre vacancies and potential increased densities relying on a town centre study, the local MP, and other groups, but without accepting all that they had to say. That issue is carefully discussed. Bloors’ serious misgivings are referred to and considered. It was not necessary for specific sites to be discussed in order for the Panel to grasp the general force of Bloors’ point - that was no doubt an advantage of the specific material which the Panel sought and obtained from the Councils. There was nothing irrational about the Panel’s refusal to be persuaded by Bloors’ figures, less detailed and more briefly supported than were Bryants’ figures. Bloors did not go into as much detail as some participants, notably Bryants, but chose the level which it thought was appropriate for the discussion, knowing that the urban capacity debate was important for the greenfield development location. It could have presented more detail but chose not to; it did little more than assert that 1800 dwellings was the maximum reasonable allowance. It is difficult to see the force of its complaint that the Panel did not go into sufficient detail and could not do so either. In my judgment the Panel Report, which is the basis for the Councils’ reasons, is a careful, reasoned analysis of the material before it, in respect of which it drew a rational conclusion as to the robustness and reliability of the Councils’ work. It was well aware of the brownfield sites’ problems; it was looking at overall potential, not site allocation. I can see nothing to support the notion that fairness required more detail; Bloors’ own material on this issue was not as detailed as that which others put in. The Panel simply disagree with the weight which Bloors attach to the specific sites and their prospect of development. My long recitation of the Panel’s Report does not include its whole discussion of this issue either; I have included enough for the reasoning and its evidential basis to be seen. Front Garden Capacity An issue, along the same lines, was raised in relation to the capacity of the Front Garden but it was not really pursued. I have set out the Panel’s Report on this issue in paragraphs 62 to 66 above. Bloors did not provide any written material as it could have done; it is again difficult to see the force of the complaint that the Panel had insufficient detail. Indeed Bloors suggested different capacities at different times: “up to 1500 dwellings” in its objections to the proposed Modifications, “3/4000 dwellings” in its recommendations to the Panel, “between 2500 and 3500 dwellings” in its objections to the further Proposed Modifications. The upper end of its range was not so very different from the Panel’s own recommendations. They do not contain a legal flaw. Agricultural land quality The particular point at issue was the extent to which MAFF’s evidence at the EiP covering at Kingsdown an area of 545 hectares of agricultural land distorted the weight to be given to that factor, because Bloors were only interested in 200 hectares of which only 132 hectares would be used for housing. Mr. Smallman provided the results of the ADAS survey for Bloors to the Panel: only 44% was Grade 3a, the rest 3b, lower or non-agricultural; I have set these representations out above in paragraph 45. To the extent that this was said to support the contention that the issues as to the direction of growth had been considered at an insufficiently detailed level, I have already dealt with it, in paragraph 165. There is no basis for supposing that the Panel ignored the extent of the area proposed for development by Bloors. They asked for information on development and ownership boundaries. for Kingsdown and other sites. Mr. Holgate submitted that that illustrated how this was in reality a “detailed” policy which was being considered. It is an indicator in that direction, but I consider that its greater significance lies in the importance, when assessing a preferred direction of growth, of checking that there will be no large surprises in store at the detailed Local Plan stage, which could prove a significant barrier to the Local Plan taking forward the general policy from the Structure Plan in an effective manner. . The Panel considered agricultural land at Kingsdown in the way set out above in paragraphs 67 - 71 above. There is no legal flaw in its reasoning or conclusions, for which it had sufficient evidence. Bloors’ real problem was the inevitable extent of best and most versatile land which it would need, and the planning priority attributed to its protection. Bloors could have presented the same level of detail, as background material, to the EiP as did Bryants; it chose not to do so. Mr. Holgate submitted that the Panel had recorded evidence that Bloors relied on further land to the north but had provided no reasons for any conclusions which it reached on that. I do not agree that its reasons show any real flaw in that respect so as to undermine its basic conclusion. Mr. Morgan on behalf of Mr. King who generally adopted Mr. Holgate’s submission added two further areas of specific concern to FRAG, flooding and the Southern Relief Road. The former was seen, literally, as a major but inadequately appreciated constraint to development of the Front Garden for anything like the 3800 or so dwellings envisaged; the latter as something the significance of which the Panel had not understood. In legal terms, the issues are ones of rationality, material considerations, and reasoning. They were however also said to exemplify the problems of the level of detail at which issues were considered: too little for a proper decision if the direction of growth was to be as specific as it was, yet too much for the general level at which matters ought to have been considered. Although Mr. King had written the letter after the EiP set out in paragraph 51, he said after the Report and the Councils’ decision that the consideration of those matters had been shallow with an inadequate opportunity for him to make his points. Flooding I have set out in paragraph 63 above the Panel’s conclusions in relation to flooding at Kingsdown. Mr. King said in his witness statement that after the Panel Report, new information on the 1 in a 100 year flood plain had been received by him for the Environment Agency and sent to the Council. Mr. King said this contrasted with the 1 in 22 year flood plain which was all that the Panel had had. In fact, as Miss Jewell’s witness statement makes clear, the Indicative Flood Plain maps which the Environment Agency had supplied to the EiP did indeed show a 1 in 100 year flood plain. Although indicative, the Agency advised that it be regarded as “the maximum extent of areas considered likely to flood during a once in 100 year flood event”. The Councils’ Position Statement to the Panel included a map base taking account of that aspect. It is right as Miss Jewell points out, that there were new Indicative Flood Plain maps produced in September 2000 but that the extent of coverage in terms of the area at risk from flooding in the event of 100 years flood was unchanged. There were limited differences in the precise definition of the area within the flood plain but the overall extent was not altered in a way affecting the capacity assessment. There were no objections to the further Proposed Modifications from the Environment Agency. It is also right to recognise that the actual representations sent to the Councils by Mr. King after the EiP, whilst very extensive and highly critical of the Panel and of the Councils confines its comments on flooding to a short sentence or two, which does not raise the point upon which I was addressed. I do not consider the approach of the Panel or Councils to disclose a legal flaw. The issue was considered and a reasoned conclusion reached. It is not necessary to go into Bryants’ subsequent hydrological modelling, as might have been necessary if a question of the exercise of the Court’s discretion had arisen. That is also true in respect of the actual way in which some of the criticised brownfield sites in Swindon have been advanced. Southern Relief Road The short point which arises here is whether the Panel’s view that the attractive environs of the Front Garden might be degraded to some extent by the Southern Relief Road in the absence of development, involved a misapprehension as to the prospects of that road being built in those circumstances, because it was to be partly developer funded. I have set out what the Panel said on this in paragraph 75 above. It is clearly not a large point and it is clearly contingently expressed: “if this were eventually to go ahead.” This was a point which Mr. King raised in his post EiP representations to the Council, albeit that it did not form part of his representations on the further Proposed Modifications. The proposed road is part of the network of improvements set out in the Swindon Transport Plan; the Borough Council wishes to see it built whether development takes place at the Front Garden or not. It is the realism of that wish which underlies Mr. King’s point. Swindon Borough Council’s Transport Policies and Programme 1999 - 2000 showed the road to be partly developer funded, i.e. part of the funding assumed development of the Front Garden. The Panel and the Councils were well aware of this. Paragraphs 4.2.14 and 4.2.15 of its Report refer to development aiding the provision of the road, and to its being brought forward and funded post 2007 by development. The Panel’s inclusion of the comment about the effect of the road on the attractiveness of the Front Garden, if it were to happen, does not therefore betray any misapprehension. It is a judgment which the Panel was entitled to reach, and to give modest weight to, as it did. Its reasons are clear when the Report is read as a whole. There is accordingly no error of law shown. Other matters I have focused in this judgment on the matters which were pursued in oral argument. The pace of development in the Northern Development Area is referred to in Mr. King’s Witness Statement and Skeleton Argument. It was not a point really pursued. It was in any event adequately answered in Miss Jewell’s Witness Statement in response to Mr. King in paragraphs 66 - 67 and the supporting documents. I do not consider it necessary to deal with all the matters of argument raised in the Witness Statements but not pursued before me. I do not consider that the criticisms of the Panel’s Report or of the Councils’ reasoning show that the Structure Plan process was unable to provide a fair scrutiny of Policy DP10 or that it omitted considerations material at that level or provided inadequate reasons. I would have expected some such deficiency to have been apparent if the underlying charge, that the process could not cope with the level of detail required, or required much more, were sound. If the planning process reveals major constraints which have been unforeseen in nature or true extent so that major surprises have not been avoided, the legal framework for decision making, taken as a whole including appeals, is not so rigid that it must carry on regardless to an obvious and serious error. Conclusion For the reasons which I have given, this application is dismissed. © 2001 Crown Copyright

MR JUSTICE BEATSON: Section 53 of the Wildlife and Countryside Act 1981 requires a surveying authority to keep the definition map and statement under continuous review. In a decision dated 26 August 2010, following an inquiry, Mr Millman, an inspector appointed by the Welsh Ministers, confirmed the Rhondda Cynon Taff County Borough Council Definitive Map and Statement Definitive Map Modification (Footpath 359 Llantrisrant) Order 2009. The effect of the modification was to show a public footpath running from Forest Walk, Talbot Green, roughly north by north eastwards and parallel to the River Ely until the Ely Railway Bridge and then north by northwest along the route of former Coed-Ely branch of the former Ely Valley Railway. Part of the footpath so designated runs over land owned by the claimants. The inquiry was held on three days between 20 and 22 July 2010. The Welsh Ministers transferred the authority to make the decision to the Inspector. In this application under paragraph 12 of Schedule 15 to the Wildlife and Countryside Act 1981 ("the 1981 Act") the claimants apply for the decision of the Inspector to be quashed. Paragraph 12 of Schedule 15 provides: "(1) If any person is aggrieved by an order which has taken effect and desires to question its validity on the ground that it is not within the powers of section 53 or 54 or that any of the requirements of this Schedule have not been complied with in relation to it, he may within 42 days from the date of publication of the notice under paragraph 11 make an application to the High Court under this paragraph. (2) On any such application the High Court may, if satisfied that the order is not within those powers or that the interests of the applicant have been substantially prejudiced by a failure to comply with those requirements, quash the order, or any provision of the order, either generally or in so far as it affects the interests of the applicant. (3) Except as provided by this paragraph, the validity of an order shall not be questioned in any legal proceedings whatsoever." The evidence in support of the application consists of a statement dated 13 October 2010 by the claimant's solicitor, Mr Hutchings, a partner of John Collins and Partners LLP. The exhibits to his statement include various maps and conveyancing documents, and the statements of the second claimant and Mr Noel Israel, two of those who gave evidence before the Inspector. The background to this application can largely be taken from the Inspector's decision, omitting such matters as are disputed and on which the claimants rely in support of their application. " 9. […]The southerly part (A-B on the Order map) runs from the turning circle at the end of a cul-de-sac road called Forest Walk to just south-west of a railway bridge over the River Ely. It is in woodland, close to and in parts adjacent to the River. It then rises very steeply from the river side to the top of the southern end of the bridge. The northern part of the Order route (B-C) runs northwards across the bridge and along the course of the former Ely Valley Railway to where it is crossed by Footpath 1 Llanharan. 10. ... [ the Inspector stated ] The last commercial use of the Ely Valley Railway was in 1983, and there was a final excursion for rail enthusiasts in 1984, after which the track was put permanently out of use. The line was at one time double-track, although it had been reduced to single-track by the 1980s. The remaining rails were removed in 1989. 11. Forest Walk came into existence in 1979 or 1980. Numbers 4 and 5 are at the head of the turning circle at the end of the cul-de-sac. A fifteen foot (4.57 metres) wide gap was left between the boundaries of nos. 4 and 5. It is through this gap that the Order route passes from the road into the woodland. The gap begins to widen about 12 metres from the road, and at a point about 22 metres north of the road it is about 7.5 metres wide. There is no doubt that at times a fence has existed on part of this 7.5 metre width and a gate across much or all of the remainder, although for how long a gate was in position, and whether it was locked or had a notice attached, or whether there was a gap at one or both sides of it, was the subject of considerable dispute at the inquiry. Two new gates, one behind the other, which entirely blocked the gap, were certainly erected close to the road, completely blocking the access, in July 2006. 12. From the late 1970s until 2008 the land over which the Order route runs between A and B was owned by Mr G Jones, who developed the houses at Forest Walk. A small area of former railway land close to point B was owned by the British Railways Board ("BRB") until 1990, when it was conveyed (with other former railway land to the south) to trustees acting for a group of local residents who wanted to extend their gardens over this land. It was conveyed to one of the objectors, Dr T Laverty, in 1991 ... The date of bringing into question 13. It is not in dispute that the right of the public to use the Order route was brought into question in July 2006 with the erection of the gates mentioned in paragraph 11 above. The relevant 20 year period is therefore from July 1986 to July 2006." In paragraphs 5 - 8 of his decision the Inspector identified the main issues. The principal issue was whether the evidence showed on the balance of probabilities that public pedestrian rights existed over the route shown on the order map. The Inspector identified two tests, that set out in section 31 of the Highways Act 1980 and the common law test but (see paragraph 73 of his decision) in the light of his conclusions on the statutory test he did not consider the common law test. The material parts of section 31 are: "(1) Where a way over any land, other than a way of such a character that use of it by the public could not give rise at common law to any presumption of dedication, has been actually enjoyed by the public as of right and without interruption for a full period of 20 years, the way is to be deemed to have been dedicated as a highway unless there is sufficient evidence that there was no intention during that period to dedicate it. (2) The period of 20 years referred to in subsection (1) above is to be calculated retrospectively from the date when the right of the public to use the way is brought into question... " In paragraph 7 of the decision the Inspector stated that he had to be satisfied that: "…the Order route is of the appropriate character, and has been used by the public as of right, that is, not by force, secretly, or with revocable permission, actual or implied. The use must have been without interruption, and in order to be satisfied that use has been for a full period of 20 years, I must decide when the right of the public to use the route was brought into question. Finally, if I am satisfied that the other aspects of the test have been met, I must decide whether deemed dedication is rebutted by sufficient evidence that there was no intention on the part of the landowner or landowners during the 20 year period that the route should be dedicated." It is not suggested that this statement of the test is flawed. The Inspector heard and considered evidence by 15 objectors, including the claimants, by the acting Public Rights of Way Officer of the Council, Ms Humber, and by 12 other witnesses. Two individuals are named in the decision as additional supporters. There is some overlap between the grounds upon which this application is made. The first ground, on which much of the time at the hearing was taken, concerns the treatment of whether there was a wire fence at the point B during the relevant period. This ground has three limbs, sometimes described as separate grounds and certainly so described in Mr Lewis's skeleton argument on behalf of the Welsh Ministers. It is submitted that the Inspector failed properly to consider the evidence as to this because (a) he found that there was a fence traversing the route at some point but did not consider the implications of this in resolving the conflict of evidence between the objectors who said there was a fence at the material time and other witnesses whose evidence was that there never had been a fence; (b) in considering when the fence was erected he did not consider all the evidence, including the documentary evidence and the circumstantial evidence; and c) the Inspector unreasonably found that the documentary evidence as to the location fencing that was required to be placed was ambiguous. During the hearing Mr Blohm QC, on behalf of the claimants, accepted that an allegation of unclear findings about the erection of a sheep wire fence between points B and C of the route was not a freestanding ground but submitted that it supported the three limbs of this ground. Mr Lewis's skeleton argument identified these as grounds 1 to 3. Secondly it is submitted that the Inspector unreasonably failed to take account of the map produced by Llantrisrant Community Council in 1987. That map was a map of local walks but it did not show a footpath along the route subject to the 2009 order. Mr Lewis's skeleton argument identified this as ground 4. Mr Lewis submitted on behalf of the Welsh Ministers that these two grounds are in reality challenges to the weight the Inspector gave particular items of evidence, and attempts to reopen issues which under the statutory scheme and paragraph 12 of Schedule 15 of the 1981 Act are not the proper subject of a statutory challenge because they are matters for the Inspector. The third ground of challenge is that it is submitted that the Inspector erred in his approach to the application of the test laid down in British Transport Commission v Westmoreland County Council [1958] AC 126 as to whether the landowner at the material time, the British Transport Commission, had capacity to dedicate a footpath, and in the Inspector's conclusion that it would not have been incompatible with the objects of the British Railways Board for the Order route to be so dedicated in July 1986. At bottom this ground, although put in a number of ways, concerns whether the land could conceivably have been used as a railway before the tracks were lifted in 1989 and whether that factor meant that there could be no designation because the purposes for which the British Railways Board held the land was to operate a railway. Mr Lewis's skeleton argument identified this as ground 5. In paragraphs 18 - 20 of the decision the Inspector states that while there was no doubt that a considerable number of members of the public walked on the southern part of the Order route and as far as the railway bridge on section A-B of the route, the issues "are whether this use followed a single definable route or was, as claimed by the objectors, 'general recreational use', whether use was interrupted, and whether it was 'as of right'". In paragraph 20 he states that: "There were stark disparities between the accounts of the use of the Order route and of its features given by users, and those given by witnesses for the objectors. Evidence given by some users was inconsistent with that given by others, and there were also some contradictions between accounts given by the objectors' witnesses. I accept the objectors' argument that in these circumstances any relevant documentary or physical evidence may assume significance, so I shall first consider contemporaneous documentary evidence, then any current physical evidence which may shed light on the position during the relevant period, before dealing with the oral evidence." The documentary evidence concerning the part of the route between point B and point C consisted of ordnance survey maps, the map of walks produced by the Community Council, photographs of the former railway line taken in 1990 which (see paragraph 32) do not show a fence and the documentation relating to the sale of the former railway land to the Residents' Association in 1990. In paragraph 30 the Inspector says of the maps: "No path on the line of the Order route between A and B is shown on small-scale OS maps of the area published between 1980 and 2007. Since no information was given as to when the area was actually surveyed by the OS for details such as paths and tracks, I can give no weight to this evidence. Nor is a path shown on a map of local walks drawn up by Llantrisant Community Council in 1987, but since no evidence was provided as to how the information shown was gathered, I can give it no weight." In paragraph 33 under the heading of documentary evidence B-C the Inspector states: "...although mentioning an obligation to place a fence across the former track at B, [it] does not show that any such fence was erected. It is, in addition, ambiguous in that one plan shows the required fence line to be adjacent to the bridge, while the other shows it further south and possibly not on the line of the Order route. A written statement by one of those involved in the negotiations to buy the land stated that he was certain that a fence was erected by the railway bridge 'as the Association [formed to buy the land] complied with all its obligations.' He did not, however, attest to having seen the fence in place." The reference to a statement is to the statement of Mr Israel who at that time was the chairman of the Residents' Association. Paragraph 37 of the decision states: "A little way below the top of the embankment, and at the top, there are concrete posts which have the appearance of those seen often at the sides of railways. It is clear that at some time in the past they would have had wires attached, two sets of which would have had to be climbed through or over to get to the railway line. It is not possible to gauge from the physical evidence for how long the wire has been missing or broken. There are also posts from which wire would have traversed the line just south of the bridge. This cannot have been in place earlier than 1984, when the last train ran." Oral evidence is dealt with in paragraphs 40 and 41. These state: "40. It was the CBC's case that between 1986 and 2006 the public had used the Order route as of right and without interruption, albeit access might have been through a gap or gaps beside the gate just to the north of A if at any time it had been locked. All of its twelve witnesses stated that they had never seen a notice on that gate, let alone one with wording such as 'Trespassers Will Be Prosecuted'. Many of its witnesses claimed in any event that for the majority of the 20 year period there was no gate, or it was open. Some claimed to have accessed the woodland via a gap to the east of the gate, some via a gap to its west, some via gaps at both sides. All of its witnesses, including those who claimed to have used the route daily, stated that they had not encountered any fence across the route approaching or on the former railway line. 41. Witnesses for the objectors, however, insisted that, apart from a few years immediately prior to the erection of impassable gates in 2006, a locked gate had always been in position just north of A, to which was attached a notice stating 'Trespassers Will Be Prosecuted' or other words to similar effect. They asserted too that there had been fences across the route on or next to the railway line at various times which would have interrupted use, or in the alternative that force would have been necessary to get through them." Paragraphs 60 to 65 deal with fences. The material parts of these can be summarised as follows. In paragraph 60 he states that Dr Laverty's evidence was that for some time during the 20 year period around 1991 there had been a barbed wire fence along the Order route as it climbed the bank from the River Ely to the railway line but a fence had been in place across the former railway line where it crossed the bridge near point B for between one and two years from 1990 or 1991, and that there had been a further fence across the track bed between B and C over which she had not been able to climb and which was in position for at least six months in 1992. This paragraph concludes: "The physical evidence of posts and remnants of wire (paragraphs 37 to 38) corroborates the existence of fences across the route, although not that they were in place during the 20 year period." In paragraph 61 it is stated that none of the 20 individuals or couples who completed user evidence forms mentioned fences across the route and the 12 users who gave evidence, including those who stated they had used the whole Order route, were adamant that their progress had never been impeded by fences. Several were clear that there had been a fence across the line of the former railway but only to the south of B adjoining Dr Laverty's garden and not across the Order route. The Inspector said that he was impressed by the surprise expressed by the Borough Council's witnesses when it was put to them that they must have encountered fences when using the Order route. He states: "They were sure that the only barrier they had seen was south of B. It seemed to me that they were credible witnesses on this point." In paragraph 63 the Inspector stated: "I do not consider Dr Laverty's oral evidence of the existence of fences to be bolstered by the physical evidence of fence posts and the remains of wires, from which it is not possible to conclude at what period they would have formed effective barriers to use. The photograph taken looking north along the former railway line taken in the autumn of 1990 (paragraph 32 above) shows no fence." He stated that the conflict of evidence between the users and the objectors was incapable of reconciliation save on an improbable basis, and in paragraph 65 stated that: "I prefer the evidence of those witnesses who appeared for the CBC and I conclude that there were probably no fences impeding access to and along the former railway during the relevant 20 year period." As to the British Transport Commission v Westmoreland point, the Inspector stated at paragraph 14 that the objectors had argued that since the rails between B and C were only lifted in 1989 there could have been no dedication of that section of the order until then at the earliest, and it was not possible to presume dedication under the statutory test. Paragraph 15 stated that both sides relied on the judgment in British Transport Commission v Wesmoreland. That paragraph states the test. In paragraph 16 the Inspector stated that: "By the start of the relevant period in July 1986 it was almost three years since the last commercial use of the railway, and more than two years after the line was rendered unusable. According to the objectors' researches, the last passenger train ran on the line in 1958, and Coedely colliery, to and from which coal or coke trains ran once a day, was closed in 1983, although seams may have remained open, worked from the Cwm side, until 1986." In paragraph 17 he said that he considered that: "…by July 1986 it would have seemed to a reasonable person highly improbable that the railway would re-open, and in those circumstances it would not have been incompatible with the objects of the BRB to dedicate a public footpath." I turn to the submissions and my conclusions. It is common ground that the Inspector's decision is susceptible to challenge under paragraph 12 of Schedule 15 only on one of the well-known grounds of judicial review. It must therefore be established that there has been either error of law, procedural impropriety, (whether breach of the rules of natural justice or specific procedural requirement), impropriety of purpose, failure to take account of relevant considerations, taking account of irrelevant considerations, or Wednesbury unreasonableness. The issue before the Inspector in this case was factual, that is, to decide whether the factual requirements in section 31(1) of the 1980 Act were satisfied or not. That involved deciding whether it had been established that there had been 20 years' use of the route, as of right, as a footpath. It is clear law that the powers of a reviewing court with respect to the factual issues remitted by the legislature to the relevant governmental body, here the Welsh Ministers and the designated Inspector, are particularly limited. In such cases, questions of fact are for the primary decision maker and, in the classic statement of Lord Radcliffe in Edwards v Bairstow [1956] AC 14 38-39, the court should not intervene unless the facts are such that no person properly instructed as to the relevant law could have come to the conclusion reached by the finder of fact, that is, that the only reasonable conclusion on the facts found is inconsistent with the conclusion in fact arrived at. In the present context this proposition is reflected in the principles identified by Forbes J in Seddon v Secretary of State for the Environment [1981] 42 P & CR 26. His Lordship described the first of the five principles as perversity. The court may overturn a decision if it considers that no reasonable person in the position of the primary decision maker, in that case the Secretary of State, in this case the Inspector, properly directing himself on the relevant material could have reached the conclusion that he did. His Lordship also set out a number of principles which he described as peripheral. These include: "If there has been conflicting evidence at the inquiry ... [the Inspector] may, if he wishes, prefer one piece of evidence to another, though the material must be there to enable him to do so ... [and] he must give reasons for doing so…" He also said: "…it is clear that his powers include the determination of the weight to be given to any particular contention; he is entitled to attach what weight he pleases to the various arguments and contentions of the parties; the court will not enter a submission that he gave undue weight to one argument or failed to give any weight at all to another." Forbes J also stated that in approaching its task: "…it is no part of the court's duty to subject that decision letter to the kind of scrutiny appropriate to the determination of the meaning of a contract or a statute." There are similar statements in other cases. I bear in mind in particular the well-known statement in Save Britain's Heritage v Number 1 Poultry Ltd [1991] 1 WLR 153 at 164 that decision letters should be approached with a measure of benevolence and should not be subjected to the kind of legalistic scrutiny that might be appropriate for a legislative instrument. I also bear in mind the well known speech of Lord Brown in South Bucks District Council v Porter (No 2) [2004] 1 WLR 1953 after reviewing the authorities on the duty of an Inspector to give reasons. The relevant paragraphs are paragraphs 35 and 36 of his speech. In paragraph 36 his Lordship stated: "The reasons for a decision must be intelligible and they must be adequate. They must enable the reader to understand why the matter was decided as it was and what conclusions were reached on the 'principal important controversial issues', disclosing how any issue of law or fact was resolved. Reasons can be briefly stated, the degree of particularity required depending entirely on the nature of the issues falling for decision. The reasoning must not give rise to a substantial doubt as to whether the decision-maker erred in law, for example by misunderstanding some relevant policy or some other important matter or by failing to reach a rational decision on relevant grounds. But such adverse inference will not readily be drawn. The reasons need refer only to the main issues in the dispute, not to every material consideration." In Clarke Homes v Secretary of State for the Environment [1993] 66 P & CR 263 Sir Thomas Bingham MR as he then was had said that it is only where a decision letter leaves room for genuine as forensic doubt as to what an Inspector decided and why that there can be a review and this he said was an issue to be resolved without excessive legalism or exegetical sophistication. I have said that most of the hearing concerned the first ground and indeed the first two limbs of the first ground, but before dealing with those I consider the submissions on the third limb of the first ground and the second ground. These are that the description of the documentation relating to the sale of the former land as ambiguous was erroneous, and that the Inspector fell into error in failing to give any weight to the map prepared by the Community Council. I do not consider that there is anything in ground 1(c) as a freestanding ground. The description of the documentation as "ambiguous" clearly relates to the totality of the documentation. There are two plans showing different locations for the required fencing line. It is true that one of them is a conveyancing document and one of them is a document prepared by the Residents' Association in connection with costs but the fact remains that there are two plans. The Inspector recognised in paragraph 20 of his decision that documentary evidence is normally of assistance in resolving conflicts of evidence by witnesses but, given the different location of the proposed fencing in the two plans, the Inspector was within the scope of what is permitted to the primary finder of fact in regarding the conveyancing documentation as not being of assistance and indeed ambiguous. I turn to the map produced by the Community Council. Mr Blohm submitted that the Inspector erred in paragraph 31 of his decision in giving no weight to the fact that the map of walks published by the Community Council in 1987, not long after the commencement of the relevant 20-year period, did not show a walk along the route of the claimed way because "no evidence was provided as to how the information shown [on the map] was gathered". He submitted that in the light of the guidance in section 32 of the Highways Act it was irrational for the Inspector to give no weight to this factor. Section 32 provides that the decision maker "shall take into consideration any map ... which is tendered in evidence" and "shall give such weight thereto as [it] considers justified by the circumstances, including the antiquity of the tendered document, the status of the person by whom and the purpose for which it was made or compiled, and the custody in which it has been kept and from which it is produced." Mr Blohm argued that this map was prepared by a local public authority for the assistance of visitors and members of the locality. The purpose of the leaflet containing the map was stated on the leaflet by the chairman of the Community Council to identify "many delightful walks" and to encourage walking during European Environment Year. The front of the pamphlet invited readers "to follow the sign of the rabbit and help keep our community footpaths open." The leaflet states that its production was supported by the Countryside Commission. The map was thus, argued Mr Blohm, drawn up by a local public authority with a view to encouraging walking during European Environment Year and to keep local footpaths open. He submitted that the natural inference is that it was drawn up by local people using local knowledge of walks used by the public and was prepared under the guidance of the Community Council. The leaflet had been produced reasonably recently and near the commencement of the 20-year period. Moreover, Mr Hutchings' evidence (see paragraph 15 of his statement) was that no question was raised at the inquiry either by the Inspector or by the local authority as to the method of the gathering of the information on the map. Mr Blohm submitted that in those circumstances it was wrong, and if necessary, irrational to decide to give the map no weight on the basis of a point not raised during the inquiry. Mr Lewis submitted that this is in reality a challenge to the weight the Inspector gave a particular item of evidence, and not a proper basis for a statutory application to quash. Had the issue of how the information in the map had been gathered been raised at the inquiry, that may have been an accurate way of describing this ground, but the fact that it was not, together with the fact that the Inspector does not even by implication address the factors listed in section 32 in my judgment puts the matter in a different light, and I will return to this after considering the first two limbs of the fencing issue ground. I turn to those. Mr Blohm submitted that in determining whether the Order route was fenced across the railway track at the bridge, point B, at the material time, the Inspector failed to have regard to all the real documentary and oral evidence in support of the contention that it was (see paragraph 5.1 of his skeleton argument, in which it is said that the only such evidence taken into account was that of Dr Laverty and (to a lesser extent) another witness, a Mr Cox). He maintained that this was not to re-engage in an impermissible reassessment of the evidence with a view to challenging the Inspector's conclusions on matters remitted to the Inspector, it was a submission that relevant evidence had not been taken into account. His starting point was that the issue between the parties was not when a fence was erected but whether the area had been fenced off at all. The Inspector made no finding from the physical evidence as to when that wire fence would have done so, but stated that it could not have been earlier than 1984, when the last train ran. But Mr Blohm submitted that paragraphs 37 and 60 of the decision letter contain a finding by the Inspector that a wire fence traversed the route just south of the bridge. However, having made that finding and to that extent rejected the evidence of those who said there was never a fence at the material point, he did not consider that finding or its implications in his overall assessment of the evidence of the witnesses giving different and contradictory accounts and the evidence as to whether the area had been fenced in 1991. Mr Blohm submitted that the Inspector's conclusion on the physical evidence should have informed his assessment of the credibility of the witnesses because it tended to support the evidence of the objectors including the claimants, but his assessment was not informed by this. He argued that once the Inspector had found that at some stage a fence had traversed the route, it should have been apparent to him that a significant number of witnesses who gave evidence in support of the contention that the way had not been fenced at all (see the witnesses referred to in paragraph 10 of Mr Hutchings' witness statement including a Mr Ryan, a Mr Tucker and possibly a Mr Rees), must have been in error. Mr Blohm also submitted that the Inspector fell into reviewable error in considering the fact of the fencing in isolation from other evidence, in particular the conveyancing documents and the circumstantial evidence provided by Mr Israel's statement, the obligation undertaken by the Association in 1990 to fence the boundaries of the purchased land "forthwith" and the failure to take account of the different status of the final conveyancing documents and the plan with the internal memorandum of costs produced by the Association. He submitted that, stepping back, once it was accepted that there had been a fence traversing the route at the point of the boundary between the land sold to the Association and that retained by the British Railways Board at point B, there was no reason for the fence to have been erected at any other time. Mr Lewis submitted that the claimants' submissions on this issue are based on a misunderstanding of the decision letter and even at their highest are no more than an attempt to re-argue matters that were firmly for the judgment of the Inspector who was entitled to attach what weight he pleased to the various arguments and contentions of the parties. As set out by Forbes J in Seddon v Secretary of State for the Environment, he argued that this was an attempt to gainsay the weight the Inspector had given to the various items of evidence and arguments. Mr Lewis submitted that in the light of the inconsistent evidence before him, the Inspector had a difficult task. He resolved the conflicts of evidence by deciding whose evidence he preferred and he supported his conclusion on that with adequate reasons. At the heart of Mr Lewis's submissions on this part of the case was the argument that the claimants and Mr Blohm had misunderstood the Inspector's decision letter. He maintained that, contrary to paragraph 7(1) of Mr Blohm's skeleton argument and his oral submissions, the Inspector did not conclude that fencing was in existence at the location suggested by the claimants and did not by implication decide that the fence must have been erected traversing the route after 1983 but before July 1986. He submitted that the claimants erred in reading the last sentence of paragraph 37 of the decision as including a finding that the Order route was necessarily blocked at some point after 1984. Mr Lewis argued that the Inspector did not even make any findings as to whether there was any wire in place in the posts south of the bridge during the material time, let alone whether any such wire would have constituted an effective obstruction (see paragraph 18 of his skeleton argument). He argued that it followed that the Inspector's reasoning did not contain the necessary implication that a fence at point B must have been erected at the material time. Paragraph 37, he submitted, contains no findings on this issue given the Inspector's statement that it was "not possible to gauge from the physical evidence for how long the wire has been missing or broken". Mr Lewis also submitted that the other evidence relied on by the claimants was considered. Mr Israel's statement was referred to in paragraph 33 of the decision and, although Mr Israel stated he was certain the fence had been erected, the evidence of others was that they had never been obstructed by one and, given that, the Inspector was entitled to place the weight that he did on the fact that Mr Israel did not attest to seeing a fence. I do not accept the proposition made by Mr Blohm that all relevant evidence must be given "some weight" or the distinction he made between probative and determinative evidence in this context. One of his propositions was that a tribunal of fact deciding a contested issue of fact must "have regard to" all evidence and "give it such weight as is due", although he qualified this by stating that how much weight is to be given to a piece of evidence is a question for the tribunal. The qualification is, however, inconsistent with the first part of the proposition. It is clear, not least from the Seddon decision, that in deciding a contested issue of fact the tribunal of fact must have regard to all evidence. It does not follow that it must give it all some weight. There may be reasons that relevant evidence is of little or no weight, see for example section 4(1) of the Civil Evidence Act 1995 which contemplates this by its reference to the court's estimation of "the weight (if any)" to be given to hearsay evidence. For a reviewing court to conclude that evidence to which the finder of fact has had regard but which is described as not having weight in itself justifies interference with the decision is to trespass into the territory forbidden to a reviewing court. I have, however, concluded that, notwithstanding the circumspection a court is required to show in dealing with the factual conclusions of an Inspector, on these limbs of the first ground Mr Blohm's submissions are to be preferred. The Welsh Ministers' defence of the approach of the Inspector to the fencing issue depends to a large extent on the premise that the Inspector did not conclude that a wire fence traversed the Order route at or around point B. Although paragraph 37 of the decision states that the "wire would have traversed the line just south of the bridge", it is clear from the context that the Inspector is considering the Order route. Had he not been considering the Order route, the wire and the posts would have been in the wrong location. It is, moreover, clear from paragraph 60 that he was, in paragraphs 37 and 38, concerned with remnants of wire which went "across the route". He stated that the "physical evidence of posts and remnants of wire (paragraphs 37 - 38) corroborates the existence of fences across the route, although not that they were in place during the 20 year period". The Inspector's statement in paragraph 63 that he did not consider Dr Laverty's oral evidence of the existence of fences was "bolstered by the physical evidence of fence posts and the remains of wires" is in context also consistent with the view that those physical remains are remains from which wire would have traversed the Order route. What is the consequence of this? In a context where what was at issue was whether the route had been fenced off at all and not simply when it had been fenced off, these parts of the decision letter which in effect reject part of the evidence given by those who said there never was a fence, were factors supporting the evidence of the objectors. The Inspector considered the question whether the physical remains gave any guidance as to when the wire traversed the route and concluded that it did not. There is no and could be no challenge to that finding. But he then set aside consideration of the physical evidence and did not stand back and consider the implication of his conclusion that at some time the wire had traversed the route on the other evidence and the circumstantial evidence before him including the obligation on the Association to fence "forthwith" and Mr Israel's evidence. He did not accordingly take it into account in making his assessment of the credibility of the witnesses. The Inspector's approach to the map prepared by the Community Council is also relevant at this stage. I have said that, had the issue about how the information in the map was gathered been raised at the inquiry, the Inspector's conclusion to give the map no weight would not have been open to challenge. But it was not raised. I have concluded that to set aside a map produced by a public body with the support of the Countryside Commission at about the material time by giving it no weight, with no explicit consideration of the factors listed in section 32 of the Highways Act and, as I have said, no implicit consideration of them and without the issue having been raised at the inquiry, is Wednesbury unreasonable. The consequence is that the Inspector also did not take the map into account at all in assessing the evidence of the witnesses who gave oral evidence or made statements. As Mr Blohm recognised, had the Inspector done all of these things he may nevertheless have come to the same conclusions. I, however, accept Mr Blohm's submission that what in fact occurred was a failure to take account of this evidence. My conclusions on these matters mean that the claimants must succeed on the first two limbs of the fencing issue taken together with the second issue, the map question. It is not therefore necessary for me to reach a decision on the British Transport Commission v Westmoreland point. However, it was fully argued and I deal with it briefly. I do not consider that the Inspector fell into reviewable error on this point. The language of the relevant parts of the decision referring to the track being "put permanently out of use" (paragraph 10) and the line being "rendered unusable" (paragraph 16) are not particularly clear. But it is common ground (see Mr Hutchings' witness statement, paragraph 16) that in 1984 the track was "secured out of use so that it could not be used inadvertently". In the light of this securing of the track, the Inspector was entitled to conclude that the reopening of the railway would have been "highly improbable" in 1986. The fact that the railway may have been used on a single occasion in 1989 when wagons were used while the tracks were being lifted does not render the finding that reopening the railway would not have been reasonably foreseen in 1986, unsustainable in public law terms. The decision made by another Inspector after another inquiry on 5 June 2007 relied on by the claimants does not lay down a general proposition that dedication would not be permissible from the cessation of use but only from the removal of track. The Inspector in that case did not rule out incompatibility ceasing while the track remains in place, but only said that in "most cases" the permanent cesser of railway use which would lead to the end of incompatibility would "be indicated by the removal of the track". For the reasons I have given, the claimants must succeed and the decision of the Inspector be quashed. MR BLOHM: My Lord in those circumstances the only additional order I ask is that the order that the Welsh Ministers pay the claimants' costs of the application and those costs (inaudible) £15,064.94. That does include (inaudible) for VAT the claimants are not entitled to (inaudible). MS BAYOUMI: My Lord the only other possible matter is obviously you will appreciate that I have stepped in at the eleventh hour in... MR JUSTICE BEATSON: ... the fifty-ninth minute of the eleventh hour... MS BAYOUMI: Yes, right. Insofar as any possible application for appeal, my Lord, in those circumstances I wonder if the court would be minded to permit the defendants 14 days following receipt of the transcript in order for counsel to consider the matter and determine whether or not there are grounds for appeal? MR JUSTICE BEATSON: Well, only if the defendant undertakes to request an expedited transcript because otherwise we can wait for a long time. MS BAYOUMI: Can I just turn my back for a minute, my Lord ? MR JUSTICE BEATSON: Of course you can. MS BAYOUMI: My Lord, as I understand it, it had been raised and can be raised but my solicitor informs me that it is essentially a matter for the court as to how quickly the transcript can be provided and the time for... MR JUSTICE BEATSON: If the court ... the court orders an expedited transcript the court is not going to pay for an expedited transcript. MS BAYOUMI: No, I accept that MR JUSTICE BEATSON: In other words ... Just let me pause for a minute. This is not one of those planning decisions in which there is no further appeal, there is an appeal... MR BLOHM: There is. MR JUSTICE BEATSON: There is definitely an appeal. MR BLOHM: My Lord, there is but whether it would be a second appeal in the circumstances is an interesting point. MR JUSTICE BEATSON: I do not think they regard it ... Well, I will ... I cannot ... can you just say your names so that I do not mispronounce it? MS BAYOUMI: Ms Bayoumi. MR JUSTICE BEATSON: Ms Bayoumi. As Ms Bayoumi was not trial counsel, I will give the Welsh Ministers fourteen days within from receiving the transcript. I am just concerned. I am happy to do it so long as the transcript comes within 28 days but I do not think it is very ... I do not think it is right that these things should hang around. MR BLOHM: My Lord, the position is I have been taking a note of your Lordship's judgment. I have not noted down the quotations... MR JUSTICE BEATSON: No, no. MR BLOHM: I have a note of the rest of it... MR JUSTICE BEATSON: Well, I have actually got ... I have actually got most of it typed out. Why don't I get my clerk to email to you or to Mr Lewis what I've ... once he inserts the manuscript for reference, and then you will see that and then he will be able to see it. That will not be an approved transcript but it will be ... I venture, without any disrespect to Mr Blohm, even better than his excellent note. And I will let you have that, I will let the Welsh ... those instructing you have that by the end of the week. Actually we are on Thursday, aren't we? I am getting excited here. By Monday, and then I will give you fourteen days from Monday. MS BAYOUMI: That would be helpful, my Lord MR JUSTICE BEATSON: I think that is the fairest way to deal with the change of counsel. MS BAYOUMI: I am grateful, my Lord. MR JUSTICE BEATSON: Good. Then the costs are agreed at that sum and the other thing that the order which I am going to ask -- you have not got a junior with you at the moment -- I am going to ask you to do what I would normally ask the junior to do. If the order could be drawn up -- also the cause list still shows the defendant as the Welsh Assembly Government and I know that Mr Lewis was terribly keen and we all agreed that the name was going to be Welsh Ministers. MR BLOHM: My Lord, I will make provision for the amendment... MR JUSTICE BEATSON: In the order. MR BLOHM: In the order. MR JUSTICE BEATSON: Thank you. MR BLOHM: There was just one very small point. MR JUSTICE BEATSON: Yes? MR BLOHM: If the transcript is being obtained or may be obtained, your Lordship read out and read into the record paragraph 41 of the Inspector's decision and ... MR JUSTICE BEATSON: Did I read it wrongly? MR BLOHM: Just one word, and unfortunately it may be pertinent when someone is reading it. Your Lordship referring ... that is the paragraph which deals with the oral evidence of the objectors… MR JUSTICE BEATSON: Yes. MR BLOHM: And the Inspector's decision is: They asserted too that there had been fences across the route on or next to the railway line...". I noted that your Lordship saying "They asserted too that there had been fences along the route on or next to the railway line", and as the main issue here relates to where the fencing was across the route, then obviously... MR JUSTICE BEATSON: It may be that ... yes, well. This is still being recorded, isn't it, for the purposes of that, so we will say that I am grateful for that and that paragraph 41 will be corrected from any official transcript and I will make a note to change it. Good. I am grateful to everybody.

Judgment of the Court (Fifth Chamber) of 24 September 1985. - The Queen, ex parte E. D. & F. Man (Sugar) Ltd v Intervention Board for Agricultural Produce (IBAP). - Reference for a preliminary ruling: High Court of Justice, Queen's Bench Division - United Kingdom. - Export refunds - Forfeiture of security - Principle of proportionality. - Case 181/84. European Court reports 1985 Page 02889 Summary Parties Subject of the case Grounds Decision on costs Operative part Keywords 1 . COMMUNITY LAW - PRINCIPLES - PROPORTIONALITY - PRIMARY OBLIGATION AND SECONDARY OBLIGATION - SAME PENALTY FOR FAILURE TO FULFIL - NOT ACCEPTABLE 2 . AGRICULTURE - COMMON ORGANIZATION OF THE MARKETS - SUGAR - EXPORTS TO NON-MEMBER COUNTRIES - STANDING INVITATION TO TENDER - SECURITY LODGED BY THE SUCCESSFUL TENDERER - APPLICATION FOR EXPORT LICENCE - FAILURE TO COMPLY WITH TIME-LIMIT - FORFEITURE OF ENTIRE SECURITY - PRINCIPLE OF PROPORTIONALITY - BREACH ( COUNCIL REGULATION NO 1785/81 , ART . 13 ; COMMISSION REGULATION NO 1880/83 , ART . 6 ( 3 ) AND 12 ( B )) Summary 1 . IN ORDER TO ESTABLISH WHETHER A PROVISION OF COMMUNITY LAW IS IN CONFORMITY WITH THE PRINCIPLE OF PROPORTIONALITY IT IS NECESSARY TO ASCERTAIN WHETHER THE MEANS WHICH IT EMPLOYS ARE APPROPRIATE AND NECESSARY TO ATTAIN THE OBJECTIVE SOUGHT . WHERE COMMUNITY LEGISLATION MAKES A DISTINCTION BETWEEN A PRIMARY OBLIGATION , COMPLIANCE WITH WHICH IS NECESSARY IN ORDER TO ATTAIN THE OBJECTIVE SOUGHT , AND A SECONDARY OBLIGATION , ESSENTIALLY OF AN ADMINISTRATIVE NATURE , IT CANNOT , WITHOUT BREACHING THE PRINCIPLE OF PROPORTIONALITY , PENALIZE FAILURE TO COMPLY WITH THE SECONDARY OBLIGATION AS SEVERELY AS FAILURE TO COMPLY WITH THE PRIMARY OBLIGATION . 2 . ALTHOUGH , WITHIN THE CONTEXT OF THE STANDING INVITATION TO TENDER ORGANIZED BY REGULATION NO 1880/83 , IN ORDER TO DETERMINE LEVIES AND/OR REFUNDS ON EXPORTS OF WHITE SUGAR , THE OBLIGATION IMPOSED ON SUCCESSFUL TENDERERS TO APPLY WITHIN A SHORT PERIOD FOR AN EXPORT LICENCE IN ACCORDANCE WITH ARTICLE 12 ( B ) OF THAT REGULATION PERFORMS A USEFUL ADMINISTRATIVE FUNCTION FROM THE COMMISSION ' S POINT OF VIEW , IT CANNOT BE ACCEPTED THAT THAT OBLIGATION IS AS IMPORTANT AS THE OBLIGATION TO EXPORT , WHICH REMAINS THE ESSENTIAL AIM OF THE COMMUNITY LEGISLATION IN QUESTION . ARTICLE 6 ( 3 ) OF REGULATION NO . 1880/83 IS INVALID INASMUCH AS IT PRESCRIBES FORFEITURE OF THE ENTIRE SECURITY AS THE PENALTY FOR FAILURE TO COMPLY WITH THE TIME-LIMIT IMPOSED FOR THE SUBMISSION OF APPLICATIONS FOR EXPORT LICENCES . THAT PENALTY , IMPOSED IN RESPECT OF AN INFRINGEMENT SIGNIFICANTLY LESS SERIOUS THAN THE FAILURE TO FULFIL THE PRIMARY OBLIGATION , WHICH THE SECURITY ITSELF IS INTENDED TO GUARANTEE , IS TOO DRASTIC IN RELATION TO THE EXPORT LICENCE ' S FUNCTION OF ENSURING THE SOUND MANAGEMENT OF THE MARKET IN QUESTION . Parties IN CASE 181/84 REFERENCE TO THE COURT UNDER ARTICLE 177 OF THE EEC TREATY BY MR JUSTICE GLIDEWELL OF THE QUEEN ' S BENCH DIVISION OF THE HIGH COURT OF JUSTICE FOR A PRELIMINARY RULING IN PROCEEDINGS BETWEEN THE QUEEN , EX PARTE E . D . & F . MAN ( SUGAR ) LTD , AND INTERVENTION BOARD FOR AGRICULTURAL PRODUCE ( IBAP ), Subject of the case ON THE VALIDITY OF ARTICLE 6 ( 3 ) OF COMMISSION REGULATION ( EEC ) NO 1880/83 OF 8 JULY 1983 ON A PRINCIPAL STANDING INVITATION TO TENDER IN ORDER TO DETERMINE LEVIES AND/OR REFUNDS ON EXPORTS OF WHITE SUGAR ( OFFICIAL JOURNAL 1983 , L 187 , P . 5 ), Grounds 1 BY AN ORDER OF 4 JULY 1984 , WHICH WAS RECEIVED AT THE COURT ON 10 JULY 1984 , MR JUSTICE GLIDEWELL OF THE QUEEN ' S BENCH DIVISION OF THE HIGH COURT OF JUSTICE REFERRED TO THE COURT FOR A PRELIMINARY RULING UNDER ARTICLE 177 OF THE EEC TREATY A QUESTION CONCERNING THE VALIDITY OF ARTICLE 6 ( 3 ) OF COMMISSION REGULATION ( EEC ) NO 1880/83 OF 8 JULY 1983 ON A PRINCIPAL STANDING INVITATION TO TENDER IN ORDER TO DETERMINE LEVIES AND/OR REFUNDS ON EXPORTS OF WHITE SUGAR ( OFFICIAL JOURNAL 1983 , L 187 , P . 5 ). 2 THAT QUESTION AROSE IN PROCEEDINGS BETWEEN E . D . & F . MAN ( SUGAR ) LIMITED ( HEREINAFTER REFERRED TO AS ' MAN SUGAR ' ), A BRITISH FIRM OF SUGAR TRADERS AND BROKERS , AND THE INTERVENTION BOARD FOR AGRICULTURAL PRODUCE ( HEREINAFTER REFERRED TO AS ' THE BOARD ' ), WHICH IS THE NATIONAL AGENCY RESPONSIBLE FOR ADMINISTERING THE COMMON AGRICULTURAL POLICY IN THE UNITED KINGDOM . 3 BY A TELEX MESSAGE DATED 27 JULY 1983 MAN SUGAR SUBMITTED TO THE BOARD SEVEN TENDERS FOR THE EXPORT OF SUGAR TO NON-MEMBER COUNTRIES , HAVING LODGED THE REQUISITE SECURITY IN THE FORM OF A BANK GUARANTEE . ON 28 JULY 1983 THE BOARD INFORMED MAN SUGAR THAT FIVE OF ITS TENDERS HAD BEEN ACCEPTED , REPRESENTING A TOTAL AMOUNT OF 30 000 TONNES OF SUGAR FOR EXPORT . 4 IT IS COMMON GROUND THAT IN ACCORDANCE WITH THE RELEVANT PROVISIONS OF COMMUNITY LAW MAN SUGAR WAS AT THAT POINT REQUIRED TO APPLY FOR EXPORT LICENCES BY 12.00 HOURS UNITED KINGDOM TIME ON 2 AUGUST 1983 AT THE LATEST . THE BOARD DID NOT RECEIVE THE TELEX MESSAGES APPLYING FOR THE EXPORT LICENCES UNTIL BETWEEN 3.41 P.M . AND 3.57 P.M . ON 2 AUGUST 1983 . 5 THAT DELAY OF A FEW HOURS WAS THE RESULT OF CIRCUMSTANCES WHICH MAN SUGAR ACKNOWLEDGES DO NOT CONSTITUTE FORCE MAJEURE . THE TELEXES WERE INDEED PREPARED FOR DISPATCH AT THE USUAL TIME . HOWEVER , OWING TO THE ABSENCE OF THE EMPLOYEE WHOSE RESPONSIBILITY IT WAS TO SEND THEM AND THE EXTRA WORK ON THAT DAY FOR THE EMPLOYEE ASSIGNED TO REPLACE HER , THE TELEXES WERE SENT WITH A SLIGHT DELAY . 6 AS A RESULT OF THAT DELAY THE BOARD DECLARED THE SECURITY OF UKL1 670 370 FORFEIT . MAN SUGAR THEREUPON BROUGHT AN ACTION IN THE QUEEN ' S BENCH DIVISION OF THE HIGH COURT OF JUSTICE FOR REPAYMENT OF THE SECURITY , CONTENDING THAT ITS FORFEITURE WAS ' GROSSLY UNFAIR ' AND THAT THE COMMUNITY RULES WHICH IMPOSED THE FORFEITURE WERE CONTRARY TO THE PRINCIPLE OF PROPORTIONALITY . 7 MR JUSTICE GLIDEWELL DECIDED TO STAY THE PROCEEDINGS AND REFERRED THE CASE TO THE COURT OF JUSTICE FOR A PRELIMINARY RULING ON THE QUESTION : ' WHETHER ARTICLE 6 ( 3 ) OF COMMISSION REGULATION ( EEC ) NO 1880/83 IS INVALID FOR BREACH OF THE PRINCIPLE OF PROPORTIONALITY IN THAT IT PURPORTS TO REQUIRE , EXCEPT IN THE EVENT OF FORCE MAJEURE , THE FORFEITURE OF THE ENTIRE SECURITY IN EVERY CASE WHERE , AS A RESULT OF AN UNINTENTIONAL FAILURE ON THE PART OF THE APPLICANT , AN APPLICATION FOR AN EXPORT LICENCE IS NOT RECEIVED BY THE COMPETENT INTERVENTION AGENCY WITHIN THE PERIOD LAID DOWN BY THE LEGISLATION ' . THE PROVISIONS OF COMMUNITY LAW APPLICABLE TO EXPORTS OF SUGAR TO NON-MEMBER COUNTRIES 8 IT IS COMMON GROUND THAT FOR MANY YEARS THE COMMUNITY SUGAR MARKET HAS BEEN CHARACTERIZED BOTH BY STRUCTURAL SURPLUSES AND BY PRICES HIGHER THAN THOSE ON THE WORLD MARKET . UNDER THE COMMON ORGANIZATION OF THE SUGAR MARKET , THE BASIC PROVISIONS OF WHICH ARE SET OUT IN COUNCIL REGULATION ( EEC ) NO 1785/81 OF 30 JUNE 1981 ( OFFICIAL JOURNAL 1981 , L 177 , P . 4 ), SURPLUS SUGAR MAY BE EXPORTED TO NON-MEMBER COUNTRIES SUBJECT TO LICENCE AND WITH THE BENEFIT OF REFUNDS WHICH ARE DESIGNED TO MAKE GOOD THE DIFFERENCE BETWEEN THE PRICE PREVAILING IN THE COMMUNITY AND THE LOWER PRICE PREVAILING ON THE WORLD MARKET . ARTICLE 13 OF THAT REGULATION STATES THAT THE ISSUE OF AN EXPORT LICENCE IS CONDITIONAL UPON THE LODGING OF A DEPOSIT WHICH GUARANTEES THAT THE EXPORT WILL BE EFFECTED DURING THE PERIOD OF VALIDITY OF THE LICENCE AND WHICH IS FORFEIT IN WHOLE OR IN PART IF THE TRANSACTION IS NOT EFFECTED , OR IS ONLY PARTIALLY EFFECTED , WITHIN THAT PERIOD . 9 IN GENERAL TERMS THE SYSTEM OPERATES BY MEANS OF STANDING INVITATIONS TO TENDER ISSUED BY THE COMMISSION IN ORDER TO DETERMINE THE REFUNDS ON EXPORTS OF SUGAR . TENDERS ARE SUBMITTED BY TRADERS TO THE NATIONAL INTERVENTION AGENCIES AND THE SUCCESSFUL TENDERERS ARE DESIGNATED BY THE COMMISSION AFTER IT HAS CONSULTED THE MANAGEMENT COMMITTEE FOR SUGAR . THE TENDERS MUST INDICATE , INTER ALIA , THE AMOUNT OF SUGAR WHICH THE TENDERER WISHES TO EXPORT AND THE LEVEL OF REFUND WHICH HE CONSIDERS NECESSARY TO ENABLE HIM TO SELL THE SUGAR ON THE WORLD MARKET . THE COMMISSION IS THUS ABLE TO DETERMINE , IN THE LIGHT OF THE TENDERS RECEIVED , THE QUANTITIES OF SUGAR TO RELEASE AND THE APPROPRIATE LEVEL OF REFUND . 10 COMMISSION REGULATION ( EEC ) NO 1880/83 OF 8 JULY 1983 , WHICH WAS ADOPTED PURSUANT TO COUNCIL REGULATION NO 1785/81 AND IS APPLICABLE IN THE PRESENT CASE , PROVIDES IN ARTICLE 1 THAT ' THERE SHALL BE ISSUED A PRINCIPAL STANDING INVITATION TO TENDER IN ORDER TO DETERMINE EXPORT LEVIES AND/OR EXPORT REFUNDS ON WHITE SUGAR , AND DURING THE PERIOD OF VALIDITY OF THIS STANDING INVITATION THERE SHALL BE ISSUED PARTIAL INVITATIONS TO TENDER ' . THE VARIOUS PROVISIONS OF REGULATION NO 1880/83 LAY DOWN THE CONDITIONS UNDER WHICH TENDERERS MUST SUBMIT THEIR TENDERS , THE INFORMATION WHICH MUST BE INCLUDED IN THE TENDERS , THE CONDITIONS FOR THE ISSUE OF EXPORT LICENCES AND THE DETAILED RULES FOR THE LODGING AND RELEASE OF SECURITIES . 11 THE SYSTEM SET UP UNDER COUNCIL REGULATION NO 1785/81 AND COMMISSION REGULATION NO 1880/83 , AND UNDER COMMISSION REGULATION ( EEC ) NO 3183/80 OF 3 DECEMBER 1980 LAYING DOWN COMMON DETAILED RULES FOR THE APPLICATION OF THE SYSTEM OF IMPORT AND EXPORT LICENCES AND ADVANCE FIXING CERTIFICATES FOR AGRICULTURAL PRODUCTS , MAY BE DIVIDED INTO THREE STAGES . AT THE FIRST STAGE THE TRADER SUBMITS HIS TENDER TO THE NATIONAL AUTHORITY CONCERNED . HE MUST AT THAT POINT HAVE LODGED A SECURITY OF 9 ECU PER 100 KG OF SUGAR TO BE EXPORTED AND MUST IN ADDITION DECLARE THAT WITHIN FOUR DAYS OF THE ACCEPTANCE OF HIS TENDER HE WILL APPLY FOR AN EXPORT LICENCE ( ARTICLE 5 ( 3 ) OF REGULATION NO 1880/83 ). 12 THE SECOND STAGE BEGINS ONCE THE TENDERER HAS BEEN INFORMED THAT HE HAS BEEN SUCCESSFUL . UNDER ARTICLE 12 ( B ) OF REGULATION NO 1880/83 HE IS THEN OBLIGED TO APPLY FOR AN EXPORT LICENCE WITHIN FOUR DAYS . IF HE FAILS TO APPLY FOR AN EXPORT LICENCE IN TIME , AS OCCURRED IN THE PRESENT CASE , THE SECURITY INITIALLY LODGED IS FORFEITED IN RESPECT OF THE AMOUNT OF SUGAR FOR WHICH NO APPLICATION HAS BEEN SUBMITTED . 13 ARTICLE 6 ( 3 ) OF REGULATION NO 1880/83 , THE VALIDITY OF WHICH IS CONTESTED , IS WORDED AS FOLLOWS : ' EXCEPT IN THE CASE OF FORCE MAJEURE , THE SECURITY WILL BE RELEASED : ( A ) ... ( B ) TO SUCCESSFUL TENDERERS ONLY IF THEY APPLIED FOR THEIR EXPORT LICENCE WITHIN THE PERIOD LAID DOWN IN ARTICLE 12 ( B ) AND ONLY FOR THE QUANTITY IN RESPECT OF WHICH THEY HAVE FULFILLED THE OBLIGATION CREATED BY THAT LICENCE , ARTICLE 33 OF REGULATION ( EEC ) NO 3183/80 REMAINING APPLICABLE . THE SECURITY LODGED IN RESPECT OF A QUANTITY FOR WHICH THE ABOVE OBLIGATIONS HAVE NOT BEEN FULFILLED SHALL BE FORFEITED . ' 14 IF EXPORT LICENCES HAVE BEEN DULY APPLIED FOR , THE THIRD STAGE BEGINS AND THE SECURITY OF 9 ECU PER 100 KG BECOMES THE SECURITY TO GUARANTEE THE EXPORT OF THE SUGAR . THAT EXPORT MUST TAKE PLACE BEFORE THE END OF THE FIFTH CALENDAR MONTH FOLLOWING THAT IN WHICH THE INVITATION TO TENDER WAS ISSUED . THE SECURITY IS FORFEITED IF EXPORT DOES NOT TAKE PLACE BY THAT DATE . THE AMOUNT OF THE SECURITY MAY BE INCREASED WHERE THE PRICE ON THE WORLD MARKET HAS VARIED BEYOND CERTAIN LIMITS , IN ORDER TO AVOID ANY SPECULATION BY TRADERS ( ARTICLE 13 ( 3 ) OF REGULATION NO 1880/83 ). FINALLY , IF ONLY PART OF THE SUGAR IS EXPORTED , THE SECURITY IS RELEASED ONLY IN PROPORTION TO THE QUANTITIES ACTUALLY EXPORTED , PROVIDED THAT AT LEAST 5% OF THE QUANTITY INDICATED IN THE LICENCE HAS BEEN EXPORTED ( ARTICLE 33 OF REGULATION NO 3183/80 ). THE REPLY TO BE GIVEN TO THE QUESTION SUBMITTED TO THE COURT 15 MAN SUGAR CONTENDS , PRIMARILY , THAT THE OBLIGATION TO APPLY FOR AN EXPORT LICENCE IS NOT INTENDED TO GUARANTEE THE PRIMARY OBLIGATION TO EXPORT , WHICH IS THE ONLY FUNDAMENTAL OBLIGATION IMPOSED BY THE ABOVEMENTIONED COMMUNITY LEGISLATION . THE OBLIGATION TO SUBMIT SUCH AN APPLICATION HAS IN FACT NO REAL JUSTIFICATION . 16 IN THE ALTERNATIVE , MAN SUGAR MAINTAINS THAT , EVEN IF IT IS ACCEPTED THAT THE OBLIGATION TO APPLY FOR AN EXPORT LICENCE IS JUSTIFIABLE , THE FORFEITURE OF THE ENTIRE SECURITY FOR FAILURE TO COMPLY WITH THAT OBLIGATION INFRINGES THE PRINCIPLE OF PROPORTIONALITY , IN PARTICULAR FOR THE FOLLOWING REASONS : THE CONTESTED REGULATION UNLAWFULLY IMPOSES THE SAME PENALTY FOR FAILURE TO COMPLY WITH A SECONDARY OBLIGATION - NAMELY , THE OBLIGATION TO APPLY FOR AN EXPORT LICENCE - AS FOR FAILURE TO COMPLY WITH THE PRIMARY OBLIGATION TO EXPORT THE SUGAR . THE OBLIGATION TO APPLY FOR AN EXPORT LICENCE COULD BE ENFORCED BY OTHER , LESS DRASTIC MEANS THAN THE FORFEITURE OF THE ENTIRE SECURITY AND THEREFORE THE BURDEN IMPOSED IS NOT NECESSARY FOR THE ACHIEVEMENT OF THE AIMS OF THE LEGISLATION . THE SEVERITY OF THE PENALTY BEARS NO RELATION TO THE NATURE OF THE DEFAULT , WHICH MAY , AS IN THE PRESENT CASE , BE ONLY MINIMAL AND PURELY TECHNICAL . 17 THE UNITED KINGDOM SUBMITS THAT , AS A RESULT OF THE NEW PROVISIONS IN FORCE SINCE 1981 , THE SHORT PERIOD WITHIN WHICH SUCCESSFUL TENDERERS MUST APPLY FOR AN EXPORT LICENCE NO LONGER PERFORMS AN ESSENTIAL FUNCTION IN THE MANAGEMENT OF THE SUGAR MARKET . THE ONLY REMAINING FUNCTIONS OF THE LICENCE ARE PURELY ADMINISTRATIVE IN NATURE , NAMELY TO CONFIRM TO THE COMMISSION THE ACCURACY OF THE INFORMATION ALREADY GIVEN BY THE TRADER AT THE TIME OF HIS TENDER AND TO DETERMINE WHETHER THE MONETARY COMPENSATORY AMOUNTS APPLICABLE TO THE EXPORT ARE TO BE FIXED IN ADVANCE . 18 THE UNITED KINGDOM THEREFORE CONSIDERS THAT IT IS POSSIBLE TO REPLACE THE PRESENT SYSTEM OF RULES BY OTHER , LESS STRICT RULES WHICH WOULD CONTINUE TO ENSURE THAT THE FUNDAMENTAL OBJECTIVE , NAMELY THE EXPORT OF SUGAR , IS ACHIEVED , WHILE REDUCING THE RISK TO TRADERS REPRESENTED BY THE SEVERITY OF THE PENALTY FOR UNINTENTIONAL FAILURE TO APPLY FOR AN EXPORT LICENCE WITHIN THE PRESCRIBED PERIOD . 19 THE COMMISSION , ON THE OTHER HAND , CONSIDERS THAT THE CONTESTED PROVISION OF REGULATION NO 1880/83 IS VALID . IT ARGUES IN THE FIRST PLACE THAT , WITH REGARD TO THE PRINCIPLE OF PROPORTIONALITY , THE COURT HAS DRAWN A DISTINCTION BETWEEN TWO TYPES OF OBLIGATION WHICH COMMUNITY LAW MAY IMPOSE . ACCORDING TO THE COMMISSION , THE COURT DISTINGUISHES BETWEEN PRIMARY OBLIGATIONS , WHERE THE LEGISLATION REQUIRES THE PERFORMANCE OF SOME ACT ESSENTIAL TO ACHIEVE THE AIMS PURSUED BY THE LEGISLATION AND WHERE FAILURE TO COMPLY WITH THE OBLIGATION MAY LEAD TO FORFEITURE OF THE ENTIRE SECURITY , AND SECONDARY OBLIGATIONS , ESSENTIALLY OF AN ADMINISTRATIVE NATURE . IN THE COMMISSION ' S VIEW , IT IS CLEAR FROM THE JUDGMENTS OF THE COURT THAT IT IS ONLY THE PENALTY FOR INFRINGEMENT OF SUCH A SECONDARY OBLIGATION WHICH MUST BE PROPORTIONATE TO THE OBJECTIVE OF ADMINISTRATIVE EFFICIENCY SOUGHT BY THE MEASURE IN QUESTION . IN THIS INSTANCE THE OBLIGATION TO APPLY FOR AN EXPORT LICENCE IS A PRIMARY OBLIGATION COMPARABLE TO THE OBLIGATION TO EXPORT . 20 IT SHOULD BE NOTED THAT , AS THE COURT HELD IN ITS JUDGMENTS OF 20 FEBRUARY 1979 ( CASE 122/78 , BUITONI V FORMA , ( 1979 ) ECR 677 ) AND OF 23 FEBRUARY 1983 ( CASE 66/82 , FROMANCAIS SA V FORMA , ( 1983 ) ECR 395 ), IN ORDER TO ESTABLISH WHETHER A PROVISION OF COMMUNITY LAW IS IN CONFORMITY WITH THE PRINCIPLE OF PROPORTIONALITY IT IS NECESSARY TO ASCERTAIN WHETHER THE MEANS WHICH IT EMPLOYS ARE APPROPRIATE AND NECESSARY TO ATTAIN THE OBJECTIVE SOUGHT . WHERE COMMUNITY LEGISLATION MAKES A DISTINCTION BETWEEN A PRIMARY OBLIGATION , COMPLIANCE WITH WHICH IS NECESSARY IN ORDER TO ATTAIN THE OBJECTIVE SOUGHT , AND A SECONDARY OBLIGATION , ESSENTIALLY OF AN ADMINISTRATIVE NATURE , IT CANNOT , WITHOUT BREACHING THE PRINCIPLE OF PROPORTIONALITY , PENALIZE FAILURE TO COMPLY WITH THE SECONDARY OBLIGATION AS SEVERELY AS FAILURE TO COMPLY WITH THE PRIMARY OBLIGATION . 21 IT IS CLEAR FROM THE WORDING OF THE ABOVEMENTIONED COUNCIL AND COMMISSION REGULATIONS CONCERNING STANDING INVITATIONS TO TENDER FOR EXPORTS OF WHITE SUGAR , FROM AN ANALYSIS OF THE PREAMBLES THERETO AND FROM THE STATEMENTS MADE BY THE COMMISSION IN THE PROCEEDINGS BEFORE THE COURT THAT THE SYSTEM OF SECURITIES IS INTENDED ABOVE ALL TO ENSURE THAT THE UNDERTAKING , VOLUNTARILY ENTERED INTO BY THE TRADER , TO EXPORT THE QUANTITIES OF SUGAR IN RESPECT OF WHICH TENDERS HAVE BEEN ACCEPTED IS FULFILLED . THE TRADER ' S OBLIGATION TO EXPORT IS THEREFORE UNDOUBTEDLY A PRIMARY OBLIGATION , COMPLIANCE WITH WHICH IS ENSURED BY THE INITIAL LODGING OF A SECURITY OF 9 ECU PER 100 KILOGRAMS OF SUGAR . 22 THE COMMISSION CONSIDERS , HOWEVER , THAT THE OBLIGATION TO APPLY FOR AN EXPORT LICENCE WITHIN A SHORT PERIOD , AND TO COMPLY WITH THAT TIME-LIMIT STRICTLY , IS ALSO A PRIMARY OBLIGATION AND AS SUCH IS COMPARABLE TO THE OBLIGATION TO EXPORT ; INDEED , IT IS THAT OBLIGATION ALONE WHICH GUARANTEES THE PROPER MANAGEMENT OF THE SUGAR MARKET . IN CONSEQUENCE , ACCORDING TO THE COMMISSION , FAILURE TO COMPLY WITH THAT OBLIGATION , AND IN PARTICULAR FAILURE TO COMPLY WITH THE TIME-LIMIT , EVEN WHERE THAT FAILURE IS MINIMAL AND UNINTENTIONAL , JUSTIFIES THE FORFEITURE OF THE ENTIRE SECURITY , JUST AS MUCH AS THE TOTAL FAILURE TO COMPLY WITH THE PRIMARY OBLIGATION TO EXPORT JUSTIFIES SUCH A PENALTY . 23 IN THAT RESPECT THE COMMISSION CONTENDED , BOTH DURING THE WRITTEN PROCEDURE AND IN THE ORAL ARGUMENT PRESENTED BEFORE THE COURT , THAT EXPORT LICENCES FULFIL FOUR SEPARATE AND IMPORTANT FUNCTIONS : ( I ) THEY MAKE IT POSSIBLE TO CONTROL THE RELEASE ONTO THE MARKET OF SUGAR . ( II)THEY SERVE TO PREVENT SPECULATION . ( III)THEY PROVIDE INFORMATION FOR THE RELEVANT COMMISSION DEPARTMENTS . ( IV)THEY ESTABLISH THE SYSTEM OF MONETARY COMPENSATORY AMOUNTS CHOSEN BY THE EXPORTER . 24 AS REGARDS THE USE OF EXPORT LICENCES TO CONTROL THE RELEASE ONTO THE WORLD MARKET OF EXPORTED SUGAR , IT MUST BE NOTED THAT THE TRADERS CONCERNED HAVE A PERIOD OF FIVE MONTHS WITHIN WHICH TO EXPORT THE SUGAR AND NO COMMUNITY PROVISION REQUIRES THEM TO EXPORT IT AT REGULAR , STAGGERED INTERVALS . THEY MAY THEREFORE RELEASE ALL THEIR SUGAR ONTO THE MARKET OVER A VERY SHORT PERIOD . IN THOSE CIRCUMSTANCES EXPORT LICENCES CANNOT BE SAID TO HAVE THE CONTROLLING EFFECT POSTULATED BY THE COMMISSION . THAT EFFECT IS GUARANTEED , THOUGH ONLY IN PART , SIMPLY BY STAGGERING THE INVITATIONS TO TENDER . 25 THE COMMISSION CONSIDERS , SECONDLY , THAT THE FORFEITURE OF THE ENTIRE SECURITY FOR FAILURE TO COMPLY WITH THE TIME-LIMIT FOR APPLYING FOR AN EXPORT LICENCE MAKES IT POSSIBLE TO PREVENT TRADERS FROM ENGAGING IN SPECULATION WITH REGARD TO FLUCTUATIONS IN THE PRICE OF SUGAR AND IN EXCHANGE RATES AND ACCORDINGLY DELAYING THE SUBMISSION OF THEIR APPLICATIONS FOR EXPORT LICENCES . 26 EVEN IF IT IS ASSUMED THAT THERE IS A REAL RISK OF SUCH SPECULATION , IT MUST BE NOTED THAT ARTICLE 12 ( C ) OF REGULATION NO 1880/83 REQUIRES THE SUCCESSFUL TENDERER TO PAY THE ADDITIONAL SECURITY PROVIDED FOR IN ARTICLE 13 ( 3 ) OF THE SAME REGULATION . THE COMMISSION ITSELF RECOGNIZED AT THE HEARING THAT THAT ADDITIONAL SECURITY REMOVES ANY RISK OF SPECULATION BY TRADERS . IT IS TRUE THAT AT THE HEARING THE COMMISSION EXPRESSED DOUBTS ABOUT THE APPLICABILITY OF ARTICLE 13 ( 3 ) BEFORE EXPORT LICENCES HAVE BEEN ISSUED . HOWEVER , EVEN IF THOSE DOUBTS ARE WELL FOUNDED , THE FACT REMAINS THAT A SIMPLE AMENDMENT OF THE RULES REGARDING THE PAYMENT OF AN ADDITIONAL SECURITY , REQUIRING FOR EXAMPLE THAT , IN AN APPROPRIATE CASE , THE ADDITIONAL SECURITY SHOULD BE PAID DURING THE TENDERING PROCEDURE , IN OTHER WORDS , EVEN BEFORE THE EXPORT LICENCE HAS BEEN ISSUED , WOULD MAKE IT POSSIBLE TO ATTAIN THE OBJECTIVE SOUGHT BY MEANS WHICH WOULD BE MUCH LESS DRASTIC FOR THE TRADERS CONCERNED . THE ARGUMENT THAT THE FIGHT AGAINST SPECULATION JUSTIFIES THE CONTESTED PROVISION OF REGULATION NO 1880/83 CANNOT THEREFORE BE ACCEPTED . 27 WITH REGARD TO THE LAST TWO FUNCTIONS ATTRIBUTED BY THE COMMISSION TO EXPORT LICENCES , IT IS TRUE THAT THOSE LICENCES MAKE IT POSSIBLE FOR THE COMMISSION TO MONITOR ACCURATELY EXPORTS OF COMMUNITY SUGAR TO NON-MEMBER COUNTRIES , ALTHOUGH THEY DO NOT PROVIDE IT WITH IMPORTANT NEW INFORMATION NOT CONTAINED IN THE TENDERS AND DO NOT , IN THEMSELVES , GUARANTEE THAT THE EXPORT WILL ACTUALLY TAKE PLACE . IT IS ALSO TRUE THAT THE EXPORT LICENCE MAKES IT POSSIBLE FOR THE EXPORTER TO STATE WHETHER HE WISHES THE MONETARY COMPENSATORY AMOUNTS TO BE FIXED IN ADVANCE . 28 HOWEVER , ALTHOUGH IT IS CLEAR FROM THE FOREGOING THAT THE OBLIGATION TO OBTAIN EXPORT LICENCES PERFORMS A USEFUL ADMINISTRATIVE FUNCTION FROM THE COMMISSION ' S POINT OF VIEW , IT CANNOT BE ACCEPTED THAT THAT OBLIGATION IS AS IMPORTANT AS THE OBLIGATION TO EXPORT , WHICH REMAINS THE ESSENTIAL AIM OF THE COMMUNITY LEGISLATION IN QUESTION . 29 IT FOLLOWS THAT THE AUTOMATIC FORFEITURE OF THE ENTIRE SECURITY , IN THE EVENT OF AN INFRINGEMENT SIGNIFICANTLY LESS SERIOUS THAN THE FAILURE TO FULFIL THE PRIMARY OBLIGATION , WHICH THE SECURITY ITSELF IS INTENDED TO GUARANTEE , MUST BE CONSIDERED TOO DRASTIC A PENALTY IN RELATION TO THE EXPORT LICENCE ' S FUNCTION OF ENSURING THE SOUND MANAGEMENT OF THE MARKET IN QUESTION . 30 ALTHOUGH THE COMMISSION WAS ENTITLED , IN THE INTERESTS OF SOUND ADMINISTRATION , TO IMPOSE A TIME-LIMIT FOR THE SUBMISSION OF APPLICATIONS FOR EXPORT LICENCES , THE PENALTY IMPOSED FOR FAILURE TO COMPLY WITH THAT TIME-LIMIT SHOULD HAVE BEEN SIGNIFICANTLY LESS SEVERE FOR THE TRADERS CONCERNED THAN FORFEITURE OF THE ENTIRE SECURITY AND IT SHOULD HAVE BEEN MORE CONSONANT WITH THE PRACTICAL EFFECTS OF SUCH A FAILURE . 31 THE REPLY TO THE QUESTION SUBMITTED MUST THEREFORE BE THAT ARTICLE 6 ( 3 ) OF REGULATION NO 1880/83 IS INVALID INASMUCH AS IT PRESCRIBES FORFEITURE OF THE ENTIRE SECURITY AS THE PENALTY FOR FAILURE TO COMPLY WITH THE TIME-LIMIT IMPOSED FOR THE SUBMISSION OF APPLICATIONS FOR EXPORT LICENCES . Decision on costs COSTS 32 THE COSTS INCURRED BY THE UNITED KINGDOM AND THE COMMISSION OF THE EUROPEAN COMMUNITIES , WHICH HAVE SUBMITTED OBSERVATIONS TO THE COURT , ARE NOT RECOVERABLE . AS THESE PROCEEDINGS ARE , IN SO FAR AS THE PARTIES TO THE MAIN PROCEEDINGS ARE CONCERNED , IN THE NATURE OF A STEP IN THE ACTION PENDING BEFORE THE NATIONAL COURT , THE DECISION AS TO COSTS IS A MATTER FOR THAT COURT . ON THOSE GROUNDS , Operative part THE COURT ( FIFTH CHAMBER ), IN ANSWER TO THE QUESTION REFERRED TO IT BY MR JUSTICE GLIDEWELL OF THE QUEEN ' S BENCH DIVISION OF THE HIGH COURT OF JUSTICE BY ORDER OF 4 JULY 1984 , HEREBY RULES : ARTICLE 6 ( 3 ) OF REGULATION NO 1880/83 IS INVALID INASMUCH AS IT PRESCRIBES FORFEITURE OF THE ENTIRE SECURITY AS THE PENALTY FOR FAILURE TO COMPLY WITH THE TIME-LIMIT IMPOSED FOR THE SUBMISSION OF APPLICATIONS FOR EXPORT LICENCES .

Conclusions OPINION OF ADVOCATE GENERAL ALBER delivered on 12 September 2002 (1) Case C-281/01 Commission of the European Communities v Council of the European Union ((International agreements – Community competence – Legal basis – Articles 133 EC and 175(1) EC – Energy Star Agreement)) I ─ Introduction 1. The present proceedings concern the choice of legal basis for the Council decision approving the Agreement on the coordination of energy-efficient labelling programs for office equipment ( the Energy Star Agreement). As in Opinion 2/00 given by the Court last year, the issue is once again to define the scope of, on the one hand, Article 133 EC relating to commercial policy and, on the other, Article 175 EC relating to environmental protection. II ─ Legal context (1) Energy Star Agreement 2. The provisions of the Energy Star Agreement relevant to the present proceedings are set out below. 3. The agreement's title is Agreement between the Government of the United States of America and the European Community on the coordination of energy-efficient labelling programs for office equipment. 4. The preamble to the agreement states: The Government of the United States of America and the European Community, ... desiring to maximise energy savings and environmental benefits by stimulating the supply of and demand for energy-efficient products, have agreed as follows. 5. Article I, headed General Principles, provides: 1. A common set of energy-efficiency specifications and a common logo shall be used by the Parties for the purpose of establishing consistent targets for manufacturers, thereby maximising the effect of their individual efforts on the supply of and demand for such product types. 2. The Parties shall use the Common Logo for the purpose of identifying qualified energy-efficient product types listed in Annex C. 3. The Parties shall ensure that common specifications encourage continuing improvement in efficiency, taking into account the most advanced technical practices on the market. 4. The Parties shall ensure that consumers have the opportunity to identify efficient products by finding the label in the market. 6. Article 2, headed Definitions, provides: 1. For the purposes of this Agreement: (a) ... (b) Common Logo means the US-registered certification mark designated in Annex A and owned by [the United States Environmental Protection Agency]; (c) ... (d) Energy Star Labelling Program means a program administered by a Management Entity using common energy-efficiency specifications, marks, and guidelines to be applied to designated product types; (e) ... (f) ... 7. Annex A sets out the common logo while Annex B establishes the guidelines for use of the logo and of the Energy Star name. Annex C lays down the respective specifications for products covered by the agreement. Specifications are set out for the following product types: computers, monitors, printers, fax machines, mailing machines, copiers, scanners and multifunction devices. (2) Regulation (EC) No 2422/2001 of the European Parliament and of the Council of 6 November 2001 on a Community energy efficiency labelling programme for office equipment (2) 8. The Energy Star Agreement was transposed into Community law by Regulation No 2422/2001. The legal basis for adoption of the regulation was Article 175(1) EC although the proposal presented by the Commission (3) specified Article 95 EC as the legal basis. III ─ Facts 9. The American Environmental Protection Agency ( the EPA) set up the Energy Star Program in 1992. At first covering primarily office equipment, it has since been extended to household appliances, heating and cooling equipment, consumer electronics, home office equipment, water-coolers, house construction, lighting, windows, ventilating fans, emergency exit signs, roofing material, transformers, traffic lights and other products and services. (4) Under that programme, provisions concerning energy consumption of products and in relation to services are laid down. They set non-binding standards. Manufacturers of the relevant products can participate in the programme on a voluntary basis. The Energy Star logo was created for the identification of products which adhere to the provisions. 10. The office-equipment industry, including European manufacturers, largely observes the provisions set out under the programme and uses the Energy Star logo for its products. Given that situation, the Commission suggested that the Community, instead of developing its own programme for energy-efficient office equipment, should attach itself to the American programme. On 1 July 1999 it therefore communicated to the Council a proposal, based on Article 133 EC, for a decision concerning the conclusion of the Energy Star Agreement with the United States of America. (5) 11. The Council unanimously adopted that proposal on 14 December 2000, (6) but on the basis of Article 175(1) EC. The agreement was signed in Washington on 19 December 2000. 12. By Decision 2001/469/EC of 14 May 2001, the decision challenged in the present case, the Council approved the conclusion of the agreement. (7) Article 175(1) EC was again the legal basis. The agreement then entered into force on 7 June 2001. IV ─ Arguments of the parties and forms of order sought (1) The Commission 13. The Commission contests the legal basis chosen for the decision of 14 May 2001. In its submission the agreement, in accordance with its aim and content, seeks to facilitate trade. It enables manufacturers to market their products in both the European and the American market using one single label obtainable through one single registration. Manufacturers of office equipment are thereby spared the costs which would result from the use of two different labels, each with its own requirements and registration procedure. Article 133 EC must therefore be the legal basis for the contested decision. 14. The aim of the agreement is not to set up an energy-efficiency programme but to coordinate the European labelling programme with the American one. The alternative to concluding the Energy Star Agreement would have been to introduce separate European energy-efficiency labelling with its own standards and a separate registration procedure. That would have led to the existence of two competing energy labels and the resulting potential barriers to trade. 15. The preamble to the agreement specifies that the latter's purpose is constituted by the contracting parties' endeavour to maximise energy savings and environmental benefits by stimulating the supply of and demand for energy-efficient products. However, this reflects only the rationale for the setting up of the Energy Star Program by the EPA and not the aim of the agreement to create a joint label for both markets by coordinating the various labelling programmes. 16. The Commission also bases its view on the title of the agreement, which speaks of the coordination of ... labelling programs. In addition the Commission refers to the wording of the 13th and 14th recitals in the preamble to its proposal for Regulation No 2422/2001 by which the agreement was transposed into Community law. 17. The Commission relies furthermore on Community practice in relation to international agreements. Agreements concerning the mutual recognition of technical standards have been concluded with a series of non-member States on the basis of Article 133 EC. Nothing different is involved in the case of the Energy Star Agreement, which lays down common standards for energy-efficient office equipment. 18. Its view is not precluded by the fact that the agreement also promotes environmental protection. Where trade agreements also take account of environmental aspects, that merely reflects Article 6 EC which declares that the task of protecting the environment applies across Community policies and activities. Referring to case-law of the Court of Justice, (8) the Commission puts forward a broad interpretation of the concept of commercial policy within the meaning of Article 133 EC. Since unilaterally adopted environmental provisions have a potentially restrictive effect on trade, trade agreements increasingly also deal with environmental aspects. As the case-law has indeed already confirmed, (9) the fact that regard is also had to environmental aspects in such agreements does not however mean that they can no longer be concluded on the basis of Article 133 EC. It cites in support of its view the Agreement on the Application of Sanitary and Phytosanitary Measures concluded within the framework of the WTO. (10) 19. The Commission regards the restrictive interpretation of the concept of commercial policy put forward by the Council as a step back from previous case-law and practice. It fears that that could undermine the effectiveness of Community commercial policy. The present proceedings concern the demarcation between the exclusive competence of the Community in the field of external trade and the shared Community and Member State competence in the field of environmental policy. It is true that the Energy Star Agreement was signed by the Community only. However, it is apparent from the statement made by the Council in the context of approval of the agreement (11) that the Council regards trade agreements which have effects on environmental protection as environmental-policy measures and intends as a rule to conclude them as mixed agreements. For the Commission that is unacceptable. 20. The fact that the provisions at issue are non-binding does not prevent the conclusion of the agreement from being regarded as a measure to facilitate trade. Voluntary standards can also give rise to barriers to trade. The Energy Star logo is a de facto requirement for the successful marketing of office equipment in the American market. The agreement pursues the objective of removing that de facto barrier to trade. 21. The Commission considers that the Council's reference to Regulation (EC) No 1980/2000 (12) is not sound. Those rules concerning the internal market do not relate to the coordination of programmes with other States or the mutual recognition of certifications, which the Energy Star Agreement deals with. The legal basis selected for an intra-Community legal measure does not affect the choice of legal basis when approving an international agreement concluded by the Community. 22. The Commission submits purely in the alternative that Article 175(1) EC is not under any circumstances a possible legal basis for concluding an international agreement. That provision grants authority for the adoption of internal legal measures only. In the context of the chapter concerning environmental protection, international agreements are instead to be based on Article 174(4) EC, as the Court has already decided. (13) 23. At the hearing the Commission also set out its view on Opinion 2/00. In its submission, the present case differs from that of the Opinion inasmuch as, unlike the Cartagena Protocol, the Energy Star Agreement was not negotiated within the framework of an agreement relating to environmental protection. Consequently, the Court's findings in Opinion 2/00 do not preclude the view that the Energy Star Agreement is to be approved on the legal basis provided by Article 133 EC. 24. For those reasons the Council claims that the Court should annul Decision 2001/469 and order the Council to pay the costs. (2) The Council 25. The Council contends that the action should be dismissed and the Commission ordered to pay the costs. 26. In its submission, the aim and subject-matter of the agreement are the reduction of energy consumption by stimulating the supply of and demand for energy-efficient office equipment. It therefore considers Article 175(1) EC to be the correct legal basis. 27. It relies in support of its interpretation on the preamble to the agreement, according to which the contracting parties are endeavouring ... to maximise energy savings and environmental benefits .... 28. The Council additionally refers to Article I(1) of the agreement, according to which the parties concluded the agreement in order to maximise the effect of their individual efforts on the supply of and demand for energy-efficient products. That desire also finds expression in the diplomatic notes exchanged in connection with the conclusion of the agreement. They state that, to maximise the impact of their individual programmes for energy efficiency of office equipment, the contracting parties will use a single set of energy-efficiency specifications and a common logo. (14) 29. The Council disputes that the agreement has the effect of facilitating trade. The logo was already a de facto standard for producers before the agreement was concluded. European producers can also use the Energy Star logo awarded by the EPA without the agreement, by registering with the EPA. 30. Besides, the agreement expressly allows the contracting parties to introduce further energy-efficiency programmes alongside the Energy Star Program. This confirms that the agreement does not result in the facilitation of trade since it does not in any way preclude the existence of a multiplicity of labels. 31. The Council concludes that the agreement is trade-neutral. Article XI(4) indeed provides that neither party is to hinder the import, export, sale or distribution of any product because it bears energy-efficiency marks of the management entity of the other party. 32. The agreement leads to synergies at best. The trade element of the agreement is in any event at most ancillary (15) to its primary aim of environmental protection and therefore does not preclude application of Article 175 EC. 33. The Council likewise supports its view by referring to Community practice with regard to international agreements. It states that numerous agreements have already been concluded on the basis of Article 175 EC although they also concern trade issues. It refers to the Vienna Convention for the protection of the ozone layer and the Montreal Protocol on substances that deplete the ozone layer, (16) the Convention on the control of transboundary movements of hazardous wastes and their disposal (the Basel Convention) (17) and the Washington Convention on international trade in endangered species of wild fauna and flora. The latter was implemented in the Community by the adoption of Regulation (EEC) No 3626/82, since replaced by Regulation (EC) No 338/97 which was based on Article 175 EC. (18) In contrast to the present case, the agreements cited by the Commission concern the establishment of mandatory and not merely voluntary standards. There is, however, a substantial difference between those two categories. The fact that the legal basis provided by Article 133 EC has not been applied to the creation of other voluntary standards shows that the Commission's argument that voluntary standards may constitute barriers to trade is incorrect. 34. The content of the agreement also shows that it is primarily concerned with energy conservation. Article IV stipulates that consumers are to be educated about the logo and its significance. Under Articles IV, V and VIII, provision is to be made for checks and measures in respect of enforcement of the proper use of the logo. The provisions on cooperation between the contracting parties and the mutual recognition of registrations effected by them (Articles VI, VIII, IX and X, and Article V) likewise serve solely to achieve the aim of reducing energy consumption. 35. In support of its view, the Council also refers to intra-Community measures for the introduction of voluntary eco-labelling which have been adopted on the basis of Article 175 EC. It cites Regulation (EEC) No 880/92, which was adopted on the basis of the former Article 130s (now, after amendment, Article 175 EC), (19) and Commission Decision 1999/205/EC of 26 February 1999. (20) The preamble to that decision makes express reference to the Energy Star Program and envisages revision of the criteria specified in the decision in order to adapt the energy requirements to technological innovation, market developments and that programme. It is the Council's understanding that, as a result of the conclusion of the Energy Star Agreement, it did not become necessary to renew that decision under the new scheme which was introduced by Regulation No 1980/2000, (21) a measure likewise adopted on the basis of Article 175 EC. 36. Furthermore, only the view that environmental-protection measures are involved is compatible with the introduction by Member States of eco-labelling of their own, such as the Blue Angel, the Swan or the GEA-label. This shows that the Community and the Member States share competence in this field. If the introduction of eco-labelling were a commercial-policy measure, the Community would have exclusive competence and it would be unlawful for the Member States to act in this field. 37. Referring to existing case-law, (22) the Council rejects the use of Article 174(4) EC. According to that case-law, Article 174 EC is confined to defining the objectives of environmental policy whereas Article 175 EC constitutes the legal basis for Community legal measures adopted to put that policy into effect. The Council regards Opinion 2/00 (23) as confirming its view as to the choice of legal basis for approving the Energy Star Agreement. Furthermore, that Opinion contains a clear rejection of Article 174 EC as a possible legal basis. V ─ Assessment 38. In accordance with settled case-law, the choice of the legal basis for a measure must rest on objective factors which are amenable to judicial review. Those factors include in particular the aim and the content of the measure. (24) If a measure pursues several purposes and one of these is identifiable as the main or predominant purpose, whereas the other is merely incidental, the measure must be founded only on the legal basis required by the main or predominant purpose. (25) If, on the other hand, a measure simultaneously pursues objectives which are inseparably linked without one being secondary and indirect in relation to the other, it may by way of exception be founded on the various corresponding legal bases. (26) 39. The Commission and the Council agree on those principles but disagree as to the outcome of their application to the present case. While the Commission considers that a commercial-policy measure is at issue, the Council regards the agreement as an environmental-policy measure. 40. The Commission contends that in the past the Court has given a wide interpretation to the concept of commercial policy within the meaning of Article 133 EC. In its submission, that justifies Article 133 EC as a basis for agreements which cover environmental aspects alongside trade. 41. The Court of Justice indeed stated in Opinion 1/78 on the Agreement on Natural Rubber that it is not possible to lay down, for the concept of commercial policy, an interpretation the effect of which is to restrict that policy to the use of instruments intended to have an effect only on the traditional aspects of external trade. (27) The open nature of the concept of commercial policy within the meaning of Article 133 EC was confirmed in Opinion 1/94 on the WTO Agreement. (28) It may also be true that more and more international trade agreements pursue a variety of objectives, one of which is environmental protection. However, the finding that the Court has given a wide interpretation to the concept of commercial policy within the meaning of Article 133 EC can yield no more than a finding that the adoption of a commercial-policy measure is not precluded simply because account is taken of other aspects, for example environmental protection. It alone cannot result in the categorisation of the Energy Star Agreement as a commercial-policy measure. 42. The question raised in the present case appears no more capable of being answered by reference to the judgments on measures relating inter alia to environmental protection but in which another matter was regarded as predominant. (29) Those judgments expressly state every time that the trade or internal market aspect is central to the legal measure in question and that a measure is not to be based on Article 175 EC simply because it also relates to environmental protection. In this regard, that case-law merely illustrates, in relation to environmental protection, the foregoing general observations regarding the choice of legal basis. The aim and content of the Energy Star Agreement must therefore be examined below. (1) Wording and history of the Energy Star Agreement 43. In order to establish the aim pursued by the Energy Star Agreement, its title should be considered first of all. According to the title, the agreement pursues the aim of coordinating labelling programmes. That pronouncement is defined more precisely in that labelling programmes for energy-efficient office equipment are stated to be at issue. The agreement's title consequently addresses two aspects, coordination and labelling of energy-efficient products. 44. The coordination of labelling programmes facilitates trade inasmuch as a uniform label, founded on uniform (energy-efficiency) standards, is agreed upon. The number of labels used that consumers have to grapple with is at least reduced. Manufacturers have to comply with only one standard at the production stage and not several different standards. Furthermore, in order to use the label it is sufficient to register with one of the two management entities provided for by the agreement (in accordance with Article III (30) they are the Commission and the EPA). The other management entity recognises the registration and hence the right of the manufacturer in question to use the logo on his products which meet the standards. Manufacturers are entitled to offer for sale products bearing the Energy Star logo on both the European and the American market. This supports the view that the Energy Star Agreement is a commercial-policy measure. 45. However, this interpretation does not yet take into account that the coordination of labelling programmes for energy-efficient products is at issue. The labelling is intended to stimulate the demand for and supply of energy-efficient products. That is to result in energy savings, for which reason this aspect of the title provides justification for regarding the agreement as primarily an environmental-policy measure. 46. The wording of the title consequently justifies both views. It therefore cannot provide a clear answer to the question raised here as to the choice of legal basis. 47. The preamble to the agreement must also be analysed. It states that the contracting parties concluded the agreement in order to maximise energy savings and environmental benefits. That aim is to be achieved by means of stimulating the demand for and supply of energy-efficient products. The Commission and the Council agree that the preamble emphasises above all the aim of saving energy. However, the Commission regards it as merely substantiating the rationale for the American Energy Star Program, and not as establishing the aim of the Energy Star Agreement. 48. It may be stated in support of the Commission's view that the agreement has recourse to the logo and standards of the EPA. To that extent it might well be correct that the preamble expresses the objective of the American Energy Star Program. 49. However, according to the agreement's title, coordination of the labelling programmes of the contracting parties is at issue. It would not be logical in that context for the preamble to the agreement to refer to the labelling programme of one party only. Rather, the natural assumption is that the preamble gives expression to the endeavour of both contracting parties to save energy and to the objective of the labelling programmes introduced by them for that purpose. In this regard the Commission's view is not persuasive. 50. The preamble links the declaration of the aim of saving energy with the means, namely stimulating the demand for and supply of energy-efficient products. The means is intended to influence the market behaviour of persons offering for sale or seeking to buy office equipment and to that extent have an effect on the market for office equipment. Such equipment is manufactured and put on sale throughout the world. To that extent the means agreed upon in the Energy Star Agreement relates to trade in office equipment. This element in the preamble consequently emphasises the commercial-policy dimension of the agreement. Accordingly, the preamble likewise cannot provide a clear answer to the question whether the agreement is an environmental-policy or a commercial-policy measure. 51. The aim of the agreement is also addressed in Article I, which deals with the agreement's general principles. Under Article I(1), the contracting parties are to use common energy-efficiency specifications and a common logo for the purpose of establishing targets for manufacturers, thereby maximising the effect of their individual efforts on the supply of and demand for energy-efficient products. That reflects the endeavour to reduce energy consumption and thereby help to protect the environment. This too supports the proposition that the agreement is a measure designed to enhance environmental protection. 52. However, as in the preamble, the objective of the agreement in Article I(1) which I have just referred to is coupled to the description, set out in the same sentence, of the subject-matter of the agreement. The means decided upon in the agreement for achieving the aim of reducing energy consumption is the establishment of common specifications with regard to the energy consumption of certain items of office equipment together with the use of a common logo. Through the use of that logo, consumers are to be able to identify which of the products offered for sale are energy-efficient and make their choice accordingly (see Article I(4)). As already stated, this agreed means relates to trade in office equipment. 53. The foregoing observations clearly show that the agreement pursues the long-term objective of contributing to environmental protection; however, the means employed for that purpose and laid down by the contracting parties in the agreement relates to trade. 54. In accordance with the case-law cited at the outset, the question thus arises as to whether one of those two aims constitutes the agreement's primary aim or whether both are inseparably linked so that the decision approving the agreement is to have a dual legal basis. 55. The present case appears comparable with the dispute between the Parliament and the Council concerning the legal basis for the programme to promote the linguistic diversity of the Community in the information society. (31) That Council decision was concerned in the long term with the promotion of linguistic diversity in the Community. Since language constitutes a component of culture, it seemed reasonable for Article 128 EC to constitute at least one of the legal bases for the measure. However, the Council used Article 130 EC alone as the legal basis. The Court upheld the Council's action. On the basis of an analysis of the decision's aim and content, the Court came to the conclusion that the beneficial effects which the programme would have for the dissemination of cultural works were to be categorised as purely indirect effects in relation to the direct economic effects which resulted from the programme. (32) 56. The situation is similar here. The present case is concerned in the long term with a reduction in energy consumption and therefore with environmental protection. The means by which that aim is to be achieved is, however, a trade-related measure. On the basis of the judgment in Case C-42/97 it should thus be concluded that Article 133 EC is the appropriate legal basis for the contested Council decision. 57. The analysis that the agreement has direct consequences only for trade and not for environmental protection is borne out by Article II(d). It provides that Energy Star Labelling Program means a programme administered by a management entity using common energy-efficiency specifications, marks, and guidelines for designated product types. The product types covered by the agreement and their respective energy-efficiency specifications are set out in Annex C. The Energy Star Agreement relates to the following product types: computers, monitors, printers, fax machines, mailing machines, copiers, scanners and multifunction devices. The power consumption requirements contained in the energy-efficiency specifications were originally set by the EPA. This is apparent from Commission Decision 2001/686. (33) The agreement borrows those requirements, but makes their amendment subject to the agreement of both contracting parties (Article X), thereby removing the possibility of unilateral amendment by the EPA. 58. The common logo which is used was likewise already in existence when the agreement was concluded. Recourse is had to the Energy Star certification mark which is owned by the EPA (Article II(b)). 59. The recourse to power consumption requirements which had already been laid down and to a logo which already existed suggests that the Energy Star Agreement should be regarded at least primarily as a trade-related measure. Environmental protection considerations cannot in any event explain why regard was had to market practice, under which the Energy Star logo was already widely regarded as the de facto standard, as is apparent from the explanatory memorandum accompanying the Commission's proposal for a decision. (34) Had environmental protection been to the fore, the obvious approach would have been to establish in the agreement new independent power consumption requirements together with an independent logo and above all to agree mandatory standards. However, that was not done. 60. The 18th recital in the preamble to Regulation No 2422/2001 expressly states with regard to office equipment to which the agreement relates that a mandatory labelling system was not regarded as the most appropriate instrument for attaining the objective of saving energy. Rather, a voluntary labelling programme was considered to be the most cost-effective measure for promoting energy efficiency of office equipment. 61. The Council submits by reference to the non-binding nature of the provisions set out in the Energy Star Agreement that its conclusion cannot serve trade purposes. However, that view conflicts with Regulation No 1980/2000 which establishes in the first and fourth recitals in its preamble and in Article 1 that the voluntary eco-label is intended to promote products with a reduced environmental impact through the provision to consumers of information on the environmental impact of products. The labelling is intended to direct consumers' attention to those products. That regulation thus proceeds on the basis that the labelling has an effect on the sale of the products and therefore on trade in them. Similarly, the fourth recital in the preamble to Directive 92/75 states that the mandatory labelling of appliances is intended to influence the public's choice in favour of those appliances which consume least energy. Also Regulation No 2422/2001, which was adopted in order to transpose the Energy Star Agreement, declares in the fourth recital in its preamble that coordination of the labelling of energy-efficient products is desirable in order to minimise the adverse impact on industry and trade. In the 14th recital it is stated that the Energy Star Agreement will facilitate international trade and environmental protection. All the legal measures cited thus demonstrate that the Energy Star Agreement is not prevented by its non-binding nature from being regarded as a commercial-policy measure. 62. Confirmation for the view that non-binding labelling rules too relate to trade is provided by the WTO Agreement on Technical Barriers to Trade. (35) Under that agreement, whether a measure is an obstacle to trade does not depend on whether the relevant provision is mandatory. The agreement applies to both mandatory and non-binding provisions. In accordance with Annex I to the agreement, provisions with which compliance is mandatory are referred to as technical regulations whereas those with which compliance is not mandatory are referred to as standards. Both types of provision can govern product characteristics or product labelling. The preamble to the agreement expresses the desire of the contracting parties that technical regulations and standards, including packaging, marking and labelling requirements, and procedures for assessment of conformity with technical regulations and standards should not create unnecessary obstacles to international trade. That implies that non-binding labelling provisions too may in principle constitute obstacles to international trade. 63. It is admittedly up to individual manufacturers to decide whether to register and use the logo for their products. However, the Energy Star Agreement provides that any registration with one of the two management entities will be recognised by the other. A registration effected in Europe is also valid in the United States and authorises use of the logo on the American market. 64. On the other hand, the environmental-policy impact of the agreement is dependent not only on whether manufacturers decide to register but in addition on consumers' purchasing decisions. The fact that compliance with the specifications is voluntary thus rather indicates that environmental protection was not to the fore when the agreement was concluded. Whether environmental protection is in fact promoted by the agreement depends solely on the will and behaviour of consumers and manufacturers. To that extent, it must be found that the Energy Star Agreement has a direct impact on trade only and an indirect impact at most on environmental protection. 65. The creation of a European registration body and recognition by the EPA of registrations effected by it facilitate access to the Energy Star logo in any event. The fact that European manufacturers had access to the logo even without the agreement does prevent the agreement from being regarded as a measure promoting trade. 66. It was a de facto requirement for products to bear the logo in order for them to be placed on the market in the United States, as the Council itself concedes. A rule relating to access to the market is, however, a typical commercial-policy measure, as follows from the examples listed in Article 133 EC. 67. This interpretation of the agreement as primarily a commercial-policy measure is borne out by the preparatory documents for the adoption of the contested decision. In the explanatory memorandum accompanying its proposal for the decision, the Commission stated that the best approach was to introduce the American Energy Star Program in the Community. It explained that the Energy Star logo was the de facto required standard for office equipment sold on the United States market. In addition, the Energy Star requirements were becoming the applicable standard world-wide and therefore in the Community as well. (36) 68. It therefore follows from an analysis of the wording and history of the Energy Star Agreement that, in accordance with the content of its provisions, it is primarily a commercial-policy measure. Its impact on environmental protection is at most indirect and long-term. (2) Comparison with Community practice in relation to international agreements 69. The Commission and the Council also refer to practice to date in concluding international agreements. The Commission compares the Energy Star Agreement with agreements concerning mutual recognition of technical standards which have been based on Article 133 EC. The Council counters by stating that those agreements concern mandatory standards and refers in support of its own argument to various environmental agreements which in its submission also related to trade issues. 70. As already explained, the fact that the energy-efficiency specifications are not binding does not prevent the Energy Star Agreement from being classified as a trade-related measure. This objection on the part of the Council is therefore not persuasive. 71. In the Energy Star Agreement, uniform specifications are laid down for certain items of office equipment. In that regard the agreement seems entirely comparable in content with the agreements concerning technical standards referred to by the Commission. 72. The Council cites agreements, such as the Montreal Protocol concerning protection of the ozone layer and the Basel Convention, which were ratified on the basis of Article 175 EC. The Cartagena Protocol on Biosafety might be added to that list. In accordance with Opinion 2/00, the decision for the conclusion of this agreement is also to be based on Article 175 EC. The Commission has meanwhile submitted a proposal to that effect which, following an opinion from the Parliament, was adopted by the Council on 25 June 2002. (37) 73. It should, however, be pointed out that all the agreements cited by the Council were negotiated in an environmental-policy context. They were primarily concerned with environmental protection and touched on trade issues in an ancillary or subsidiary manner at most. Opinion 2/00 on the Cartagena Protocol expressly emphasises the environmental-policy context in which the protocol was negotiated. (38) In that regard there is a fundamental difference between the agreements cited by the Council and the Energy Star Agreement. The latter was not negotiated in the context of an environmental agreement, on the basis of such an agreement or within the framework of a conference concerning the environment. No specific international context for the Energy Star Agreement is discernible. 74. A comparison with Community practice in relation to international agreements thus reveals that the Energy Star Agreement bears a certain similarity to agreements concerning technical standards which have been concluded on the basis of Article 133 EC. The comparison therefore confirms the conclusions reached in the preceding sections. (3) Comparison with other Community labelling rules 75. The Council refers in support of its view to Regulation No 880/92 (39) which has meanwhile been replaced by Regulation No 1980/2000. (40) By the adoption of Regulation No 880/92, a Community eco-label promoting products which have a reduced environmental impact during their entire life cycle was introduced. As in the case of the Energy Star logo, products are promoted in that the label is intended to direct consumers' attention to them. That is intended to contribute to the more efficient use of resources and a high level of environmental protection (see the first and fourth recitals in the preamble to Regulation No 1980/2000 and Article 1 thereof). Both regulations were adopted as environmental measures on the basis of what is now Article 175 EC. 76. The Energy Star Program set up by the EPA in 1992 does not cover merely the office equipment governed by the agreement. Rather, it relates to household appliances, heating and cooling equipment, consumer electronics, home office equipment, water-coolers, house construction, lighting, windows, ventilating fans, emergency exit signs, roofing material, transformers, traffic lights and other products and services. (41) The eco-label introduced by Regulation No 880/92 is available in the Community for a whole range of products bearing the EPA's Energy Star logo. 77. The Community eco-label can also be used for computers. First the Commission adopted, on the basis of Regulation No 880/92, Decision 1999/205/EC in which ecological criteria were laid down for personal computers. (42) The preamble to that decision refers to the negotiations concerning the Energy Star Agreement and envisages the possibility of the decision's being revised in the light of the agreement. The decision was indeed subsequently superseded by Commission Decision 2001/686/EC (43) which is based on Regulation No 1980/2000. In that decision, which was adopted after the entry into force of the Energy Star Agreement but before the adoption of Regulation No 2422/2001 which transposed the Energy Star Agreement into Community law, the Commission, in laying down the ecological criteria, refers under the heading Energy savings to the definitions of the EPA's Energy Star Program. (44) All those legal measures are founded directly, or indirectly through the relevant basic regulation, on Article 175 EC and were thus adopted as measures to protect the environment. 78. It is to be noted first as a matter of principle with regard to the reference to Regulations No 880/92 and No 1980/2000 that the choice of Article 175 EC as the legal basis for those regulations does not predetermine the choice of legal basis for the decision at issue in the present case approving the Energy Star Agreement. The present case is concerned with defining the scope of Articles 133 EC and 175 EC. As Community practice in relation to international agreements shows, the Community has in the past concluded agreements on the basis of both provisions. The fact that Article 175 EC has been chosen as the legal basis for an internal Community measure is not in itself sufficient to show that the same legal basis must be chosen when approving an international agreement governing comparable matters. Article 133 EC, which relates to external trade, can never form the legal basis for a measure whose effects are internal to the Community. Article 95 EC perhaps fulfils a comparable function in respect of internal trade. However, the decision whether measures which are contained in international agreements ratified on the basis of Article 133 EC are to be implemented within the Community on the basis of Article 95 EC or another legal basis turns solely on the scope of Article 95 EC and the other potential legal bases such as Article 175 EC. Those fundamental considerations alone show that the Council's reference to Regulations No 880/92 and No 1980/2000 is not persuasive. 79. It must also be pointed out that, in addition to the regulations mentioned by the Council, there are further Community legal measures which deal with the labelling of electrical appliances and their energy consumption but are not based on Article 175 EC. Directive 92/75/EEC on the indication by labelling and standard product information of the consumption of energy and other resources by household appliances (45) was adopted on the basis of Article 100a of the EC Treaty, that is to say the precursor of Article 95 EC. Like Regulations No 880/92 and No 1980/2000, it too pursues the objective of saving energy by stimulating demand for energy-efficient products (see the fourth recital in its preamble). 80. Accordingly, there are internal Community legal measures which pursue an objective comparable to that of the Energy Star Agreement and likewise employ the means of stimulating supply and demand but some are regarded as a measure relating to environmental protection and others as a measure concerning the internal market, that is to say intra-Community trade. 81. There is, however, a difference between Regulations No 880/92 and No 1980/2000, on the one hand, and Directive 92/75, on the other, inasmuch as the regulations, like the Energy Star Agreement, set up a voluntary labelling system whereas the directive introduces a mandatory labelling system. None the less, as already explained (see point 61 et seq.), the question whether a measure relates to trade does not turn on whether it establishes mandatory or voluntary standards. Both Regulations No 880/92, No 1980/2000 and No 2422/2001, which set up a voluntary system, and Directive 92/75, which prescribes mandatory labelling, make it clear in their respective preambles that they relate to trade. 82. It can accordingly be stated by way of intermediate conclusion that comparison of the Energy Star Agreement with Regulations No 880/92 and No 1980/2000 and with Directive No 92/75 confirms that an agreement concerning the use of a uniform label constitutes in the first place a trade-related measure. (4) Introduction by the Member States of their own eco-labels 83. The Council finally puts forward in support of its view the fact that some Member States have introduced their own eco-labels. In its submission, that would not be possible if the introduction of the Energy Star Agreement were taken to be a commercial-policy measure, since the Community has exclusive competence in the field of commercial policy: only if it were regarded as an environmental-policy measure could the action on the part of the Member States be explained, since competence is shared in the field of environmental protection. 84. Article 133 EC establishes exclusive Community competence in respect of external trade. (46) The introduction of an eco-label by Member States does not relate to the external trade of the Community, but possibly to intra-Community trade. In that regard, such rules could raise the question of their compatibility with Article 28 EC. However, so long as no Community harmonisation measure has been adopted, there is no prohibition in law of such action by Member States in so far as the requirements of the free movement of goods are observed. That applies in particular where, as in the cases referred to by the Council, voluntary rules are involved and manufacturers in other Member States also have access to the eco-label. The Council has adduced no evidence suggesting that that is not currently the case. 85. It must therefore be concluded that the introduction by Member States of their own eco-labels does not prevent Article 133 EC from being regarded as the legal basis for Decision 2001/469. (5) Summary 86. By way of summary, the Energy Star Agreement contains aspects relating both to trade and to environmental protection. The agreement of common energy-efficiency specifications for certain items of office equipment, of a common logo for the labelling of such products which comply with the specification and of a procedure for the mutual recognition of registrations has a direct impact on trade, since trade in those products is facilitated. On the other hand, agreement on those matters has only an indirect impact on the environment since energy savings depend on how manufacturers and consumers actually behave. The Energy Star Agreement therefore primarily relates to trade and the decision approving it thus had to be based on Article 133 EC. (6) In the alternative: the applicability of Article 174 EC 87. Purely in the alternative, should the Court not follow the foregoing analysis but regard the Energy Star Agreement as a primarily environmental measure, it is also necessary to consider briefly the issue, upon which the parties disagree, as to whether in that case Article 174 EC or Article 175 EC constitutes the appropriate legal basis for the decision approving the agreement. 88. Article 174(4) EC must be interpreted as forming the legal basis only for legal measures which establish the details of Community cooperation with third countries and international organisations in the field of environmental protection. It was thus the legal basis for Council Decision 98/216/EC of 9 March 1998 on the conclusion, on behalf of the European Community, of the United Nations Convention to combat desertification in countries seriously affected by drought and/or desertification, particularly in Africa. (47) 89. It is true that the Energy Star Agreement also relates to cooperation between the two management entities (the Commission and the EPA) entrusted with coordinating the programmes (see in particular Articles V(4), VI, IX and X). However, the agreement's content extends beyond those issues of administrative organisation in that the agreement provides for uniform energy-efficiency specifications, a uniform logo and the mutual recognition of registrations. 90. In this connection, the Court, citing existing case-law, held in the Opinion on the Cartagena Protocol that Article 174 EC defines the objectives to be pursued in the context of environmental policy, while Article 175 EC constitutes the legal basis on which Community measures are adopted. (48) In so far as an agreement extends beyond the scope of Article 174(4) EC, as is the case here, Article 175 EC should therefore be used as the legal basis. 91. Accordingly, should the Court place the agreement within the scope of environmental protection, Article 175 EC is the legal basis for the decision concerning its conclusion. VI ─ Costs 92. Under Article 69(2) of the Rules of Procedure, the unsuccessful party must pay the costs if they have been applied for in the successful party's pleadings. Since the Council is the unsuccessful party and the Commission has applied for costs, the Council is to be ordered to pay the costs. VII ─ Conclusion 93. On the basis of the foregoing arguments, I propose that the Court should: (1) annul Council Decision 2001/469/EC of 14 May 2001 concerning the conclusion on behalf of the European Community of the Agreement between the Government of the United States of America and the European Community on the coordination of energy-efficient labelling programs for office equipment; (2) order the Council to pay the costs. 1 – Original language: German. 2 – OJ 2001 L 332, p. 1. 3 – COM(2000) 18 final of 28 January 2000, Proposal for a Regulation of the European Parliament and of the Council on a Community energy efficiency labelling programme for office and communication technology equipment (OJ 2000 C 150 E, p. 73). 4 – See the overview on the internet at www.energystar.gov/products. 5 – Proposal for a Council Decision concerning the conclusion on behalf of the European Community of an agreement between the United States of America and the European Community on the co-ordination of energy-efficient labelling programmes (COM(1999) 328 final of 1 July 1999; OJ 1999 C 274 E, p. 16). The text of the original proposal cited Articles 130 EC and 300(2) EC as the legal basis. However, the Commission subsequently corrected this, stating that Articles 133 EC and 300(2) EC were meant. In its discussions the Council assumed that the Commission proposal was based on Articles 133 EC and 300(2) EC, as is apparent from Council document 8663/00 submitted as Annex 3 to the application. The examination which follows is therefore to be carried out on that premiss. 6 – Decision of 14 December 2000, item 8 in the list of A points of the Council agenda (Council document 14408/00) submitted as Annex 4 to the application. 7 – Council Decision 2001/469/EC of 14 May 2001 concerning the conclusion on behalf of the European Community of the Agreement between the Government of the United States of America and the European Community on the coordination of energy-efficient labelling programs for office equipment (OJ 2001 L 172, p. 1). 8 – In particular Opinion 1/78 concerning the International Agreement on Natural Rubber [1979] ECR 2871, paragraph 45, and the judgment in Case 45/86 Commission v Council [1987] ECR 1493, paragraph 19. 9 – The Commission relies on Case C-62/88 Greece v Council [1990] ECR I-1527, paragraphs 18, 19 and 20, Case C-300/89 Commission v Council [1991] ECR I-2867, paragraph 22, and Case C-405/92 Mondiet [1993] ECR I-6133, paragraphs 26, 27 and 28. 10 – OJ 1994 L 336, p. 40, approved by Council Decision 94/800/EC of 22 December 1994 concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the agreements reached in the Uruguay Round multilateral negotiations (1986-1994) (OJ 1994 L 336, p. 1). 11 – The statement is annexed to Council document 8421/01 of 3 May 2001 which was lodged as Annex 6 to the application. 12 – Regulation (EC) No 1980/2000 of the European Parliament and of the Council of 17 July 2000 on a revised Community eco-label award scheme (OJ 2000 L 237, p. 1). 13 – The Commission refers to Case C-268/94 Portugal v Council [1996] ECR I-6177, paragraphs 37, 38 and 39. 14 – See point 1 of the diplomatic note from the EC to the USA (OJ 2001 L 172, p. 31) and point 1 of the diplomatic note from the USA to the EC (OJ 2001 L 172, p. 32). 15 – The Council cites in this connection the judgment in Case C-187/93 Parliament v Council [1994] ECR I-2857. 16 – Council Decision 88/540/EEC of 14 October 1988 concerning the conclusion of the Vienna Convention for the protection of the ozone layer and the Montreal Protocol on substances that deplete the ozone layer (OJ 1988 L 297, p. 8). 17 – Council Decision 93/98/EEC of 1 February 1993 on the conclusion, on behalf of the Community, of the Convention on the control of transboundary movements of hazardous wastes and their disposal (Basel Convention) (OJ 1993 L 39, p. 1). 18 – Council Regulation (EEC) No 3626/82 of 3 December 1982 on the implementation in the Community of the Convention on international trade in endangered species of wild fauna and flora (OJ 1982 L 384, p. 1) and Council Regulation (EC) No 338/97 of 9 December 1996 on the protection of species of wild fauna and flora by regulating trade therein (OJ 1997 L 61, p. 1). 19 – Council Regulation (EEC) No 880/92 of 23 March 1992 on a Community eco-label award scheme (OJ 1992 L 99, p. 1). 20 – Commission Decision 1999/205/EC of 26 February 1999 establishing ecological criteria for the award of the Community eco-label to personal computers (notified under document number C(1999) 425) (OJ 1999 L 70, p. 46). 21 – Cited in footnote 12. 22 – Opinion 2/00 [2001] ECR I-9713, paragraphs 23, 24 and 25, and the judgment in Case C-36/98 Spain v Council [2001] ECR I-779. 23 – Opinion 2/00 on the Cartagena Protocol, cited in footnote 22. 24 – Judgments in Portugal v Council , cited in footnote 13, paragraph 22, Case C-269/97 Commission v Council [2000] ECR I-2257, paragraph 43, and Spain v Council , cited in footnote 22, paragraph 58; Opinion 2/00, cited in footnote 22, paragraph 22. 25 – Judgments in Case C-42/97 Parliament v Council [1999] ECR I-869, paragraph 40, and Spain v Council , cited in footnote 22, paragraph 59; Opinion 2/00, cited in footnote 22, paragraph 23. 26 – See, to that effect, judgments in Case 165/87 Commission v Council [1988] ECR 5545, paragraph 11, Case C-300/89 Commission v Council , cited in footnote 9, paragraph 17, and Joined Cases C-164/97 and C-165/97 Parliament v Council [1999] ECR I-1139, paragraph 14, and Opinion 2/00, cited in footnote 22, paragraph 23. 27 – Opinion 1/78, cited in footnote 8, paragraph 44. 28 – Opinion 1/94 [1994] ECR I-5267, paragraph 41. 29 – See Greece v Council , cited in footnote 9, paragraph 20, Case C-300/89 Commission v Council , cited in footnote 9, paragraph 22, and Mondiet , cited in footnote 9, paragraphs 26, 27 and 28. 30 – Articles cited without further indication are articles of the Energy Star Agreement. 31 – Council Decision 96/664/EC of 21 November 1996 on the adoption of a multiannual programme to promote the linguistic diversity of the Community in the information society (OJ 1996 L 306, p. 40). The legality of the decision was confirmed in Case C-42/97 Parliament v Council , cited in footnote 25. 32 – See paragraphs 62 and 63 of the judgment. 33 – Commission Decision 2001/686/EC of 22 August 2001 establishing the ecological criteria for the award of the Community eco-label to personal computers (OJ 2001 L 242, p. 4, in particular p. 7, footnote 1). 34 – COM(1999) 328 final of 1 July 1999 (cited in footnote 5), p. 3, paragraph 3. 35 – OJ 1994 L 336, p. 86. 36 – COM(1999) 328 final of 1 July 1999 (cited in footnote 5), p. 3, paragraph 3. 37 – Proposal for a Council Decision concerning the conclusion, on behalf of the Community, of the Cartagena Protocol on Biosafety (COM (2002) 127 final of 13 March 2002; OJ 2002 C 181 E, p. 258) and Council Decision 2002/628/EC of 25 June 2002 (OJ 2002 L 201, p. 48). 38 – Opinion 2/00, cited in footnote 22, paragraphs 26, 27 and 28. 39 – Cited in footnote 19. 40 – Cited in footnote 12. 41 – See the overview on the internet at www.energystar.gov/products. 42 – Commission Decision 1999/205/EC of 26 February 1999 establishing ecological criteria for the award of the Community eco-label to personal computers (OJ 1999 L 70, p. 46). 43 – Commission Decision 2001/686/EC of 22 August 2001, cited in footnote 33. 44 – See OJ 2001 L 242, p. 7, footnotes 1, 3 and 4. 45 – Council Directive 92/75/EEC of 22 September 1992 on the indication by labelling and standard product information of the consumption of energy and other resources by household appliances (OJ 1992 L 297, p. 16). 46 – Case C-83/94 Leifer and Others [1995] ECR I-3231, paragraph 13. 47 – OJ 1998 L 83, p. 1. 48 – See Opinion 2/00, cited in footnote 22, paragraph 43.

SECOND SECTION CASE OF NOVAKOVIĆ AND OTHERS v. MONTENEGRO (Application no. 44143/11) JUDGMENT STRASBOURG 20 March 2018 This judgment is final but it may be subject to editorial revision. In the case of Novaković and Others v. Montenegro, The European Court of Human Rights (Second Section), sitting as a Committee composed of: Ledi Bianku, President,Nebojša Vučinić,Jon Fridrik Kjølbro, judges, and Hasan Bakırcı, Deputy Section Registrar, Having deliberated in private on 20 February 2018, Delivers the following judgment, which was adopted on that date: PROCEDURE 1. The case originated in an application (no. 44143/11) against Montenegro lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by three Montenegrin nationals, Mr Milan Novaković, Ms Draginja Proročić and Ms Mileva Lubarda (“the applicants”), on 6 July 2011. 2. The applicants were represented by Ms M. Novaković, a lawyer practising in Podgorica, and Ms D. Radulović, a lawyer practicing in Kotor. The Montenegrin Government (“the Government”) were represented by their Agent, Ms V. Pavličić. 3. On 3 December 2014 the applicant’s complaint concerning the excessive length of the proceedings was communicated to the Government and the remainder of the application was declared inadmissible pursuant to Rule 54 § 3 of the Rules of Court. THE FACTS THE CIRCUMSTANCES OF THE CASE 4. The applicants were born in 1925, 1927 and 1930, respectively, and live in Budva. 5. On 3 April 2001 the applicants lodged a civil claim with the Court of First Instance in Kotor seeking compensation for the property nationalised from their parents in 1948. On 16 July 2008 the Court of First Instance ruled against the applicants. 6. On 2 October 2009, the High Court in Podgorica upheld the decision of the first instance court on appeal. 7. On 19 January 2011 the Supreme Court of Montenegro rejected the applicants’ appeal on points of law, which decision was served on the applicants on 15 March 2011. THE LAW I. ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE CONVENTION 8. The applicants complained that the length of the proceedings had been incompatible with the “reasonable time” requirement, laid down in Article 6 § 1 of the Convention, which reads as follows: “In the determination of his civil rights and obligations ..., everyone is entitled to a ... hearing within a reasonable time by [a] ... tribunal...” A. Admissibility 9. The Court notes that this complaint is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible. B. Merits 10. The applicants reaffirmed their complaints. 11. The Government made no comment in this regard. 12. The Court observes that the proceedings in question took place between 3 April 2001 and 15 March 2011. However, the Court can only examine the period between 3 March 2004, when the Convention had entered into force in respect of Montenegro, and 15 March 2011, when the Supreme Court’s decision was served on the applicants, that being a period of seven years at three levels of jurisdiction. 13. The Court reiterates that the reasonableness of the length of proceedings must be assessed in the light of the circumstances of the case and with reference to the following criteria: the complexity of the case, the conduct of the applicants and the relevant authorities and what was at stake for the applicants in the dispute (see, among many other authorities, Frydlender v. France [GC], no. 30979/96, § 43, ECHR 2000-VII). 14. The Court has frequently found violations of Article 6 § 1 of the Convention in cases raising issues similar to the one in the present case (see Frydlender, cited above). 15. Having examined all the material submitted to it, the Court considers that the Government have not put forward any fact or argument capable of persuading it to reach a different conclusion in the present case. Having regard to its case-law on the subject, the Court considers that in the instant case the length of seven years at three levels of jurisdiction was excessive and failed to meet the “reasonable time” requirement. 16. There has accordingly been a breach of Article 6 § 1. II. APPLICATION OF ARTICLE 41 OF THE CONVENTION 17. Article 41 of the Convention provides: “If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.” 18. The applicants asked the Court to award them pecuniary damage, but left the amount to the discretion of the Court. They further claimed compensation for non-pecuniary damage in their application form, but they failed to submit any quantified claims in this respect despite the Court’s letter inviting them to submit their just satisfaction claims under Article 41 of the Convention subsequent to the communication of their complaints. 19. The Government contested their claim. 20. The Court does not discern any causal link between the violation found and the pecuniary damage alleged; it therefore rejects this claim. 21. Furthermore, in view of its settled case-law and finding no exceptional circumstances in the present case which could warrant a different conclusion (see Nagmetov v. Russia [GC], no. 35589/08, §§ 76-78, 30 March 2017), the Court makes no award in respect of non-pecuniary damage. 22. Lastly, as the applicant failed to submit any quantified claim in respect of costs and expenses, the Court makes no award in this respect either. FOR THESE REASONS, THE COURT, UNANIMOUSLY, 1. Declares the application admissible; 2. Holds that there has been a violation of Article 6 § 1 of the Convention; 3. Dismisses the applicants’ claims for just satisfaction. Done in English, and notified in writing on 20 March 2018, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. Hasan BakırcıLedi BiankuDeputy RegistrarPresident

Opinion of Mr Advocate General Alber delivered on 13 November 2001. - Kingdom of Spain v Council of the European Union. - Fisheries - Regulation laying down limits on and distributing fishing opportunities among Member States - Requirement of relative stability - Fishing quota exchanges - Fishing quota for anchovy - Annulment. - Joined cases C-61/96, C-132/97, C-45/98, C-27/99, C-81/00 and C-22/01. European Court reports 2002 Page I-03439 Opinion of the Advocate-General I - Introduction 1. The present proceedings concern the extent to which the anchovy catches in certain fishing areas known as ICES areas (ICES = International Council for the Exploration of the Sea), which the Council fixed annually by six regulations for 1996 to 2001, are lawful. In particular, they concern the compatibility of the regulations with the principle of relative stability. Under that principle, regard must be had not only to the stocks of the species concerned, but also to the needs of regions where local populations are especially dependent on fisheries and related activities. 2. The six regulations authorise Portugal and France to exchange anchovy fishing opportunities in such a way that part of the quota initially allocated to Portugal for ICES areas IX, X, CECAF 34.1.1, which lie to the west and south-west of the Iberian Peninsula, is transferred to France for fishing in another, adjacent area, ICES area VIII, which is in the Bay of Biscay. In the first-named areas 48% of the quota is allocated to Spain and 52% to Portugal and in the last-named area 90% is allocated to Spain and 10% to France. 3. By judgment of 5 October 1999 in Case C-179/95, the Court dismissed Spain's action against the same provisions governing anchovy fishing in ICES area VIII, on that occasion for 1995. Spain was of the opinion that the quota exchange in 1995 ultimately led to an increase in the quota in area VIII, which was unlawful because it jeopardised relative stability. If an increase in the catch in area VIII had been possible and had that increase had taken place in a lawful manner, Spain should also, in its opinion, have received a higher quota since it was entitled to a 90% share of the catch for that area. Spain is of the opinion that the catch should not have been increased, because the anchovy in the two areas belong to different, separate stocks, a fact acknowledged by the Council's fixing of two different volumes of catches and not an overall volume. 4. By letter of 14 October 1999, Spain declared that it regarded the proceedings in the present Cases C-61/96, C-132/97, C-45/98 and C-27/99, which concern the corresponding provisions for the years 1996 to 1999, as having been only partly disposed of by the judgment in Case C-179/95. As far as the plea in law of breach of the principle of relative stability was concerned, that judgment was not conclusive. In that respect, therefore, those proceedings must be continued. They are supplemented by two actions concerning the corresponding provisions for 2000 and 2001, Cases C-81/00 and C-22/01, in which the further plea in law of breach of the obligation to ensure rational and responsible exploitation of resources is again advanced. That plea also was already put forward in Case C-179/95. II - Legal framework and facts (1) The essential features of the fisheries policy 5. The Community's policy in the sphere of the conservation and management of fishery resources is based on the annual fixing of total allowable catches (or TACs, derived from the English term or from the French term totaux admissibles des captures). This is done according to fish species and fishing zones on the basis of scientific analyses. The TACs are distributed as quotas among the Member States. 6. That policy continues the prevailing tradition in the management of fisheries, as it stood when the common fisheries policy was laid down by Council Regulation (EEC) No 170/83 of 25 January 1983 establishing a Community system for the conservation and management of fishery resources (Regulation No 170/83). Regulation No 170/83 was later replaced by Council Regulation (EEC) No 3760/92 of 20 December 1992 establishing a Community system for fisheries and aquaculture (Regulation No 3760/92). 7. Regulation No 3760/92 deals with the fundamental issues concerning the fisheries sector in the Community. It establishes the following measures, for each fishery or group of fisheries: establishment of zones in which fishing activities are prohibited or restricted, limitation of exploitation rates, setting of quantitative limits on catches, limitation of time spent at sea taking account, where appropriate, of the remoteness of the fishing waters, fixing of the number and type of fishing vessels authorised to fish, laying down of technical measures regarding fishing gear and its method of use, setting of a minimum size or weight of individuals that may be caught, and establishment of incentives, including those of an economic nature, to promote more selective fishing, and so on. 8. That regulation repeatedly invokes the principle of relative stability with which the present proceedings are primarily concerned. That principle assures the Member States a fixed percentage share of the fishing opportunities, but not fixed quantities of fish, for marketable species. 9. That principle has its origins in the 1970s. On 3 November 1976, following the extension of exclusive economic zones to 200 nautical miles and the associated loss of Member States' fishing potential off the coasts of non-member countries, which occurred in the mid-1970s, the Council adopted the Hague Resolution. Annex VII to that resolution introduced a system known as the Hague Preferences for Irish and United Kingdom coastal fisheries. In that system, the Council recognised that, in the application of the common fisheries policy, account should also be taken of the particular vital needs of other economically disadvantaged coastal regions where the local populations are particularly dependent upon fisheries and related industries. As a result of the Council declaration of 30 May 1980 on the common fisheries policy, the principle of relative stability was enshrined in the earlier Regulation No 170/83. The fifth to seventh recitals in the preamble to that regulation are identical in wording to the 12th to 14th recitals of Regulation No 3760/92. 10. The 12th to 14th recitals in the preamble to Regulation No 3760/92 define the principle of relative stability as follows: Whereas conservation and management of resources must contribute to a greater stability of fishing activities and must be appraised on the basis of a reference allocation reflecting the orientations given by the Council; Whereas, in other respects, that stability, given the temporary biological situation of stocks, must safeguard the particular needs of regions where local populations are especially dependent on fisheries and related activities as decided by the Council in its resolution of 3 November 1976, and in particular Annex VII thereto; Whereas, therefore, it is in this sense that the notion of relative stability aimed at must be understood. (2) The fixing of catches and quotas 11. Council Regulation (EEC) No 172/83 of 25 January 1983 fixing, for certain fish stocks and groups of fish stocks occurring in the Community's fishing zone, total allowable catches for 1982, the share of these catches available to the Community, the allocation of that share between the Member States and the conditions under which the total allowable catches may be fished was adopted on the basis of Article 11 of Regulation No 170/83. For the first time it allocated to the Member States fixed quotas for particular species in particular areas. The allocation key used has subsequently continued to be applied unaltered. 12. Under Article 161 of the Act concerning the conditions of accession of the Kingdom of Spain and the Portuguese Republic and the adjustments to the Treaties (hereinafter the Act of Accession), Spain was granted a TAC share of 90% (and France 10%) for anchovy in ICES area VIII. Pursuant to Article 162 of the Act of Accession, an adjustment of that arrangement was to be adopted before 31 December 1993 in accordance with the procedure laid down in Article 43 of the EEC Treaty. It was to take effect on 1 January 1996. 13. That adjustment was made with the adoption of Council Regulation (EC) No 1275/94 of 30 May 1994 on adjustments to the arrangements in the fisheries chapters of the Act of Accession of Spain and Portugal (hereinafter Regulation No 1275/94). Under Article 3(1) of that regulation, the Council is to adopt, in accordance with Articles 4 and 8 of Regulation No 3760/92, the measures laying down the conditions of access to the zones and resources subject to specific rules pursuant to Article 161 of the Act of Accession. Under Article 3(2), those measures were to take account of the principle of relative stability. 14. Article 4 of Regulation No 3760/92 provides as follows: 1. In order to ensure the rational and responsible exploitation of resources on a sustainable basis, the Council, acting, except where otherwise provided, in accordance with the procedure laid down in Article 43 of the Treaty, shall establish Community measures laying down the conditions of access to waters and resources and of the pursuit of exploitation activities. These measures shall be drawn up in the light of the available biological, socio-economic and technical analyses and in particular of the reports drawn up by the Committee provided for in Article 16. 2. These provisions may, in particular, include measures for each fishery or group of fisheries to: (a) establish zones in which fishing activities are prohibited or restricted; (b) limit exploitation rates; (c) set quantitative limits on catches; (d) limit time spent at sea taking account, where appropriate, of the remoteness of the fishing waters; ... Article 8 provides: 1. In accordance with Article 4, the exploitation rate may be regulated by restricting for the period concerned the volume of catches authorised and, if necessary, the fishing effort. In cases where a limitation of catches is not appropriate, the exploitation rate may be regulated solely by a restriction of the fishing effort. 2. ... 3. ... 4. The Council, acting by qualified majority on a proposal from the Commission: (i) shall determine for each fishery or group of fisheries, on a case-by-case basis, the total allowable catch and/or total allowable fishing effort, where appropriate on a multiannual basis. These shall be based on the management objectives and strategies where they have been established in accordance with paragraph 3; (ii) shall distribute the fishing opportunities between Member States in such a way as to assure each Member State relative stability of fishing activities for each of the stocks concerned; however, following a request from the Member States directly concerned, account may be taken of the development of mini-quotas and regular quota swaps since 1983, with due regard to the overall balance of shares; (iii) ... (iv) ... (v) ... (3) The regulation of quota exchanges 15. Article 9(1) of Regulation No 3760/92 provides: 1. Member States may, after notifying the Commission, exchange all or part of the fishing availabilities allocated to them. 16. In compliance with Article 3 of Regulation No 1275/94, the Council adopted Regulation (EC) No 685/95 of 27 March 1995 on the management of the fishing effort relating to certain Community fishing areas and resources. In the first to third recitals in the preamble, that regulation refers to Regulations Nos 3760/92, 1275/94 and the principle of relative stability. 17. Article 11(1) of Regulation No 685/95 provides: 1. In accordance with Article 9 of Regulation (EEC) No 3760/92, the Member States concerned shall exchange fishing possibilities allocated to them under the conditions referred to in Annex IV point 1. Point 1 in Annex IV lays down: Measures concerning the exchange of certain fishing possibilities and certain authorised catch limits 1. Exchanges of fishing possibilities 1.1. Exchanges between France and Portugal will be tacitly renewable for the period 1995 to 2002, subject to the possibility of annual amendment of the conditions thereof by each Member State at the time of the annual fixing of TACs and quotas. Exchanges concern the following TACs: (i) a common TAC for anchovy being fixed for ICES areas VIII and IX, 80% of Portugal's fishing possibilities will be transferred every year to France. Quantities must be fished exclusively in waters under the sovereignty or jurisdiction of France; ... 18. Only four days later, on 31 March 1995, the Council adopted Regulation (EC) No 746/95 of 31 March 1995 amending Regulation (EC) No 3362/94 fixing, for certain fish stocks and groups of fish stocks, the total allowable catches for 1995 and certain conditions under which they may be fished. Under that measure, Portugal was for the first time allowed to fish in ICES area VIII a certain part of the anchovy catch quota allocated to it for ICES area IX. (4) The measures at issue in the present case 19. In Case C-179/95 Spain obtained a review of the lawfulness of Regulations Nos 746/95 and 685/95. By its judgment of 5 October 1999, the Court dismissed that action on the grounds that the principle of relative stability and the obligation to provide for the rational and responsible exploitation of living marine aquatic resources were not infringed by the two contested regulations. 20. The regulations at issue in the present proceedings were also adopted on the basis of Article 8(4) of Regulation No 3760/92. They are: - Council Regulation (EC) No 3074/95 of 22 December 1995 fixing, for certain fish stocks and groups of fish stocks, the total allowable catches for 1996 and certain conditions under which they may be fished (Regulation No 3074/95), - Council Regulation (EC) No 390/97 of 20 December 1996 fixing, for certain fish stocks and groups of fish stocks, the total allowable catches for 1997 and certain conditions under which they may be fished (Regulation No 390/97), - Council Regulation (EC) No 45/98 of 19 December 1997 fixing, for certain fish stocks and groups of fish stocks, the total allowable catches for 1998 and certain conditions under which they may be fished (Regulation No 45/98), - Council Regulation (EC) No 48/1999 of 18 December 1998 fixing, for certain fish stocks and groups of fish stocks, the total allowable catches for 1999 and certain conditions under which they may be fished (Regulation No 48/1999), - Council Regulation (EC) No 2742/1999 of 17 December 1999 fixing for 2000 the fishing opportunities and associated conditions for certain fish stocks and groups of fish stocks, applicable in Community waters and, for Community vessels, in waters where limitations in catch are required and amending Regulation (EC) No 66/98 (Regulation No 2742/1999) and - Council Regulation (EC) No 2848/2000 of 15 December 2000 fixing for 2001 the fishing opportunities and associated conditions for certain fish stocks and groups of fish stocks, applicable in Community waters and, for Community vessels, in waters where limitations in catch are required (Regulation No 2848/2000). 21. Those regulations fixed the total allowable catches for 1996 to 2001. The Annex to Regulation No 3074/95, Annexes I to Regulations Nos 390/97, 45/98 and 48/1999 and Annexes ID to Regulations Nos 2742/1999 and 2848/2000 all identified a separate TAC for anchovy, both for ICES area VIII and for ICES area IX. In area VIII, 90% of the available TAC was allocated to Spain and the remaining 10% to France in all years. In area IX, 48% of the available TAC was allocated to Spain and 52% to Portugal in all years. Of that 52%, according to note (3) or (2), in each year from 1996 to 1999 5 008 tonnes, in 2000 a total of 3 000 tonnes and in 2001 a total of 80% of 5 220 tonnes, that is, 4 176 tonnes, were allowed to be fished in ICES area VIII under the sovereignty or jurisdiction of France. 22. In each year from 1996 to 1999 a precautionary TAC was fixed for both areas. In 2000 and 2001, an analytical TAC was fixed for ICES area VIII and a precautionary TAC for ICES area IX. Pursuant to Article 1 of Council Regulation (EC) No 847/96 of 6 May 1996 introducing additional conditions for year-to-year management of TACs and quotas, [p]recautionary TACs shall apply to stocks for which no scientifically-based evaluation of fishing possibilities is available specifically for the year in which the TACs are to be set; analytical TACs shall apply otherwise. 23. The TAC for ICES area VIII was 33 000 tonnes in all years. For 2000, however, on the basis of scientific reports, a TAC of only 16 000 tonnes was initially fixed, but in June 2000 this was increased to 33 000 tonnes again on the basis of new scientific estimates. 24. The TAC in ICES area IX was fixed at 12 000 tonnes in 1996, 1997 and 1998, at 13 000 tonnes in 1999 and at 10 000 tonnes in both 2000 and 2001. III - Forms of order sought by the parties 25. Spain claims that the Court should: (1) - in Case C-61/96, annul the point concerning anchovy in the Annex to Regulation No 3074/95, - in Case C-132/97, annul the point concerning anchovy in the Annex to Regulation No 390/97, - in Case C-45/98, annul the point concerning anchovy in Annex I to Regulation No 45/98, - in Case C-27/99, annul the point concerning anchovy in Annex I to Regulation No 48/1999, - in Case C-81/00, annul note (2) relating to stocks of Anchovy, Zone: IX, X, CECAF 34.1.1 in Annex ID to Regulation No 2742/1999, and - in Case C-22/01, annul note (2) relating to stocks of Anchovy, Zone: IX, X, CECAF 34.1.1 (Community waters) in Annex ID to Regulation No 2848/2000; (2) in all the cases, order the Council to pay the costs. 26. The Council claims that the Court should: (1) dismiss the applications as inadmissible, (2) in the alternative, dismiss the applications as unfounded, (3) in Cases C-81/00 and C-22/01, confirm the principles on which the judgment of the Court in Case C-179/95 Spain v Council was based and which upheld the lawfulness of the quota exchange between Portugal and France in 1995, (4) in all the cases, order Spain to pay the costs. 27. The Commission, which has intervened in support of the Council in all the cases except Case C-22/01, claims, in Cases C-61/96, C-132/97, C-45/98, C-27/99 and C-81/00, that the Court should: (1) dismiss the applications as inadmissible, (2) in the alternative, dismiss the applications as unfounded, (3) order Spain to pay the costs. IV - Arguments of the parties and assessment A - Admissibility of the actions (1) Arguments of the parties 28. The Council takes the view that the actions in Cases C-61/96, C-132/97, C-45/98 and C-27/99 are inadmissible. At the hearing, it extended that objection to include Cases C-81/00 and C-22/01, the admissibility of which it had not challenged in the written procedure. 29. It maintains that the actions are between the same parties, have the same purpose and are based on the same pleas in law as in Case C-179/95. They are identical to Case C-179/95 in so far as the provision concerning anchovy fishing in ICES area VIII, which is contained in the annexes to the contested regulations, is identical to those in Regulation No 746/95, including the disputed note (3) which the Court declared lawful in its judgment in Case C-179/95. The admissibility of the actions is therefore precluded by the authority of res judicata attaching to the judgment in Case C-179/95. The view that the proceedings have the same subject-matter is supported by the decisions of the President of the Court of 3 May 1996, 15 May 1997, 16 March 1998 and 8 March 1999 staying the proceedings in Cases C-61/96, C-132/97, C-45/98 and C-27/99 pending delivery of the judgment in Case C-179/95. 30. The Commission likewise considers those actions inadmissible. Spain is challenging only the annual fixing of the total allowable catches. However, those total allowable catches are merely the confirmation of the quota exchange established in Regulation No 685/95. The lawfulness of that exchange was confirmed in the judgment in Case C-179/95. In the Commission's opinion, only Regulation No 685/95 and the last phrase of subparagraph (i) of the second paragraph of point 1(1.1) of Annex IV thereto produce legal effects. That regulation and it alone lays down provisions on the common management of the anchovy stocks in ICES areas VIII and IX and on the detailed rules, scope and duration of the quota exchange between France and Portugal. The subsequent regulations, which fix the annual total allowable catches, merely confirm the application of common management of the anchovy stocks and of the quota exchange and calculate in tonnes the percentages already fixed in Regulation No 685/95. The contested provisions spell out in detail the logical consequence of Regulation No 685/95 without adding any new elements. The judgment in Case C-179/95 decided with the authority of res judicata on the lawfulness of that regulation, and in particular its compatibility with the principle of relative stability. 31. The Spanish Government, on the other hand, considers the actions admissible. It is of the view that the judgment in Case C-179/95 did not answer conclusively the question whether the principle of relative stability was infringed. Moreover, the present cases concern Regulations Nos 3074/95, 390/97, 45/98, 48/1999, 2742/1999 and 2848/2000, which were not the subject-matter of Case C-179/95. To declare the present actions inadmissible would amount to refusing judicial review in the case of a legislative provision with a specific, temporally-limited scope, on the ground that a provision with analogous content but a different temporal scope has been declared lawful. Dismissal of the actions as inadmissible would also infringe Spain's legal status as a privileged applicant. Article 230 EC makes the admissibility of its action subject only to the condition that the time-limit for instituting proceedings is complied with. (2) Assessment 32. It is settled case-law that the authority of res judicata attaching to a judgment can constitute a bar to the admissibility of an action only if both actions are between the same parties, have the same purpose and are based on the same submissions. 33. The parties in Cases C-61/96, C-132/97, C-45/98, C-27/99, C-81/00 and C-22/01 are the same as in Case C-179/95, namely Spain (as applicant) and the Council (as defendant). The actions are also based on the same submissions. Following Spain's partial discontinuance by letter of 14 October 1999, they concern the compatibility of the contested regulations with the principle of relative stability. The action in Case C-179/95 was also based inter alia on that submission. The question is to what extent the actions have the same purpose as the action in Case C-179/95. 34. Each action contests a different regulation and seeks its partial annulment in so far as it regulates anchovy fishing in ICES area VIII. Each of those acts has a different temporal scope. They relate to the successive years from 1996 to 2000. The action in Case C-179/95 concerned a regulation for 1995. Since, according to settled case-law, the act whose annulment is sought is an essential element in defining the subject-matter of an action, and since different acts are being contested in the actions to be assessed here, there are good grounds for considering those actions admissible. 35. The Council goes a step further in its reasoning. It concerns itself not only with the act contested in each case, but also with its content. Since the contested provisions on anchovy fishing in ICES area VIII contained in Regulations Nos 3074/95, 390/97, 45/98, 48/1999 and 2742/1999 are identical in each case to those in Regulation No 746/95, the Council considers the actions inadmissible. 36. On the other hand, however, it should be noted that Regulation No 48/1999 fixed a TAC of 13 000 tonnes for ICES area IX, that is, 1 000 tonnes more than in the previous years. In 2000 and 2001 also, different quantities were fixed from those for 1995. Regulation No 2742/1999 fixed a TAC of 16 000 tonnes for ICES area VIII, which was then increased to 33 000 tonnes by Regulation No 1446/2000. For the first time this was an analytical TAC, to which the provisions of Articles 3 and 4 of Council Regulation (EC) No 847/96 of 6 May 1996 introducing additional conditions for year-to-year management of TACs and quotas were declared inapplicable, whereas Article 5 of that regulation was declared applicable. For ICES area IX, a TAC of 10 000 was fixed, of which 5 220 tonnes were allocated to Portugal. It was allowed to fish 3 000 tonnes, that is less than 80%, of that allocation in ICES area VIII within the jurisdiction of France. In this respect also, these are provisions which differ from those of previous years. Regulation No 2848/2000 again fixed a TAC of 33 000 tonnes for ICES area VIII, again as an analytical TAC. For ICES area IX a quantity of 10 000 tonnes was fixed, of which 5 220 tonnes were allocated to Portugal. For the first time it was provided that 80% of that allocation could be fished in ICES area VIII within the jurisdiction of France. Thus for the first time a percentage instead of a quantity in tonnes was fixed for the quota exchange. As those examples show, the fact that the figures from 1995 to 1999 were identical is more a matter of coincidence. 37. The decision on the admissibility of the actions cannot depend on the fact that, without legal necessity, an identical set of provisions was adopted for the years from 1996 to 1999 to that adopted for 1995. In that respect, the regulations adopted for 2000 and 2001 prove that they each constitute a new set of provisions which is applicable to a specific period and is independent in its legal validity of the provisions adopted in other years. This suggests that the actions have different purposes and must therefore be considered admissible. 38. The Commission points out that the quota exchanges between Portugal and France were established in Regulation No 685/95. That regulation provides that exchanges will be tacitly renewable for the period 1995 to 2002. The question is whether Regulations Nos 746/95, 3074/95, 390/97, 45/98, 48/1999, 2742/1999 and 2824/2000 are therefore to be regarded as identical sets of provisions. 39. Such a supposition is difficult to reconcile with the wording of Regulation No 685/95. That regulation reserves to France and Portugal the right to amend the conditions of the quota exchange at the time of the annual fixing of TACs and quotas. Regulation No 685/95 expressly makes the exchange subject to annual renewal and, in certain circumstances, adjustment. In that respect, the provision in question starts from the assumption that a new set of provisions will be adopted annually. This likewise supports the admissibility of the actions. 40. However, the Commission's argument that the fundamental rules dealing with the quota exchanges are already laid down in Regulation No 685/95 must be upheld. That is why it takes the view that contested Regulations No 3074/95, No 390/97, No 45/98, No 48/1999 and No 2742/1999 merely confirm the quota exchanges agreed in Regulation No 685/95, which was declared lawful in the judgment in Case C-179/95. 41. On the other hand, it should be pointed out that, in its actions in Cases C-61/96, C-132/97, C-45/98, C-27/99, C-81/00 and C-22/01, in contrast to the action in Case C-179/95, Spain is no longer challenging the lawfulness of Regulation No 685/95. Consequently, in that respect there is no overlap or even identity of purpose between the actions. 42. The Commission's reasoning is based on the assumption that the contested Regulations Nos 3074/95, 390/97, 45/98, 48/1999, 2742/1999 and 2848/2000 contain no substantive independent rules. As far as the common management of anchovy stocks and the quota exchanges are concerned, the Commission considers those regulations to be acts confirming Regulation No 685/95. 43. However, against that it must be said that Regulation No 685/95 does not contain a complete set of provisions. On the contrary, it needs expanding on. On the one hand, it merely confers authority on France and Portugal to renew the quota exchanges. It neither provides for exchange nor deals with the question whether the permitted renewal is to take place. Both matters remain subject to the adoption of further provisions. The quota exchanges between Portugal and France, which are at issue here, are based on an arrangement concluded at the Council meeting on 22 December 1994. That is clear from the third and fourth recitals in the preamble to Regulation No 746/95. The renewal of those exchanges, which was authorised in Regulation No 685/95, took place for 1995 in Annex I to Regulation No 746/95. Under Species: Anchovy, the contested note (3) was included for zone IX, X, CECAF 34.1.1, allowing up to 5 008 tonnes of the precautionary TAC of 6 260 tonnes allocated to Portugal for that zone to be fished in the waters of ICES area VIII under the sovereignty or within the jurisdiction of France. Finally, the provisions in Regulation No 685/95 are also incomplete in that the quota exchanges in question are made subject to the condition precedent that a common TAC for anchovy is fixed for ICES areas VIII and IX (a common TAC for anchovy being fixed ...). It follows that not even the common management of the anchovy stocks in ICES areas VIII and IX is dealt with comprehensively in Regulation No 685/95. In that respect, reference is made here to yet a further set of provisions. 44. In the light of the incompleteness of the provisions in Regulation No 685/95, it falls to Regulations Nos 3074/95, 390/97, 45/98, 48/1999, 2742/1999 and 2848/2000 to deal with a multiplicity of substantive matters. They fix the level of the TAC for each individual ICES area and fish species and allocate quotas for each such species among the Member States. Moreover, they lay down the provision contested by Spain that a certain part of the catch allocated to Portugal in ICES area IX may be fished in waters of ICES area VIII under the sovereignty or within the jurisdiction of France. Whether this should be seen as fixing a common TAC for anchovy in ICES areas VIII and IX, and whether the condition laid down in Regulation No 685/95 has thus been fulfilled, is a question which goes to the substance of the actions. For the purpose of examining the admissibility, it is sufficient to note that that is the situation which Spain is challenging by its various actions. It is a situation which is regulated afresh each year with the fixing of the relevant TAC and the granting of authorisation for Portugal to fish a certain quantity of that TAC, which is allocated to it for Area IX, in Area VIII. 45. The quota exchanges are not expressly dealt with in the annual regulations. However, the fact that the arrangement recurred annually may constitute evidence of the tacit renewal of the quota exchange, mentioned in Regulation No 685/95. 46. Only taken together with those annual specific regulations can the content of the provisions in Annex IV to Regulation No 685/95 be said to be complete. That also suggests that the actions should be considered admissible. 47. The foregoing observations lead to the question regarding the extent to which account must be taken of the link, as described above, between the content of the provisions in Regulations Nos 3074/95, 390/97, 45/98, 48/1999, 2742/1999 and 2848/2000 and that of Regulation No 685/95. According to the case-law, the principle of res judicata extends only to the matters of fact and law actually or necessarily settled by a judicial decision. In that respect, it should be borne in mind that the question regarding the compatibility of Regulation No 685/95 with Community law was definitively settled by the judgment in Case C-179/95. 48. However, unlike in the proceedings in Case C-179/95, in the present proceedings Spain is no longer contesting Regulation No 685/95. In that respect, the authority of res judicata attaching to the judgment in Case C-179/95 does not constitute a bar to the admissibility of the actions in the present cases. However, account must be taken of that judgment in considering the merits of the present actions in so far as the content of Regulation No 685/95 is material. 49. In conclusion, it must therefore be held that the actions in Cases C-61/96, C-132/97, C-45/98, C-27/99, C-81/00 and C-22/01 are not identical in purpose to the action in Case C-179/95. Accordingly, the authority of res judicata attaching to the judgment in Case C-179/95 does not constitute a bar to the admissibility of those actions. B - Merits of the actions (1) Observance of the principle of relative stability 50. In considering the merits of the actions, the plea in law based on infringement of the principle of relative stability, which is put forward in all the cases, must be examined first. (a) Arguments of the parties 51. Spain is of the opinion that the contested regulations effectively allocate to Portugal an (exchangeable) anchovy quota in ICES area VIII even though it has never held quotas there. That is contrary to the principle of relative stability under which the Council was obliged, when distributing the catch quotas in ICES area VIII, to maintain the percentages fixed for Spain and France, between which the anchovy stock in ICES area VIII had always been shared; that is to say, it should have allocated 90% of the TAC to Spain and 10% to France. 52. The Council is of the view that the principle of relative stability was not infringed. It points out that there are other cases where Member States are allowed to fish certain quotas in areas adjacent to those allocated to them, in order to ensure better utilisation of the quotas. Those exchanges likewise relate to biologically distinct fish stocks and their lawfulness has never been challenged. Spain itself avails itself of such a quota exchange in respect of the fish species megrim and monkfish between areas VI and VII. 53. The Council confirms that the anchovy stocks in ICES areas VIII and IX are two biologically distinct stocks. Nevertheless, it does not consider that the fixing of two TACs, as has in fact taken place, is really necessary since neither stock is jeopardised and from 1996 to 1999 only precautionary TACs were fixed. There are no legal obstacles to the common management of those two TACs. It was only on account of the relevant provision in Article 161 of the Act of Accession that two separate TACs were fixed for ICES areas VIII and IX. 54. By fixing a separate TAC for ICES area VIII and allocating 90% of that TAC to Spain, the Council observed the relevant provision in Article 161 of the Act of Accession and the principle of relative stability. In allowing Portugal to fish part of its quota allocated for area IX in ICES area VIII and to exchange it with France, it merely used its margin of discretion in order to achieve the objective of integrating Spain and Portugal into the common fisheries policy. 55. The Council also points out that the principle of relative stability established in Article 8(4)(ii) of Regulation No 3760/92 does allow adjustments to catches, in particular through the exchange of quotas as practised since 1983. The Council submits that the condition that due regard must be had to the overall balance of shares in this context was fulfilled in the case of Portugal's quota transfer. In support of that assertion, it refers to a combined total of the catch quotas distributed in ICES areas VIII and IX. 56. The Commission likewise considers that the principle of relative stability was not infringed. Both TACs for ICES areas VIII and IX were managed in common. However, that made no difference to the distribution of the quotas of the Member States concerned: Spain, Portugal and France. The Commission, too, bases its assessment in this regard on an aggregate view of the quotas distributed for both areas. 57. The quota exchange which Spain contests is expressly authorised under the provisions of Articles 8 and 9 of Regulation No 3760/92. Moreover, the common management of both TACs does achieve an overall balance of shares. 58. Finally, the Commission views the adoption of Regulation No 685/95 as a relaxation of the principle of relative stability. In that respect, the Council made use of the wide discretion which it enjoys in the context of decisions in the field of agricultural policy. (b) Assessment 59. This plea in law raises the question whether the principle of relative stability was infringed by the fact that Portugal was authorised, in the contested Regulations Nos 3074/95, 390/97, 45/98, 48/1999, 2742/1999 and 2848/2000, to fish part of its anchovy quota allocated for ICES area IX in ICES area VIII. 60. The principle of relative stability assures the Member States a fixed percentage share of the fishing opportunities for marketable species. This refers to a particular species of fish within a specified area. As explained in the account of the legal framework, the principle in question has its origin in Annex VII to the Hague Resolution of 3 November 1976. As a result of the Council declaration of 30 May 1980 on the common fisheries policy, the principle of relative stability became enshrined in Regulation No 170/83 and ultimately in Regulation No 3760/92. 61. It is clear from the definition in the 12th to 14th recitals in the preamble to Regulation No 3760/92 that the allocation of fishing opportunities under the common fisheries policy is based on three criteria: the extent of traditional fishing activity, the particular needs of regions where local populations are especially dependent on fisheries and related activities, and above all the prevailing biological situation of the stocks. 62. Stability is relative since it guarantees only entitlement to a percentage of the available TAC, but not entitlement to a fixed catch. On the contrary, the catch is variable. That follows from the requirement to take account of the biological situation of the stock concerned. Stability does not always allow the same catch. Moreover, it is dependent on the share of the total allowable catch which falls to the Community. Only that share, which in part is established within the framework of international organisations, is passed on as a quota to the Member States. 63. In the present proceedings, Spain is not interested in obtaining a specific quantity of anchovy which it would like to catch in ICES area VIII, as the Council believes. It is interested in securing its share of the quantity of anchovy made available for fishing in ICES area VIII. 64. The Act of Accession of 1985 granted Spain a 90% share and France a 10% share for anchovy in ICES area VIII. Pursuant to Regulations Nos 1275/94 and 685/95, those shares are taken into account in the annual allocation of quotas in accordance with the procedure laid down in Article 8 of Regulation No 3760/92. The quotas allocated to the Member States are then expressed in tonnes. 65. In the context of the present proceedings, the question which must now be considered is whether that percentage allocation is maintained in Regulations Nos 3074/95, 390/97, 45/98, 48/1999, 2742/2000 and 2848/2000, or whether it is infringed by the fact that Portugal is allowed, in note (3) or (2), to fish part of its quota allocated for ICES area IX in ICES area VIII. That would be the case if the provisions in question meant that Spain no longer received 90% of the total allowable catch in ICES area VIII and if that adjustment was not justified by a quota exchange allowed under Article 8(4) and Article 9 of Regulation No 3760/92. 66. The first ground for rejecting the view that the principle of relative stability was infringed is that that principle does not guarantee an absolute volume of catches, but only a share of the catches. That share may be affected by an exchange of quotas, as is expressly provided for in Article 9 of Regulation No 3760/92. It may also be affected by the authorisation of quota transfers from the area of allocation to adjacent areas, as was granted in the present case in respect of Portugal's anchovy fishing and as has also been provided for in respect of herring, hake, blue whiting, mackerel and monkfish since the adoption of Regulation No 3074/95. As the recitals in the preambles to the regulations indicate, those quota transfers took place in order to ensure a better exploitation of the quotas. The transfer of the quota allocated to Portugal for ICES area IX to ICES area VIII is therefore not an isolated case, as the Council rightly points out. It took place against the background of a quota exchange agreed between Portugal and France in December 1994 and documented in Annex IV to Regulation No 685/95. 67. A second ground for rejecting the view that the principle of relative stability was infringed is the fact that Spain's overall share in ICES areas VIII and IX taken together was not reduced, either proportionately or quantitatively, by authorisation of the quota transfer. The Council and the Commission expressly draw attention to this point. In the final analysis, 90% of the total allowable catch for ICES area VIII was in fact allocated to Spain. 68. On the other hand, the view that there was a breach of the principle of relative stability is supported by the fact that authorisation of the quota transfer increased the catch in ICES area VIII from 33 000 tonnes to 38 008 tonnes between 1996 and 1999, to 36 000 tonnes in 2000 and to 37 176 tonnes in 2001. If Spain's entitlement to 90% of the total allowable catch is applied to the total anchovy catch allowed in ICES area VIII by the authorisation to transfer quotas, then it must be held that Spain was not granted 90% of that catch. 69. The answer to the question raised here thus depends on the choice of the point of reference to which the 90% share to be granted to Spain relates. If that percentage is applied to the authorised catch, including the quota transfer, then Spain's rights were infringed. If, on the other hand, it is applied to the TAC allocated for ICES area VIII, then Spain's right to 90% of that TAC was not infringed. Nor was it infringed if there is assumed to be a common TAC for areas VIII and IX, or at least common management of the two TACs fixed for those areas, as is suggested by the Council and the Commission. 70. That leads to the question whether authorisation of the quota transfer in favour of Portugal, as granted in the disputed note (3) or (2), can be seen as fixing a common TAC for anchovy fishing in ICES areas VIII and IX or at least as establishing a common management of those TACs. Such an understanding is supported by the fact that the two areas are adjacent to one another. Such an understanding of the authorisation would also respect the rights of Spain which, as observed above, suffers no disadvantage if its quotas for ICES areas VIII and IX are considered together. Moreover, it should be pointed out that Article 11 in conjunction with point 1.1(i) in Annex IV to Regulation No 685/95 expressly makes the quota exchange at issue here subject to the condition that a common TAC for anchovy is fixed for ICES areas VIII and IX. 71. However, such an understanding of the quota transfer authorisation is precluded by the fact that in all cases the contested regulations allocate two separate TACs for ICES areas VIII and IX. The Spanish Government correctly draws attention to this point. If it was intended to assume a common TAC for those areas, the obvious course of action would have been to fix only one TAC. As the Council itself submits, however, it was legally prevented from so doing by Article 161 of the Act of Accession. 72. Nor can that drawback be remedied by assuming a common management of both TACs. That is because the decisive factor in determining the question raised here is the fact that it is contrary to the criteria on which the fixing of TACs is based to assume that authorising a quota transfer amounts to fixing a common TAC or establishing a common management of two TACs. According to the 13th recital in the preamble to Regulation No 3760/92, regard must be had to the biological situation of the stock concerned and to the needs of regions where local populations are especially dependent on fisheries and related activities. It is common ground that the anchovy stocks in ICES areas VIII and IX are two biologically distinct stocks. That fact alone precludes the assumption of a common TAC or a common management of two TACs, because there is no common scientific basis for such an assumption. 73. Nor, similarly, is the Council's argument that the TACs in question are merely precautionary TACs of any assistance. In 2000 and 2001, analytical TACs were fixed for ICES area VIII, whereas precautionary TACs continued to be fixed for ICES area IX. This underlines the biological distinctness of the two stocks and the impossibility of managing them jointly. Any other approach would be contrary to Article 4(1) of Regulation No 3760/92, pursuant to which the management of fishery resources is to take place inter alia in the light of the available biological analyses and reports. 74. Moreover, the interests of the Spanish population which is dependent on anchovy fishing in ICES area VIII are not sufficiently taken into account if the authorised total catch is increased without at the same time increasing the share to which Spain is entitled. That loss cannot simply be offset by the simultaneous gain to the Spanish population which is dependent on anchovy fishing in ICES area IX, which lies off the Galician and Portuguese coast and where, as a result of the quota transfer, there is less fishing. Authorisation of the quota transfer cannot therefore be viewed either as fixing a common TAC for ICES areas VIII and IX or as establishing a common management of those areas. 75. Although in principle it is therefore contrary to the principle of relative stability to authorise Portugal to fish part of its quota allocated for ICES area IX in ICES area VIII, it must also be examined whether such authorisation might not constitute a modification of that principle, as permitted by the second clause of Article 8(4)(ii). Under that provision, when quotas are distributed, ... following a request from the Member States directly concerned, account may be taken of the development of mini-quotas and regular quota swaps since 1983, with due regard to the overall balance of shares; .... 76. If ICES areas VIII and IX are considered together, as proposed by the Council and the Commission, it is clear that Spain's overall share of the anchovy catches is not adversely affected by Portugal's quota transfer. In that respect, the view could be taken that the rules have due regard to an overall balance of shares. 77. Nevertheless, application of the provision cited in point 75 is precluded simply by the fact that Spain did not consent to the quota transfer, let alone request it, as required by that provision. A request made by Portugal and France alone, such as could be inferred from the agreed quota exchange, is not sufficient. That is because, as observed above, the quota transfer concerns Spain inasmuch as it alters the overall quantity that can be fished in ICES area VIII without Spain being able to exert any influence in that regard. Yet Spain's rights under Article 161 of the Accession Treaty, as they are recognised in Regulations Nos 1275/94, 685/95 and the regulations adopted on the basis of Article 8 of Regulation No 3760/92 are affected. Spain should therefore be regarded as a Member State ... concerned for the purposes of the second clause of Article 8(4)(ii) of Regulation No 3760/92. The procedural conditions for the application of that provision are therefore not satisfied. 78. Nor, however, are the substantive conditions fulfilled either. The rules in question concern the distribution of quotas within the limits of the total allowable catch. However, the quotas have specifically not been amended under the contested regulations. The Council and the Commission expressly draw attention to this point. Portugal was not allocated a quota in ICES area VIII. It was merely authorised to fish part of its quota allocated for ICES area IX in ICES area VIII. That was merely transferring a quota, not introducing a quota for Portugal in ICES area VIII. In that respect, the rules contained in note (3) or (2) in the contested regulations cannot be interpreted as a modification of the principle of relative stability or of the quota distribution effected on the basis of that principle under Article 8(4)(ii) of Regulation No 3760/92. It must therefore be concluded that those rules infringe the principle of relative stability. 79. That conclusion is not precluded by the res judicata authority attaching to the judgment in Case C-179/95. That judgment relates to Regulations Nos 685/95 and 746/95. As observed when considering admissibility, Regulation No 685/95 does not lay down a comprehensive set of provisions on the quota transfer at issue here. The quota exchange between Portugal and France, which is documented in Annex IV to that regulation, does on the other hand presuppose that there is fishing availability for Portugal in ICES area VIII. However, that availability is only created by the disputed note (3) or (2) in Regulations Nos 3074/95, 390/97, 45/98, 48/1999, 2742/1999 and 2848/2000, that is, in connection with the annual fixing of the TAC. The provisions in question are thus wholly separate legal rules which must not only be separately contestable. They must also be fully amenable to review and such reviews must not be precluded by the res judicata authority attaching to judgments concerning parallel rules which cover a different period of time. 80. I therefore conclude that the authorisation for Portugal to transfer its quota, which it was granted for anchovy fishing in ICES area IX, to ICES area VIII infringes the principle of relative stability since it results in Spain not being allocated 90% of the allowable catch for anchovy in ICES area VIII. To that extent, the contested regulations must therefore be annulled. (2) Observance of the principle of rational and responsible exploitation of resources 81. The plea in law concerning observance of the principle of rational and responsible exploitation of resources was originally put forward in all the actions. By letter of 14 October 1999, Spain withdrew that plea in Cases C-61/96, C-132/97, C-45/98 and C-27/99, but put it forward once again in the actions in Cases C-81/00 and C-22/01. I shall therefore examine it below. (a) Arguments of the parties 82. Spain is of the view that the contested provisions infringe the principle of rational and responsible exploitation of resources inasmuch as they increase the TAC for ICES area VIII, which is fixed on the basis of scientific analyses, by the quantity which Portugal is authorised to catch in that zone. This leads to an excessive exploitation of fishery resources which has no scientific basis. As the drastic limitation of the TAC in 2000 by Regulation No 2742/1999 shows, the anchovy stock in ICES area VIII is jeopardised by such overfishing. In order for France to be lawfully allocated the 4 600 tonnes, the total allowable catch in that area would have had to be increased to 46 000 tonnes. However, that would have amounted to an excessive exploitation of resources. A total of 37 176 tonnes was made available for fishing in ICES area VIII in 2001. 83. The Council counters that argument by saying that it halved the TAC for 2000 when scientific reports indicated that the anchovy stock in ICES area VIII was jeopardised. Only when it became possible, on the basis of new analyses, to regard the stock as safe was the TAC increased to the level of previous years. For the rest, it refers to the judgment in Case C-179/95 in which the Court held that Spain had failed to adduce sufficient evidence to show that the principle of rational and responsible exploitation of resources had been infringed. 84. The Commission, too, is of the opinion that Spain has failed to adduce any concrete evidence to show that the anchovy stock in ICES area VIII was jeopardised by the contested regulations. In any case, when there were indications of a decline in the anchovy stock in ICES area VIII, the Council immediately fixed a lower TAC for 2000. Only when new estimates became available, indicating that the stock was no longer at risk, was the TAC increased to the previous level again. For the rest, the Commission refers to the wide discretion which the Council enjoys in the context of agricultural policy. (b) Assessment 85. The second recital in the preamble to Regulation No 3760/92 contains a declaration of the importance of rational and responsible exploitation of living aquatic resources. Article 2(2) provides that the purpose of the regulation is the establishment of a framework for the conservation and protection of resources. In particular, pursuant to Article 4(1) of the regulation, Community measures laying down the conditions of access to waters and resources and of the pursuit of exploitation activities are to be established in order to ensure the rational and responsible exploitation of resources on a sustainable basis. Those measures are therefore to be drawn up in the light of the available biological, socio-economic and technical analyses and of the reports drawn up by the Scientific, Technical and Economic Committee for Fisheries established in Article 16 of the regulation. 86. However, in the proceedings in Cases C-81/00 and C-22/01, in which Spain puts forward this plea in law, no evidence has been adduced which would support the conclusion that, by adopting the contested provisions, the Council infringed the principle of rational and responsible exploitation of fishery resources. 87. In the context of fisheries policy, the Council has wide discretion in the evaluation of complex economic situations. That includes the fixing of TACs and adopting of rules in connection with them. Judicial review is confined to examining whether there has been a manifest error or misuse of powers in the exercise of that discretion or whether the bounds of that discretion have clearly been exceeded. 88. There is no evidence of such a misuse of powers. As the Council and the Commission have submitted, the TAC for anchovy fishing in ICES area VIII was even halved in 2000 after reports became available which indicated that the stock was at risk. Only when further reports became available, which did not confirm that risk, was the TAC again increased to the level of previous years. That clearly shows that the Council was guided in its decision by the available scientific analyses. Spain has not put forward any evidence to show that those analyses were incorrect or that the Council otherwise acted on the basis of incorrect facts. 89. The authorisation given to Portugal to fish part of its quota allocated for ICES area IX in ICES area VIII likewise does not constitute a misuse of powers. Spain has not adduced any factors, and in particular has not produced any scientific analyses, which support the assertion that that authorisation led to overfishing in ICES area VIII. The fact that a TAC of 33 000 tonnes was fixed annually for that area and that it even constituted, at least in 2000 and 2001, an analytical TAC and not merely, as in previous years, a precautionary TAC, does not support Spain's argument. On the contrary, it suggests that, at the permitted rate of exploitation, that is, including the quota transfer which Portugal was authorised to make, the stock was not jeopardised. The second plea in law should therefore be rejected. V - Costs 90. In accordance with Article 69(2) of the Rules of Procedure, the unsuccessful party must be ordered to pay the costs if they have been applied for in the successful party's pleadings. Spain has applied for the Council to be ordered to pay the costs. Since the Council has been unsuccessful, it must be ordered to pay the costs. Pursuant to Article 69(4) of the Rules of Procedure, the Commission must bear its own costs. VI - Conclusion 91. I therefore propose that the Court rule as follows: (1) (a) in Case C-61/96, annul the point concerning anchovy in the Annex to Council Regulation (EC) No 3074/95 fixing, for certain fish stocks and groups of fish stocks, the total allowable catches for 1996 and certain conditions under which they may be fished; (b) in Case C-132/97, annul the point concerning anchovy in Annex I to Council Regulation (EC) No 390/97 of 20 December 1996 fixing, for certain fish stocks and groups of fish stocks, the total allowable catches for 1997 and certain conditions under which they may be fished; (c) in Case C-45/98, annul the point concerning anchovy in Annex I to Council Regulation (EC) No 45/98 of 19 December 1997 fixing, for certain fish stocks and groups of fish stocks, the total allowable catches for 1998 and certain conditions under which they may be fished; (d) in Case C-27/99, annul the point concerning anchovy in Annex I to Council Regulation (EC) No 48/1999 of 18 December 1998 fixing, for certain fish stocks and groups of fish stocks, the total allowable catches for 1999 and certain conditions under which they may be fished; (e) in Case C-81/00, annul note (2) relating to stocks of Anchovy, Zone: IX, X, CECAF 34.1.1, in Annex I D to Council Regulation (EC) No 2742/1999 of 17 December 1999 fixing for 2000 the fishing opportunities and associated conditions for certain fish stocks and groups of fish stocks, applicable in Community waters and, for Community vessels, in waters where limitations in catch are required and amending Regulation (EC) No 66/98; (f) in Case C-22/01, annul note (2) relating to stocks of Anchovy, Zone: IX, X, CECAF 34.1.1 (Community waters), in Annex I D to Council Regulation (EC) No 2848/2000 of 15 December 2000 fixing for 2001 the fishing opportunities and associated conditions for certain fish stocks and groups of fish stocks, applicable in Community waters and, for Community vessels, in waters where limitations in catch are required. (2) order the Council to pay the costs and the Commission to bear its own costs.

Allowing the appeals, this Court, HELD 1.1 Section 168 3 of the Income Tax Act, 1961 makes it clear that the executor will companytinue to be assessed until the estate is distributed among the beneficiaries equally according to their several interests. This provision does number enact anything different from the preexisting law on the subject. 596 B 1.2 In view of the facts and circumstances of the present ease, the High Court was wrong in companying to the companyclusion that the administration must be deemed to have companye to an end. Raghavalu Naidu Sons v.C.L T., 1950 18 I.T. R. 787 Mad. , referred to. 595 E 2.1. Having regard to the nature of the properties left by the deceased it is clear that the executor had certain steps to take before he companyld wash his hands off the administration of the estate. The movable properties and the immovable properties belonging to the deceased in his individual capacity had to be divided into two equal shares and handed over to the two beneficiaries. A perusal of the assessment order also indicates that the deceased had a half share in a firm. The executor, companytinued to derive a half share from the firm. There is numberinformation on record as to how this share in the firm held by the deceased was disposed of. It was part of the duties of the executor to make arrangements regarding the devolution of the share of the deceased in the firm by having the two legatees taken in as partners in respect of a one-fourth share each in the firm. in the absence of any such steps, the asset in question cannot be deemed to have vested in the beneficiaries. 595 E-H 2.2. There is numberhing on record to indicate that there was any deliberate attempt on the part of the executor to postpone the distribution of the estate. There is also numberhing to indicate that the assessment proceedings were in any way delayed by the executor or the other legal representatives. A substantial part of the estate duty had been paid without delay and there is numberhing to suggest that the payment of the balance of the estate duty was delayed deliberately by the executor. 593 C-E Navnitlal Sakarlal v.C.W.T., 1977 106 I.T.R. 512, approved. Navnitlal Sakarlal v. 677 1978 125 I.T.R. 67, overruled. Under the Estate Duty Act, the accountable person is jointly and severally liable for the whole of the duty along with other accountable persons. This does number necessarily mean that the incidence of the duty will ultimately fall on him always. But he has to companysider ways and means of paying the duty and, though he may or may number be able to pay off the entire estate duty before distributing the estate, he will be exposing himself to a great risk if he does number make adequate arrangements for the due payment of the duty, before distributing it. The High Court was wrong in taking the view that the fact of a part of the estate duty liability being outstanding should be ignored in deciding the issue as to whether administration is companyplete. 594 D-G Leelavatamma v.C.E.D, 1991 188 I.T.R. 803 SC , relied on. I.T. v. Bakshi Samparan Singh 1982 133 ITR 650 PH C.I.T. v. Ghosh, 1986 159 ITR 124 Cal. Raghavalu Naidu Sons v. C.I.T. 1950 18 ITR 787 Mad. referred to. XXX XXX XXX RANGANATHAN, J. Balabhai Damodardas, aged 98 years, executed will on October 6, 1956, so that, after his death, his property might be administered as per this desire. The material provisions of the will were follows I have the following properties of my ownership- My individual i.e. personal movable and immovable property which is being assessed in Income Tax as individual. Whatever right, title and interest I have in movable and immovable properties of our joint family. There was numberexecutor named in the will. The above movable and immovable properties I may enjoy, sell or exchange in future, but if by Gods will at the time when I am number alive whatever is left of my individual personal property of my ownership including additions or deletions therefrom after paying my debts, income-tax, super-tax, estate duty, municipal tax etc. and any other outstandings as also medical expenses and expenses for obsequial ceremonies and charity and also my right, title and interest in our joint family movable and immovable properties, in that way all my property when I am number alive shall be taken possession of by my two grandsons Navnitlal Sakarlal and Nandkishore alias Shamubhai Sakarlal and they shall use and enjoy the same as they desire. There was numberexecutor named in the will. Balabhai Damodardas died on 31-12-57. Thereafter, his son, SakarBalabhai, describing himself as the legal representative of the deceased, furnished returns of income as well as returns of wealth in respect of the estate of the deceased Balabhai Damodardas and he was assessed on the basis of those returns for the assessment years following the death and up to assessment year 1967-68. We are companycerned in these appeals with the income tax assessments of Navnitlal Sakarlal herein referred to as the assessee , one of the two grandsons of Balabhai Damodardas, to whom the latter had bequeathed his properties, for the assessment years 1963-64 to 1967-68. The Income Tax Officer took the view that the estate of Balabhai Damodardas had vested in the two grandsons immediately on his death as per the terms of the will. He, therefore, proceeded to assess the assessee and his brother separately in respect of one half of the income from the properties let behind by Balabhai Damodardas. The companytention of the assessee, that the estate of the deceased was still under Administration and companytinued to be so till August 5, 1970 and that the income thereof had rightly been as sessed, in the earlier years as well as in the year as well in the years presently under companysideration, in the hands of Sakarlal Balabhai as executor, was rejected. The Appellate Assistant Commissioner also companyfirmed the view taken by the Income-Tax Officer, though, for the assessment years 1966-67 and 1967-68 he made some modifications in the assessments with which we are number here companycerned. The Income Tax Appellate Tribunal had earlier taken the view, in the wealth-tax assessments of the assessee and his brother for the assessment years 1963-64 and 1964-65, that, on the death of Balabhai Damodardas, the assessee and his brother had become the owners of interests in the estate in accordance with the will and were companysequently assessable to wealth-tax in respect of their respective shares in the estate. This view had also been upheld by the Gujarat High Court in its judgment reported at Navnitlal Sakarlal C.W.T. 1977 105 I.T.R.512. However, when the income-tax appeals for the assessment years 1964-65 to 1967-68 came up before the Tribunal, it took the view that the assessee was number taxable in respect of any part of the income of the estate of Balabhai Damodardas for these assessment years. The additions made in the assessment orders in this respect were deleted. At the instance of the Revenue, the following question was referred to the High Court of Gujarat for its opinion under section 256 1 of the Income Tax Act.1961 Whether the Income Tax Appellate Tribunal was right in law in holding that half share of the income in respect of the estate of late Shri Balabhai Damodardas was number taxable in the hand of the assessee when the estate was being administered by Shri Sakarlal Balabhai, having regard to the provisions of Section 168 of the Income Tax Act, 1961? This question has been answered by the High Court - its decision had been reported as Navnitlal Sakarlal v CIT in 1978 125 I.T.R.67 - in the negative and in favour of the Revenue. The present appeals have bee preferred by the assessee from the High Courts judgment. At the outset, two aspects which had been raised before the High Court, may be cleared up. In the first place, the companytention of the assessee before the High Court was that the decision in the wealth-tax case would number govern the income tax assessments in view of the provisions companytained in Section 168 of the Income Tax Act, 1961, a provision companyresponding to which viz. s.19A has been introduced in the Wealth Tax Act only on 1.4.65. The High Court pointed out - and it is companymon ground before us that in view of the distinction between the provisions of the Wealth Tax Act and the Income Tax Act and in view of the fact that, for the relevant years under companysideration before the Division Bench which companysidered the wealth-tax case, namely, assessment years 1963-64 and 1964-65, section 19-A was number on the statute book, the decision in the wealth-tax case will number affect the decision in this case except in an indirect manner. The second issue, on which a certain amount of debate took place before the High Court, was as to whether Sakarlal Balabhai companyld be treated as an executor within the meaning of section 159 of the Income Tax Act,1961, companysidering that the will had number named any executor and that Sakarlal Balabhai had taken charge of the estate and began administering it voluntarily. On this point, the High Court has held, after discussing the relevant provisions, that Sakarlal Balabhai was a person who intermeddled with the estate of the deceased and was, therefore, included in the definition of legal representative for the purposes of the Income Tax Act. On this point also there is numberdispute before us. The only questions arising for our companysideration is about the proper mode of assessment of the income from the properties left by Balabhai Damodardas. The procedure to be followed., when an assessee dies, is set out in section 168 of the Act. This section reads as follows 168. 1 Subject as hereinafter provided, the income of the estate of deceased person shall be chargeable to tax in the hands of the executor, If there is only one executor, then, as if the executor were an individual or If there are more executors than one, then, as if the executors were an association of persons and for the purposes of this Act, the executor shall be deemed to be resident or number-resident according as the deceased person was a resident or number-resident during the previous year in which his death took place. The assessment of an executor under this section shall be made separately from any assessment that may be made on him in respect of his own income. Separate assessments shah be made under this section on the total income of each companypleted previous year or part thereof as is included in the period from the date of the death to the date of companyplete distribution to the beneficiaries of the estate according to their several interests. In companyputing the total income of any previous year under this section, any income of the estate of that previous year distributed to, or applied to the benefit of, any specific legatee of the estate during that previous year shah be excluded but the income so excluded shall be included in the total income of the previous year of such specific legatee. Explanation In this section, executor includes an administrator or other person administering the estate of a deceased person. On behalf of the appellant, Sri Salve submits that, when a person dies, the income of the estate of the deceased person is chargeable to tax in the hands of the executor, separate assessments being made on the total income of each companypleted previous year or part thereof companyprised in the period from the date of the death to the date of companyplete distribution to the beneficiaries of the estate according to their several interests. He points out that it is number companymon ground that Sakarlal Balabhai was an executor w,thin the meaning of section 168 in respect of the estate of the deceased. The Tribunal has also given a categorical finding of fact in the following terms Balabhai Damodardas died on December 31, 1957, leaving behind as his next-of-kin a son, named Sakarlal Balabhai, three daughters and a number of grand-children including the appellant assessee and his brother. On the death of Balabhai Damodardas, Shri Sakarlal Balabhai took charge of the properties left behind by the deceased and started administering them. By an order made on December 30, 1961, an amount of Rs.1,04,619 was determined as the estate duty payable on the properties passing on the death of Balabhai Damodardas. It is number in dispute that upto the close of the assessment year 64/65, part of the estate duly was remaining unpaid and further upto the last day of the accounting year for the assessment year 67/68 which is the last assessment year in appeal, the estate was number distributed or applied for the benefit of the assessee and his brother, the two legatees. As a matter of fact numberhing was distributed till 5th August, 1970. He submits that, on the above finding of fact and the dear terms of sec.168 3 4 , the income of the properties left by Balabhai Damodardas had to be assessed in the hands of Sakarlal Balabhai, companymencing from the date of death and at least till the 5th of August, 1970. We are of the opinion that the above companytention urged on behalf of the assessee is well founded. There is number numberdispute that Sakarlal Balabhai was the executor in respect of the estate left by Balabhai Damodardas. There is also numberdispute that the income from the properties left by Balabhai Damodardas was assessed in the hands of Sakarlal Balabhai for the assessment years 1958-59 to 1962-63. Nothing has happened since to change the above position. The Tribunal has found that Sakarlal Baiabhai was administering the estate as an executor and that the estate was number distributed till the 5th of August, 1970. It has also pointed out that the estate duty payable in respect of the properties passing on the death of Balabhai Damodardas had number been paid till the close of the previous year relevant to the assessment year 1964-65. Though the Tribunal has number set out in detail the manner in which the estate was ultimately distributed, it has given a categorical finding that, as a matter of fact numberhing was distributed till the 5th of August, 1970, implying that there was a distribution on that date. The Revenue has number challenged the companyrectness of this finding of fact either generally or by raising a specific question of law as to whether this finding was based on any material. In the face of these findings by the Tribunal, it is number possible to hold that the administration of the estate was companyplete in any of the previous years with which we are companycerned. On behalf of the Revenue, Sri Manchanda vehemently companytends that the will companytained a direct and simple bequest in favour of the assessee and his brother. He submits that there was numberhing in the estate to be administered and that the properties directly vested in the two legatees immediately in equal shares. According to his submission, the mere fact that Sakarlal Balabhai purported to take charge of the estate and administer it and was prolonging the so-called administration by delaying the payment of estate duty and the handing over the properties to the only two legatees, cannot postpone the vesting of the estate in the two beneficiaries. It is submitted that there was numbercomplicated process of administration called for in the present case. He submits that the intervention of Sakarlal Balabhai was part of a device to postpone a direct and immediate vesting of the income and the properties in the hands of the legatees in view of the high rates of tax applicable to their individual assessments and to companydon off the income and the estate into a separate assessment, purportedly on a socalled executor. He submits that the Court should number encourage attempts of this type to avoid the legitimate incidence of taxation and that, in the circumstances, the answer given by the High Court to the reference should be upheld. There are a number of difficulties in accepting the companytention put forward by Sri Manchanda. In the first place, the companytention, its present form, has number been put forward at any of the earlier stages. There is numberhing in the statement of facts or in the orders of the authorities to indicate that there was any deliberate attempt on the part of the executor to postpone the distribution of the estate. As we have mentioned earlier, Balabhai Damodardas died on 31.12.57 and the assessment to estate duty of the estate passing on his death was companypleted on December 30, 1961. There is numberhing to indicate that the assessment proceedings were in any way delayed by the executor or the other legal representatives. A substantial part of the estate duty had been paid by October or November 1963. There is numberhing to suggest that the payment of the balance of the estate duty was delayed deliberately by the executor. Again, the submission that there was numberhing in the estate to be administered and this process was being deliberately prolonged by the executors and the legatees is number based on the record. Though a reference has been made to the estate duty liabilities being outstanding, there is numberhing to show that the only thing that remained to be done was the payment of estate duty and that numberhing else remained to be done. There is numberinformation on record before us as to the various assets and liabilities of the estate shown by the executor. No attempt has been made to find out whether there were any other outstanding liabilities and when these were discharged. We have mentioned earlier that the Tribunal has found that something was done towards the distribution of the estate in 1970 and it is number the suggestion of the Department that this finding is based on numbermaterial. It is, therefore, number possible to allow the companynsel for the Revenue to raise this companytention at this stage. Proceeding on the premise that only the estate duty liability was outstanding, a companytention appears to have been put forward for the Revenue that the discharge of the estate duty liability is the personal liability of the residuary legatees and is numberpart of the duties of the executor. This argument has been accepted by the High Court. On behalf of the assessee, it is submitted that the discharge of the estate duty liability in respect of the estate of the deceased is one of the primary functions of an executor and that the administration of the estate can number be said to be companyplete until the estate duty liability is properly provided for, vide C.I.T.v. Ghosh 1986 159 I.T.R. 124 Cal . We are of opinionthat there is forece in the appellants companytention. It seems that, under the English Law, estate duty is regarded as part of the testamentary expenses in respect of certain kinds of property See Williams on Executors and Administrators, 14th Edn.Vol.1, pp.452-4. The Estate Duty Act makes the executor one of the accountable persons. Under S.55, he has to deliver an account of the estate passing on the death. He is accountable, under S.53, for the whole of the estate duty on the property passing on the death though he will number be liable for duty in excess of assets of the deceased which he actually received or which, but for his own neglect or default, he might have received. He is jointly and severally liable for the whole of the duty along with other accountable person. It is true that this does number necessarily mean that the ultimate incidence of the duty will ultimately fall on him always. But he has to companysider ways and means of paying the duty and, though he may or may number be able to pay off the entire estate duty before distributing the estate, he will be exposing himself to a great risk if he does number make adequate arrangements for the due payment of the duty, before distributing it. The proposition enunciated in the cases referred to by the High Court that the estate duty is a personal liability of the heirs and is number a debt or encumbrance deductible in companyputing the principal value of the estate - a proposition number settled by the decision of this Court in Leelavatamma v.C.E.D. 1991 188 I.T.R. 803 C or the fact that the estate duty is a charge on the immovable properties passing on death do number detract from the duties and responsibilities of the executor, as an accountable person, to make satisfactory arrangements for the payment of the estate duty. It is, therefore, difficult to accept the view of the High Court that the fact of a part of the estate duty liability being outstanding should be ignored in deciding the issue as to whether administration is companyplete. The High Court has also expresed the view that the administration of the estate should be deemed to be companyplete as the estate companyld and ought to have been handed over by the executor to the legatees. It has accepted this submission because, in its view, the executor had postponed the actual distribution between the two residuary legatees though all debts had been discharged and the residue companyld have been easily ascertained. Applying the test propounded by Viswanantha Sastri, in Raghavalu Naidu Sons v.C.I.T. 1950 18 I.T.R. 787 Mad. viz Can it be said that the residuary estate had taken companycrete shape and companyld and should have been handed over by the executors to the persons beneficially entitled but for the fact that the estate is Settled in trust and vested in the executors as trustees? The High Court held Under these circumstances, the only companyclusion that companyld be drawn is that by the companymencement of the period that is under companysideration, the residuary estate must be deemed to have been ascertained and the residuary estate must be said to have taken companycrete shape and should have been handed over by Sankarlal, the father of the assessee. Administra tion had reached such a point that one can infer that the administration had been companypleted and the residuary estate had been ascertained or was capable or easily capable of being ascertained. We find it difficult to accept this companyclusion. Even leaving the estate duty out of account, it is difficult to see how the High Court companyld have reached this companyclusion. Having regard to the nature of the properties left by Balabhai Damodardas, it is clear that the executor had certain steps to take before he companyld wash his hands off the administration of the estate. The movable properties and the immovable properties belonging to Damodardas in his individual capacity had to be divided into two equal shares and handed over to the two beneficiaries. A perusal of the assessment order also indicates that Balabhai Damodardas had a half share in a firm known as Mangaldas Balabhai Co. It appears that Sankarlal Balabhai, as executor, companytinued to derive a half share from the firm. There is numberinformation on record as to how this share in the firm held by Balabhai Damodardas was disposed of. It was part of the duties of the executor to make arrangements regarding the devolution of the share of Balabhai Damodardas in the firm say, for example, by having the two legatees taken in as partners in respect of a one-fourth share each in the firm. In the absence of any such steps, the asset in question cannot be deemed to have vested in the beneficiaries. In fact, even in what may be described as much clearer situations and where the executor was also the sole beneficiary, it has been held that the administration is number companyplete vide, C.I.T. v. Bakshi Sampuran Singh, 1982 133 I.T.R. 650 PH and C.I.T. v. Ghosh 1986 159 I.T.R. 124 Cal . Section 168 3 makes it clear that the executor will companytinue to be assessed until the estate is distributed among the beneficiaries equally according to their several interests. This provision does number enact anything different from the pre-existing law on the subject which has been clearly enunciated by Viswanatha Sastri, J. in Raghavalu Naidu, cited earlier, in these words Chapter VII of the Indian Succession Act, 1925, succinctly defines the duties of executors. Shortly stated, it is their duty to clear the estate - to pay the debts, funeral and testamentary expenses and the pecuniary legacies, and to hand over the assets specifically bequeathed to the specific legatees. When all this has been done, the balance left in the executors hands is the residue and must be paid over to the residuary legatees under Section 366 of the Succession Act or held in trust for them, if the directions in the will require the residue to be so held. Section 211 1 of the Succession Act companystitutes the executor of a deceased person his legal representative for all purposes and vests all the property of the deceased in the executor. Though numbertime limit is fixed by the section for the duration in the office of executor with its powers and rights, and in this sense an executor remains an executor for an indefinite time, the property, which he has in the estate that devolves upon him and over which his powers extend, does number remain his indefinitely. By his assent to the disposition in the will they become operative, the executor is pro tanto divested of the property which was his virtue officii, and the legatees have vested in them as owners, the property in. the subject-matter of the bequests. Under Sections 332 and 333 of the Succession Act, the assent of the executor to a legacy may be express or implied from his companyduct. By assent is meant number that the executor companycurs in the dispositions in the will but that he assents to the disposition taking effect upon the specific property if the bequest is specific, upon the sum of money if it is pecuniary or upon the residue brought out by the executor at the end of the administration, if it is a residuary bequest. There is the same necessity for the executors assent to a bequest of the residue as to a bequest of a specific or pecuniary legacy. So soon as he assents to the dispositions of the will -- and the assent may be express or implied from his companyduct -- they become fully operative and the title of the legatees becomes absolute. If there are trusts declared or created by the will in respect of the subject-matter of the bequest the trusts take effect on such assent, the estate vested in the executor as such is divested and vests in the trustees of the will. The fact that the executors are themselves the trustees does number make any difference. Nor does the fact that the bequest is of the residue affect the point, once the residue has been ascertained in due companyrse of administration. See Attenborough v. Solomon 1913 A.C. 76. XXXX XXXX XXXXX XXXXX The decision in Lord Sudeley v. Attorney- General, 1897 C. 11 is authority for the position that even if the trustees and executors happen to be the same persons, until the claims of the testators estate for his debts and testamentary expenses and the pecuniary and specific legacies have been satisfied, the residue does number companye into actual existence. It is a numberexistin thing, until that event has occurred. The probability that there will be a residue is number enough, but it must be actually ascertained. Dealing with a trust of the residuary estate Lord Halsbury, L.C. observed Even if the trustees and executors happen to be the same persons,until the estate is fully administered until the thing has been ascertained, until the trust fund has been companystituted, the thing of which the trustees are trustees has number been ascertained. Till then the right of the residuary legatee is to require the executors to administer the estate companypletely. XXX XXXX XXXXX XXXX Younger, L.J. afterwards Lord Blanesborough in Barnardos Homes v. Special Income Tax Commissioners 1921 2 A.C. 1 stated the law in these terms Until the residue is ascertained, and until its existence as net residue has been acknowledged by the executor, either by payment to the residuary legatee, or if the residue be settled, by the appropriation of a fund to meet the settled residue, the residuary legatee has numberiterest in any specific part of that which subsequently becomes residue as a specific fund but his right is, until that moment of time arrives, to have the estate administered in due companyrse. The House of Lords affirmed the decision of the Court of Appeal on the ground above stated. XXXX XXXX XXXX XXXXX The residuary legatee might be interested in the estate subject to the payment of debts and legacies, but he did number become the proprietor or owner of the residue except when a residue had been ascertained which, on companypletion of administration, is made over to him by the executiors. The question in each case is, has the administration reached a point at which you can infer that the administration has been companypleted, the residuary estate has been ascertained, the bequest of the residue has been assessed to and the residuary estate therefore became vested in trustees, be they the executors themselves or strangers ? In other words, can it be said that the residuary estate had taken companycrete shape and companyld and should have been handed over by the executors to the persons beneficially entitled but for the fact that the estate is settled in trust and vested in the executors as trustees ? Emphasis added We have, therefore, to look at the factual position and find out whether the executor has ascertained the residue and acknowledged its existence. Even taking it that the last sentence of the above quotation goes a little further and enables the Court to deem the administration to have companye to an end where the facts clearly show that everything necessary has been done in this regard, it is difficult to accept the companyclusion of the High Court in the present case that the administration must be deemed to have companye to an end in the face of the factual findings in the case which have been referred to earlier. For the reasons discussed above, we are of the opinion that the High Court, in the circumstances of the case, should number have interfered with the Tribunals finding and that the question referred should have been answered in the affirmative and in favour of the assessee. We, therefore, allow the appeals and answer the above question in the affirmative.

Mrs Justice Gloster: Introduction This is the court's judgment in relation to the application made by the defendant, Roman Abramovich ("Mr. Abramovich"), to strike out various parts of the Statement of Case lodged on behalf of the claimant, Boris Berezovsky ("Mr. Berezovsky") in the Commercial Court proceedings (2007 Folio 942) ("the Abramovich Action"), as set out in his Response dated 26 April 2011 ("the Response") to Mr. Abramovich's Request for Further Information dated 24 March 2011 ("the RFI"), pursuant to CPR3.4(2)(b). This judgment assumes a familiarity with the background to these actions, as set out in the judgment of Mann J dated 14 May 2010 in the three Chancery actions ("the Chancery Actions") ([2009] EWHC 1176) and our joint judgment dated 30 July 2010 ( [2010] EWHC 2044 ). Although the application is made only in the Abramovich Action, its success or failure has a potential impact on the joint case management that has been put in place in both the above actions. Accordingly we have once more sat together, in our respective jurisdictions, to enable the application to be considered, and given effect to, in both cases. 2.. The relevant parts of the Response are set out below. The passages which Mr. Abramovich seeks to strike out are underlined for emphasis: "Under Paragraph C62 of the Re-Amended Particulars of Claim Of: To pool the aluminium assets controlled or beneficially owned by ... Mr Berezovsky ....' .... Requests: 26.. In relation to any such assets that it is alleged were 'controlled' by Mr Berezovsky please explain the means by which such control was held and exercised. 27.. In relation to any such assets that it is alleged were 'beneficially owned' by Mr Berezovsky please identify under which law and by virtue of what rights such beneficial ownership interests are alleged to have arisen. Answers: .... 26. The 1995 Agreement (as set out in paragraphs C34A and C34B of the Particulars of Claim) applied to the aluminium assets, and/or they fell within the scope of the joint venture relationship between Mr Berezovsky and Mr Patarkatsishvili. As a result the aluminium assets were controlled by Messrs Berezovsky and Patarkatsishvili and Abramovich. 27. The system of law most closely connected to acquisition of the aluminium assets was English law (as the law expressly chosen in all the purchase contracts entered into by the Offshore Companies). Mr Berezovsky's rights or interests in the Offshore Companies arose (under Russian and/or English law): (a) Pursuant to the 1995 Agreement; (b) Pursuant to Mr Berezovsky's joint venture relationship with Mr Patarkatsishvili; and/or (c) By reason of the fact that payment for these assets came from Mr Berezovsky's, Mr Patarkatsishvili's and Mr Abramovich's share of profits derived from their interest in Sibneft. Those rights or interests in the Offshore Companies are evidenced in writing by (i) the fact that pursuant to the Share Purchase and Sale Agreement dated 15th March 2000, and the Amended and Restated Share Purchase and Sale Agreement dated 15th May 2000, in each case between Runicom Limited and GSA (Cyprus) Limited and in each case governed by English law, Runicom Limited represented that others apart from Runicom Limited (described variously as the 'Other Selling Shareholders' and the 'PI Shareholders') were legally and/or beneficially interested in the Offshore Companies; and/or (ii) the fact that the 10 February 2000 agreement by which the aluminium assets were acquired identifies Mr Patarkatsishvili (along with Mr Abramovich and Mr Shvidler) as one of the purchasers of the assets (it being well known to Mr Abramovich that Mr Patarkatsishvili was Mr Berezovsky's joint venture partner, and that joint venture relationship extended to all commercial investments). Under Paragraph C63 of the Re-Amended Particulars of Claim Of: 'Mr Berezovsky and Mr Patarkatsishvili would beneficially own half or 25% of the new company ("the Berezovsky/Patarkatsishvili RUSAL shares")' and 'The Berezovsky/Patarkatsishvili RUSAL shares would be controlled and legally owned by Mr Abramovich , or by companies Mr Abramovich owned or controlled, and held on trust by Mr Abramovich for Mr Berezovsky and Mr Patarkatsishvili'; Under Paragraph R64.1 of the Re-Amended Reply; Of: '... Mr Berezovsky (and Mr Patarkatsishvili) as the settlers of the trust.'; .... Requests: .... 32. Whether it is alleged that the trust arose by: (a) Declaration of the settlor(s); or (b) Transfer of the trust property from the settlor(s) to the trustee; or (c) In some other way and, if so, how. Answers: .... 32. Mr Berezovsky's primary case is that the trust was an express trust, which arose as a result of the settlors'/settlor's binding agreement and/or continuing intention that Mr Abramovich would hold the trust property on trust for the beneficiaries, which became fully constituted on the date specified in paragraph 31 above [25 December 2000], Mr Berezovsky's secondary case is that the trust was a resulting trust and/or constructive trust, which arose as a result of the transfer of Mr Berezovsky's rights or interests in the Offshore Companies and (through them) the underlying aluminium interests to Rusal on the date specified in paragraph 31 above and/or by virtue of Mr Berezovsky's reliance on the agreement specified in paragraph 29 above, as a result of which he allowed Mr Abramovich to acquire ownership and/or control over the Rusal shares and never demanded that 50% of the Rusal shares ultimately owned and/or controlled by Mr Abramovich should be transferred to him and/or Mr Patarkatsishvili and/or companies under their control, and/or by virtue of the fact that it would be unconscionable in all the circumstances for Mr Abramovich to deny Mr Berezovsky's interest." The thrust of Mr. Abramovich's application, as originally formulated, was to strike out the Response insofar as Mr. Berezovsky now seeks to plead, as a matter for determination in the Abramovich Action, that: i) there was a bilateral joint venture agreement between Mr. Berezovsky and Mr. Patarkatsishvili extending to all commercial ventures ("the Bilateral JVA"); and ii) Mr. Abramovich knew about such Bilateral JVA and its alleged scope. During the course of argument, Mr. Rabinowitz QC, leading counsel representing Mr. Berezovsky, indicated that the Response should be read as referring to a Bilateral JVA between Mr. Berezovsky and Mr. Patarkatsishvili limited to aluminium assets and RusAl. Mr. Abramovich's strike-out application accordingly encompassed that alternative case sought to be made by Mr. Berezovsky, notwithstanding that it had not been pleaded. Procedural Chronology Following the first conjoined CMC in July 2010 ("the conjoined CMC"), the court ordered, by its order dated 16 August 2010 ("the August 2010 Order") that the "Overlap Issues" as defined in paragraph 1 of the order should be decided by the judge assigned to hear the Abramovich Action at a joint trial as: (i) part of the Abramovich Action; and (ii) preliminary issues in the Chancery Actions. The defendants to the Chancery Actions ("the Chancery Defendants") were to be entitled to participate in the joint trial, and would be bound by the findings made upon the Overlap Issues, as well as upon certain other issues arising primarily in the Abramovich Action and identified at paragraph 5 of the August 2010 Order ("the Further Issues"). The Overlap Issues and the Further Issues were together referred to in our joint judgment at the conjoined CMC at paragraph 4 as the "RusAl Issues". Paragraph 1 of the August 2010 Order defined the Overlap Issues as follows: "(1) Did the Claimant acquire any interest in any Russian aluminium industry assets by way of the KrAZ Asset sale prior to the alleged meeting at the Dorchester Hotel in March 2000 (other than as a result of the joint venture agreement alleged by the Claimant in the Main Chancery Action) and if so, what was the nature and extent of such interest and how did it arise? (2) Was there a meeting at the Dorchester Hotel in 2000 at which the Claimant, Mr Patarkatsishvili, Mr Abramovich and Mr Deripaska agreed to pool their assets in the Russian aluminium industry as the Claimant alleges (the "Dorchester Hotel Agreement")? (3) If so: (a) Did Mr Abramovich agree to hold half his 50% interest on trust for the Claimant and Mr Patarkatsishvili? (b) Was any such agreement governed by English law or Russian law (or another system of law)? (c) Did any such agreement give rise to any trustlike interest in Rusal in favour of the Claimant (other than as a result of the joint venture agreement alleged by the Claimant in the Main Chancery Action)? (4) Was the US$585 million received by Cliren following the sale of the Second Tranche of Rusal shares (as defined at paragraph 29 of the Abramovich List of Issues): (a) US$450 million of sale proceeds and (ii) US$135 million of outstanding dividend payments from Rusal?; or (b) A payment made by Mr Abramovich to Mr Patarkatsishvili at the request of Mr Patarkatsishvili in return for him providing assistance and protection to Mr Abramovich in relation to Mr Abramovich's acquisition of assets in the Russian aluminium industry?" Paragraph 5 of the August 2010 Order defined the Further Issues as follows: "(1) Regarding the sale in about September 2003 by Mr Abramovich of half of his 50% interest in Rusal, which he controlled ("First Tranche"), to Mr Deripaska:- (a) Was the consideration received by Mr Abramovich for the sale of the First Tranche US$1.75 billion (as Mr Berezovsky contends in the Abramovich Action) or $1,578 billion (as Mr Abramovich contends in the Abramovich Action)? (b) Did the sale amount to a breach of trust and/or breach of contract by Mr Abramovich arising from the alleged Dorchester Hotel Agreement, as Mr Berezovsky contends in the Abramovich Action? (c) Is Mr Berezovsky entitled (as he contends in the Abramovich Action) to treat this as the sale of Mr Berezovsky's and Mr Patarkatsishvili's alleged interest in Rusal acquired pursuant to the alleged Dorchester Hotel Agreement? Alternatively, is this to be treated as the sale of Mr Abramovich's interest in Rusal? (2) If Mr Abramovich committed any of the alleged breaches of the Dorchester Hotel Agreement in relation to Rusal (as contended by Mr Berezovsky in the Abramovich Action), then:- (a) Does he, as a result, hold the proceeds of the sale of the First Tranche on trust for Mr Berezovsky and Mr Patarkatsishvili? (b) Is Mr Abramovich liable, as a result, to account in equity for the profit he made from the sale of the First Tranche and/or does he hold such profits as constructive trustee for Mr Berezovsky and Mr Patarkatsishvili? (c) Is Mr Abramovich liable as a result to compensate Mr Berezovsky for the loss suffered by Mr Berezovsky? If so:- (i) Is this loss to be calculated as the difference between the value of Mr Berezovsky's interest in Rusal shares before the sale by Mr Abramovich to Mr Deripaska and the value after such sale, or in some other manner? (ii) Is the calculation the difference between the sale price of the First Tranche and the sale price of the Second Tranche, or is it to be calculated in some other manner?" It is clear that neither the Overlap Issues nor the Further Issues included the issue as to whether there was a Bilateral JVA, and that the Overlap Issues were clearly defined to exclude any such issue; see the emphasised passages in the definition of the Overlap Issues as set out above. Moreover, it is clear from our judgment that we rejected Mr. Berezovsky's submissions at the conjoined CMC to the effect that, if the RusAl Issues were to be determined at the joint trial, the existence of the alleged Bilateral JVA would have to be decided at the same time. Our reasons for so doing were the following: i) Although the existence and scope of the Bilateral JVA between Mr. Berezovsky and Mr. Patarkatsishvili (then pleaded as one relating to all commercial investments) was part of the background facts advanced by Mr. Berezovsky as part of his evidential case in the Abramovich Action, it was not a pleaded issue and was technically not something which needed to be decided in the Abramovich Action: see the judgment at paragraph 19, where we said: "Next is the bilateral joint venture agreement between Mr. Berezovsky and Badri. This is not a pleaded issue in the Abramovich proceedings, but it was said, and we accept, that it will be part of the background facts advanced by Mr. Berezovsky as part of his evidential case. It will be said to explain the events which are central to Mr. Berezovsky's claims in that action. The judge in the Abramovich Action may need to make some findings about it on the way to other more central findings, but it is not technically something which needs to be decided..." ii) The RusAl Issues were discrete issues, whose separate trial was feasible and whose inclusion for determination in a joint trial would remove the major source of risk of inconsistent findings. There did not appear to be other obvious candidates to join the RusAl Issues in the fold of issues to be determined in the Abramovich Action so as to bind all parties. The other issues were not sufficiently common, nor sufficiently severable, nor practicably triable within the Abramovich Action. iii) In saying that the other matters common to both proceedings were not practicably triable within the Abramovich Action, we clearly had in mind our own observation at paragraph 26 about the Bilateral JVA issues in the Chancery Actions. We pointed out that, if the Bilateral JVA issues were introduced into the Abramovich Action, all parties to the Chancery Actions would, as a matter of principle, have to be allowed to deploy their case upon it in full: "It was not always clear whether it would have involved the parties bringing in the whole of their documentary case on (for example) the bilateral joint venture into the Abramovich Action. If it did, then it would expand the Abramovich Action to an extent which (at the moment at any rate) is apparently undesirable (if indeed the litigation would remain triable as a result). The Joint Venture in the Main Action is to be tested by considering a large number of complex financial transactions (or at least that is the present intention), and they would have to be brought into the Abramovich Action if that issue were to be fully determined there. It would hugely increase the scope of the Abramovich Action." iv) There remained some risk of inconsistent findings in this area, but it was not plain that the Bilateral JVA would be central, and the risk would have to be accepted: judgment at paragraph 28(vii). As a result of the order which we made, there has (not surprisingly) been no disclosure given to Mr. Abramovich in relation to the Bilateral JVA by either Mr. Berezovsky or the Chancery Defendants. Mr. Berezovsky's new pleaded case against Mr. Abramovich as set out in the Response It is evident from Mr. Berezovsky's Response that further, or in the alternative, to his already pleaded claim (based on the alleged 1995/1996 agreements, and/or the alleged use of the Sibneft profits to purchase the aluminium assets, and/or the alleged Dorchester Hotel Agreement in March 2000), he is now seeking to contend (for the first time) that he has a claim, or cause of action, against Mr. Abramovich on the grounds that: i) he had an ownership interest in the five aluminium plants which were subsequently pooled with Mr. Deripaska's assets on the basis of the alleged Bilateral JVA; see Answer 26 of the Response; ii) the alleged Bilateral JVA gave Mr. Berezovsky an interest in the offshore companies which bought the aluminium assets and which contributed to the formation of RusAl; see Answer 27 of the Response; and iii) Mr. Abramovich knew of the existence of the alleged Bilateral JVA between Mr. Berezovsky and Mr. Patarkatsishvili, and that it extended to all their commercial interests. On the back of these allegations relating to the Bilateral JVA and Mr. Abramovich's knowledge of it, Mr. Berezovsky pleads, for the first time, in Answer 28, that he has a cause of action against Mr. Abramovich because Mr. Abramovich was a trustee of Mr. Berezovsky's interest in the RusAl assets on the basis of an alleged express, resulting or constructive trust; see Answers 28 and 32 in the Response. The nature of this new case as against Mr. Abramovich, is, to say the least, opaque. However, there is no doubt that it is a completely new cause of action as against Mr. Abramovich which has not previously been raised by Mr. Berezovsky, despite the various shifts in the formulation of his case that have occurred over the lifetime of the Abramovich Action. Originally, the sole bases upon which Mr. Berezovsky claimed an interest in the RusAl assets were his alleged agreement with Mr. Abramovich in 1995/1996, the alleged Dorchester Hotel Agreement and/or the alleged use of the Sibneft profits to purchase the RusAl assets. These claims were all based on alleged direct dealings between Mr. Berezovsky and Mr. Abramovich. Mr. Rabinowitz realistically accepted this. However, he submitted that it had always been part of Mr. Berezovsky's case that he had an interest in the RusAl assets under the terms of the Bilateral JVA, and that paragraph 19 of our judgment clearly recognised that the scope of the Bilateral JVA was an evidential issue which might arise in the Abramovich Action. On 31 May 2011, Mr. Berezovsky served his witness statement for trial. In paragraph 260 of his witness statement he now appears to rely on an express agreement between Mr. Abramovich, Mr. Patarkatsishvili and Mr. Berezovsky at some point prior to February 2000 that they would purchase the aluminium assets from Sibneft profits. He also contends that his and Mr. Patarkatsishvili's share was the subject of the Bilateral JVA. Mr. Berezovsky also states in paragraph 87 of his witness statement that he "made clear" to Mr. Abramovich that he and Mr. Patarkatsishvili were "partners". It is against the above background that Mr. Abramovich's application to strike out was made. The Court's Approach Although the application with which we have formally to deal is Mr. Abramovich's strike-out application, the reality is that Mr. Berezovsky is trying to amend his case to base his claim as against Mr. Abramovich in relation to RusAl and the aluminium assets on new grounds. The issue is whether the court should permit him to do so. Whether that decision is taken in the context of a strike-out application by Mr. Abramovich under CPR 3.4(2), or of an application, as yet unmade, by Mr. Berezovsky for permission to amend under CPR Part 17, seems to us to be immaterial. In either case the court has to consider whether the newly formulated statement of case, as it appears in the Response, if permitted to be run, or maintained, as a case at the joint trial, is an abuse of the court's process, is likely to obstruct the just disposal of the trial, or is likely to prejudice any other party to the proceedings. Mr. Abramovich's submissions In summary, Mr. Jonathan Sumption QC, leading counsel on behalf of Mr. Abramovich, made the following submissions in support of the application to strike out: i) If the existence and scope of the Bilateral JVA (and Mr. Abramovich's alleged knowledge of the same) ("the New Issues") were to be accepted as issues for determination in the Abramovich Action at the joint trial in October 2011, the practical implications for a fair trial would be very serious indeed. Any inclusion of the New Issues would be seriously prejudicial to Mr. Abramovich. ii) As the Overlap Issues are currently defined, they do not include the New Issues. The Chancery Defendants would therefore not be bound by any findings by the Commercial Court at the joint trial, and, theoretically, the New Issues would have to be retried in the Chancery Actions (where they are amongst the central issues in those actions). That would give rise to the possibility of inconsistent findings, which is exactly what the court was seeking to avoid in its previous joint judgment. Mr. Berezovsky was not seeking to redefine the Overlap Issues. iii) But in reality, the determination of the New Issues in the Abramovich Action would put the Chancery Defendants in a very difficult position. They would clearly be adversely affected by a decision in the Abramovich Action that there was a Bilateral JVA, even if such finding was not, technically, binding on them. The reality is that any Chancery Judge would be very slow to come to a different finding on the New Issues from that of the judge hearing the Abramovich Action. The Chancery Defendants would be entitled to be heard on the Bilateral JVA issues at the joint trial, and yet, in order to be heard effectively, they would have to deploy all the material available in the Chancery Actions where the issue was central. iv) Mr. Abramovich would need to obtain all the disclosure relating to the Bilateral JVA from Mr. Berezovsky and the Chancery Defendants, none of which he had obtained to date. This, effectively, was most of the disclosure in the Chancery Actions, which amounted to a huge volume of material. v) The process of obtaining and digesting that material, putting it to existing witnesses and, if necessary identifying further witnesses to call in relation to the New Issues, would be a substantial task for Mr. Abramovich's legal team. There was simply no time available before trial to perform that task in any sensible fashion. vi) If Mr. Abramovich were forced to deal with the Bilateral JVA issues in the Abramovich Action, the only feasible alternatives would be: a) to adjourn the October 2011 trial date, which would be highly unsatisfactory; or b) to exclude the RusAl Issues from the trial in October. The alleged Bilateral JVA issues could then be tried in Part I of the Chancery Actions in October 2012; thereafter the RusAl claim would have to be tried in the Commercial Court. Again this would be highly unsatisfactory, as not only would it delay matters, but it would be necessary for Mr. Abramovich to participate in the Chancery Actions to the extent necessary to protect his interests; or c) to try the RusAl Issues arising in the Abramovich Action at the same time as the Chancery Actions: again, this would be wholly unsatisfactory, not only because of the delay, but also because the RusAl Issues, as between Mr. Berezovsky and Mr. Abramovich go far wider than merely the Bilateral JVA issues. vii) There was no injustice to Mr. Berezovsky in not being permitted to amend his claim against Mr. Abramovich to raise the New Issues. Mr. Berezovsky had amended his case on numerous previous occasions; he had had every opportunity at earlier stages to plead the point against Mr. Abramovich, had he wished to do so. It should be inferred that he had taken a deliberate tactical decision not to do so. In those circumstances, it was not acceptable for a point of this significance to be taken at such a late stage before trial, given the disruption and prejudice that any such amendment would cause. Submissions on behalf of the Chancery Defendants Mr. Ali Malek QC, on behalf of the Anisimov Defendants, Mr. Adkin on behalf of the Family Defendants, and Mr. Mumford on behalf of the Salford Defendants, adopted the same position and supported the submissions made on behalf of Mr. Abramovich. They emphasised not only the prejudice to them if they had effectively to deploy their full arguments in relation to the New Issues in the Abramovich Action in October 2011, but also underlined the scale of the court's task in resolving the Bilateral JVA issues, if they were to be introduced into the joint trial in October 2011. Not only would the scale of the documentation be vastly increased, but so would the extent of the evidence - both in chief and in cross-examination - and the length of the arguments. Mr. Berezovsky's submissions Mr. Rabinowitz's principal submissions can be summarised as follows: i) There was no suggestion that the allegations in relation to the New Issues were unarguable. ii) The allegation that Mr. Berezovsky was party to a Bilateral JVA with Mr. Patarkatsishvili in relation, at least, to the RusAl assets, or, more widely in relation to all his and Mr. Patarkatsishvili's commercial investments, was always an evidential issue in the Abramovich Action, and known by Mr. Abramovich to be such an issue. That was so, notwithstanding that (as Mr. Rabinowitz accepted) it had never been pleaded as an issue against Mr. Abramovich, or used to found a claim against him, based on his knowledge of the Bilateral JVA, that he was a trustee. In this context, Mr. Rabinowitz referred to certain comments made by Mr. Michael Brindle QC (leading counsel for Mr. Abramovich) during the course of the conjoined CMC, which, Mr. Rabinowitz submitted, showed that Mr. Brindle accepted that the scope and terms of the Bilateral JVA were always amongst the issues to be decided at the joint trial. iii) There was no prejudice to Mr. Abramovich or any of the Chancery Defendants. There was no need to amend the scope of the Overlap Issues to encompass any issues relating to the Bilateral JVA. Mr. Berezovsky accepted that, given its centrality to the Chancery Actions, the Chancery Defendants should not be bound by the Commercial Court's decision on the Bilateral JVA. iv) The only issues that the court would need to resolve, to deal with the newly pleaded case against Mr. Abramovich, so far as the existence of any Bilateral JVA was concerned, was whether the Bilateral JVA extended to the interests which Mr. Patarkatsishvili acquired in the underlying aluminium assets, and, following the merger with Mr. Deripaska's aluminium interests, RusAl. There would be no need to decide any wider issues as to whether the Bilateral JVA was "an all-encompassing joint venture" and/or whether it applied to all commercial assets regardless of the source of the funds. Nor was it necessary to decide whether there was an economic divorce as between Mr. Berezovsky and Mr. Patarkatsishvili in 2006 (these were wider issues that arose in the Chancery Actions). v) It was wrong for Mr. Abramovich to contend that he would be prejudiced because he had not had disclosure in relation to the Bilateral JVA issues. On the contrary, he had had disclosure of all the documents in the Chancery Actions that related to RusAl and, pursuant to the provisions of paragraph 7 of the August 2010 Order, could have applied for inspection of any documents that fell within "train of inquiry" disclosure relating to the Overlap Issues or the Further Issues. vi) Mr. Abramovich, at all material times, knew that Mr. Berezovsky was going to say that he had an interest under the Bilateral JVA. Pursuant to paragraph 7(2) of the August 2010 Order, he had been provided with a list of all disclosure given in the Chancery Actions. Accordingly, had he chosen to do so, he could easily have applied for inspection of any document relevant to the Bilateral JVA at a much earlier stage. vii) Moreover, Mr. Abramovich, in his witness statement had already dealt with what he said was his limited knowledge of the commercial relationship between Mr. Berezovsky and Mr. Patarkatsishvili. Likewise, Mr. Anisimov had, in his witness statement, addressed the question as to whether there was a Bilateral JVA between Mr. Berezovsky and Mr. Patarkatsishvili in relation to the aluminium assets and RusAl. Furthermore, the Badri proofs recently disclosed pursuant to the order made in the Abramovich Action also addressed the Bilateral JVA. Therefore, there could be no prejudice caused to Mr. Abramovich by the elevation of what was always recognised as an evidential issue into a pleaded issue, which founded a claim against Mr. Abramovich. viii) In those circumstances, it was unreal for Mr. Abramovich and the Chancery Defendants to contend that in the Chancery Actions, Mr. Berezovsky would be free to allege that Mr. Patarkatsishvili was referring, in the alleged proofs of his witness statement, to a Bilateral JVA with Mr. Berezovsky and/or a three- way joint venture agreement with Mr. Abramovich, but in the Abramovich Action Mr. Berezovsky would only be free to contend that Mr. Patarkatsishvili was speaking about a three-way joint venture. ix) Notwithstanding that, as Mr. Rabinowitz accepted, Mr. Berezovsky's pleadings, as they currently stood, asserted a Bilateral JVA with Mr. Patarkatsishvili extending to all commercial investments (see, in particular, paragraph 27 of the Response), that was too wide and would, for the purposes of the Abramovich Action, have to be amended. All that was sought to be alleged in the Abramovich Action was a Bilateral JVA between Mr. Berezovsky and Mr. Patarkatsishvili limited in scope to the aluminium assets and/or RusAl. x) In all the circumstances it would be unjust if Mr. Berezovsky were not permitted to pursue this new claim against Mr. Abramovich. Discussion and Determination In our judgment, to allow Mr. Berezovsky, at this late stage of the Abramovich Action, to amend his case to plead, for the first time, a substantive proprietary claim against Mr. Abramovich based upon an as yet unpleaded, or inadequately pleaded, allegation that: i) Mr. Berezovsky had a beneficial interest in RusAl or the aluminium assets underlying RusAl as a result of a specific Bilateral JVA with Mr. Patarkatsishvili limited merely to the aluminium assets and/or RusAl; and ii) because of his knowledge of such Bilateral JVA, Mr. Abramovich was an express, resulting or constructive trustee of such assets, and accordingly obliged to account to or compensate Mr. Berezovsky as a beneficiary of such alleged trust; would not only seriously disrupt the fair and efficient conduct of the trial in the Abramovich Action, but would also be unjust, in that it would be unduly prejudicial to Mr. Abramovich and the Chancery Defendants. Nor do we consider that justice to Mr. Berezovsky requires the court to permit this amendment. Our reasons may be summarised as follows: i) The proposed amendment to Mr. Berezovsky's case, which, in effect the Response seeks to introduce, as it were, by a side door, comes at a staggeringly late stage in proceedings that have already been going on for several years. As a reading of the judgments of Sir Anthony Colman and the Court of Appeal on the strike-out application demonstrates, Mr. Berezovsky has significantly altered the formulation of his claim against Mr. Abramovich, or shifted its focus, on several previous occasions. ii) In Worldwide Corporation v GPTLtd [1998] EWCA Civ 1894 (reviewed with other similar authorities by Gloster J in her recent judgment on Mr. Abramovich's application to amend in Berezovsky v Abramovich [2011] EWHC 1143 (Comm) at paragraph 34-36), the Court of Appeal (Bingham CJ, Peter Gibson and Waller LJJ) said (at page 10): "Where a party has had many months to consider how he wants to put his case and where it is not by virtue of some new factor appearing from some disclosure only recently made, why, one asks rhetorically, should he be entitled to cause the trial to be delayed so far as his opponent is concerned and why should he be entitled to cause inconvenience to other litigants? The only answer which can be given and which, Mr Brodie has suggested, applies in the instant case is that without the amendment a serious injustice may be done because the new case is the only way the case can be argued, and it raises the true issue between the parties which justice requires should be decided. We accept that at the end of the day a balance has to be struck. The court is concerned with doing justice, but justice to all litigants, and thus where a last minute amendment is sought with the consequences indicated, the onus will be a heavy one on the amending party to show the strength of the new case and why justice both to him, his opponent and other litigants, requires him to be able to pursue it." iii) We do not consider that a serious injustice would be caused to Mr. Berezovsky if he were not allowed to raise the New Issues in the trial of the Abramovich Action in October 2011 as against Mr. Abramovich. Mr. Berezovsky already has a number of ways in which he formulates his claim against Mr. Abramovich in relation to the aluminium assets and/or RusAl. These include the alleged 1995/1996 agreement (as set out in paragraphs C34A and C34B of the Amended Particulars of Claim); the fact that the payment for the aluminium assets allegedly came from Mr. Berezovsky's, Mr. Patarkatsishvili's and Mr. Abramovich's share of the profits derived from their interests in Sibneft (see Answer 27(c) of the Response); and the Dorchester Hotel Agreement concluded on or about 14 March 2000, whereby it is alleged that there was a trilateral agreement as a result of which Mr. Berezovsky and Mr. Patarkatsishvili shared a 25% interest of the aluminium assets (see paragraphs C62 and 63 of the Re-Amended Particulars of Claim). Notwithstanding our refusal to permit Mr. Berezovsky to rely (as against Mr. Abramovich) on any claims or remedies based on the Bilateral JVA, he will be entitled to allege that English law was the system of law that governed all the relevant aluminium acquisition and merger transactions; and he will also be entitled to allege (notwithstanding Mr. Abramovich's application to strike out the entirety of Response 32) that the legal result, or the appropriate remedy arising as a result, of his existing claims to an interest in the aluminium assets and/or RusAl (i.e. those not based on the Bilateral JVA but based on the trilateral agreement) was that Mr. Abramovich was a trustee or otherwise subject to a proprietary claim. Indeed, Mr. Sumption rightly accepted this (see page 43 (16-21) of the transcript of the hearing on 9 June 2011). iv) We have not been taken to any material to show or to support the strength of Mr. Berezovsky's new claims based on the Bilateral JVA specifically in regard to the aluminium assets and/or RusAl as against Mr. Abramovich. The Badri proofs do not, in our view, do so. It is fair to say, however, that none of the defendants submitted that the new case was not an arguable one. v) The proprietary claims based on the Bilateral JVA are all claims that Mr. Berezovsky will be running in the Chancery Actions as against the Chancery Defendants. He will remain entitled to do so. vi) On the other hand, if the permitted amendment to Mr. Berezovsky's claim against Mr. Abramovich based on the alleged Bilateral JVA in relation to the aluminium assets and/or RusAl, were allowed to proceed in the Abramovich Action, both Mr. Abramovich and the Chancery Defendants would suffer substantial prejudice. vii) First, so far as Mr. Abramovich is concerned, we accept Mr. Sumption's submission that, if the amendment to Mr. Berezovsky's case were allowed, the disclosure burden would be intolerable. We reject Mr. Rabinowitz's submission that Mr. Abramovich could (and should) have applied for inspection of the documents disclosed in the Chancery Actions relating to the alleged Bilateral JVA at an earlier stage. Until the Response was served in April 2011, there was absolutely no reason why Mr. Abramovich should have concerned himself with reviewing documents that related exclusively to the alleged Bilateral JVA. We also reject the submission made by Mr. Rabinowitz that it must always have been clear to Mr. Abramovich that the New Issues were issues that were going to fall to be decided in the Abramovich Action. Of course Mr. Abramovich would have appreciated that Mr. Berezovsky's relationship with Mr. Patarkatsishvili would form part of the background to Mr. Berezovsky's claims in the Abramovich Action. But Mr. Abramovich would have had no reason to understand that allegations of a Bilateral JVA with Mr. Patarkatsishvili were going to constitute the foundation of a proprietary claim in trust as against him (whether express, resulting or constructive). Nor do we consider that Mr. Brindle ever conceded the point. viii) Mr. Adkin informed us that, in the Chancery Actions, approximately 95,000 documents have been disclosed (as compared with 5,600 documents in the Abramovich Action). Over 70,000 of those were documents which Mr. Abramovich had not seen, because they had not been identified as relevant to the Overlap Issues. The likelihood is that the vast majority of these 70,000 documents are relevant to the issue as to whether there was an over-arching Bilateral JVA between Mr. Berezovsky and Mr. Patarkatsishvili in relation to all their commercial investments. ix) We reject, too, Mr. Rabinowitz's suggestion that Mr. Abramovich (or, indeed, the Chancery Defendants) could adequately defend the new case sought to be raised in the Abramovich Action, that there was a Bilateral JVA specifically in relation to the aluminium assets and/or RusAl, simply by reference to the documents that have already been disclosed in relation to the RusAl Issues. The reality is that, up until the recent hearing, Mr. Berezovsky's case has always been that there was an over-arching Bilateral JVA with Mr. Patarkatsishvili relating to all their commercial investments. Indeed, his recently served witness statement refers to such an over-arching agreement, not to any Bilateral JVA limited specifically to the aluminium assets and/or RusAl. Given that the agreement is said to have been oral, the principal way in which such an agreement could be challenged by Mr. Abramovich and the Chancery Defendants is by a review of all the relevant transactions in which Mr. Berezovsky and Mr. Patarkatsishvili were involved, and the associated documentation. Indeed, that is precisely what will be involved in the Chancery Actions. It is wholly unreal to expect that Mr. Abramovich, or, indeed, the Chancery Defendants, could be in a position to do that by October 2011. Moreover, the length of time that would have to be added to the joint trial timetable would be very substantial indeed. It would effectively involve hearing the Abramovich Action and the Chancery Actions together. x) If that were to occur, further consideration would have to be given to the definition of the Overlap Issues. Either they would have to be expanded (effectively to include many of the principal issues in the Chancery Actions), or the Chancery Defendants would run the risk of an adverse finding which, although not technically binding, might have serious repercussions for their respective positions in the Chancery Actions. Realistically, they would have to engage in the litigation of such issues at the joint trial, so as to seek to avoid inappropriate evidential findings, or to ensure that the appropriate evidence was on the transcripts. xi) The only realistic alternative, if Mr. Berezovsky were to be allowed to raise this late claim against Mr. Abramovich, would be to adjourn resolution of the RusAl Issues as against Mr. Abramovich and the Chancery Defendants until after the trial of the Chancery Actions, or possibly to the trial of the Chancery Actions. Even Mr. Berezovsky does not suggest that this course would be an attractive one. We see no reason why it should be adopted. All the parties are geared up for the determination of both the Sibneft claim and the RusAl Issues in October 2011 at the joint trial. Substantial investment on all sides will no doubt have been made in the expectation that the matters would be resolved at that trial. There is no reason why Mr. Abramovich or the Chancery Defendants should have to suffer the uncertainty and anxiety caused by yet further delay in the determination of the RusAl Issues, simply because Mr. Berezovsky seeks to add to or alter his case once again. xii) Finally, Mr. Berezovsky's proposed amendment seeking, in effect, to import into the Abramovich Action many of the principal issues which are centre stage in the Chancery Actions, completely undermines the careful case management structures put in place pursuant to the August 2010 Order. We are in effect being invited to tear up that order and start again. In our judgment, to do so would make a mockery of the court process, and, in particular, of the effective management of these types of high-value, heavy cases which the Commercial Court and the Chancery Division try to achieve. Wider considerations relating to the administration of justice and the consequences so far as other court users are concerned are also engaged. xiii) In the absence of any real or substantial prejudice to Mr. Berezovsky, and taking into account all the above factors, we do not consider that it would be fair or in the interests of justice to allow him to pursue these new claims against Mr. Abramovich at this late stage. Even if there were any prejudice to Mr. Berezovsky in not being able to pursue this additional claim against Mr. Abramovich, that is something that, in our judgment, he should have to bear, rather than any prejudice should be caused to the other parties. The timing of the attempted introduction of the new case is his responsibility. Accordingly, in general terms Gloster J, with the full agreement of Mann J, accedes to Mr. Abramovich's strike-out application, but the precise terms of the order will require further discussion with counsel. This is because, necessarily, her order will not preclude evidence relating to Mr. Berezovsky's commercial relationship with Mr. Patarkatsishvili being adduced at trial, as was always envisaged. What we are excluding, as is clear from this judgment, is any reliance on an alleged Bilateral JVA with Mr. Patarkatsishvili (whether over-arching or limited to the aluminium assets and/or RusAl) as grounding a cause of action against Mr. Abramovich. The extent to which, or the detail in which, such evidence will be permitted to be adduced at the joint trial will be a matter for determination at that stage by Gloster J, as trial judge. Likewise, as we mentioned above, Mr. Berezovsky will be able to assert trust or proprietary claims or remedies as against Mr. Abramovich, flowing from the existing pleaded claims in relation to the aluminium assets and/or RusAl. It may well be that these should be more clearly pleaded, but that is a matter for further argument consequential on this judgment.

Leave granted. The question that arises for companysideration in this case is whether the High Court was justified in deciding the appeal on merits when there was numberappearance on behalf of the appellant, in view of the explanation to Order 41 Rule 17 1 of the Code of Civil Procedure. CPC . The appellant herein had engaged a lawyer for companyducting his appeal before the Delhi High Court. The appeal was admitted and was pending for adjudication. Later, the lawyer of the appellant was elevated as a Judge of the Delhi High Court and hence he returned the files to the appellant. The appellant later engaged another lawyer to companyduct the case. However, due to the mistake by the clerk, the Vakalatnama of that advocate companyld number be filed and hence the name of the newly engaged lawyer did number figure in the cause list. The appeal came up for final hearing on 13.1.2012. representation was made by a lawyer on behalf of the previous lawyer stating that the case files had already been returned to the party. Consequently, there was numbereffective appearance on behalf of the appellant before the High Court. In fact, there was numberappearance on behalf of the respondent as well. Learned Judge, however, proceeded to companysider the appeal on merits, without the assistance of learned companynsel on either side. By a detailed judgment, the appeal was dismissed on 13.1.2012 stating as follows In view of the above, there is numbermerit in the appeal inasmuch as number only because the appellant defendant was guilty of breach of companytract but also because the appellant defendant did number plead and prove the orfeiture of earnest money or any loss having been caused to him. The appellant defendant was, therefore, liable to refund the amount which he received under the Agreement to Sell. In view of the above, there is numbermerit in the appeal which is accordingly dismissed leaving the parties to bear their own companyts. Aggrieved by the judgment of the High Court, this appeal has been preferred. Shri Rakesh Dahiya, learned companynsel appearing on behalf of the appellant, submitted that the High Court was number justified in deciding the appeal on merits since there was numberrepresentation on behalf of the appellant. Learned companynsel pointed out that the only companyrse open to the Court was either to dismiss the appeal on default or adjourn the same, but number to decide the matter on merits, in view of the explanation to Order 41 Rule 17 1 CPC. Learned companynsel appearing on behalf of the respondent supported the judgment of the High Court companytending that the appeal was of the year 2003 and came up for final hearing after a period of nine years, and the High Court was justified in deciding the matter on merits even if there was numberappearance on behalf of the appellant. We are, in this case, called upon to companysider whether the High Court was justified in deciding the appeal on merits in the absence of any representation on behalf of the appellant, in view of Explanation to Order 41 Rule 17 1 CPA. The said provision is given below for easy reference Rule 17. Dismissal of appeal for appellants default.- 1 Where on the day fixed, or on any other day to which the hearing may be adjourned, the appellant does number appear when the appeal is called on for hearing, the Court may take an order that the appeal be dismissed. Explanation.- Nothing in this sub-rule shall be companystrued as empowering the Court to dismiss the appeal on the merits. Rule 17 1 of Order 41 deals with the dismissal of appeal for appellants default. The above mentioned provision, even without explanation, if literally read, would clearly indicate that if the appellant does number appear when the appeal is called for hearing, the companyrt has to dismiss the appeal. The provision does number postulate a situation where, the appeal has to be decided on merits, because possibility of allowing of the appeal is also there, if the appellant has a good case on merits even if numberbody had appeared for the appellant. Prior to 1976, companyflicting views were expressed by different High Courts in the companyntry as to the purport and meaning of sub-rule 1 of Rule 17 of Order 41 CPC. Some High Courts had taken the view that it was open to the appellate companyrt to companysider the appeal on merits, even though there was numberappearance on behalf of the appellant at the time of hearing. Some High Courts had taken the view that the High Court cannot decide the matter on merits, but companyld only dismiss the appeal for appellants default. Conflicting views raised by the various High Courts gave rise to more litigation. The Legislature, therefore, in its wisdom, felt that it should clarify the position beyond doubt. Consequently, Explanation to sub-rule 1 of Rule 17 of Order 41 CPC was added by Act 104 of 1976, making it explicit that numberhing in subrule 1 of Rule 17 of Order 41 CPC should be companystrued as empowering the appellate companyrt to dismiss the appeal on merits where the appellant remained absent or left un-represented on the day fixed for hearing the appeal.

THIRD SECTION CASE OF SAYGILI AND FALAKAOĞLU v. TURKEY (no. 2) (Application no. 38991/02) JUDGMENT STRASBOURG 17 February 2009 FINAL 17/05/2009 This judgment may be subject to editorial revision. In the case of Saygılı and Falakaoğlu v. Turkey (no. 2), The European Court of Human Rights (Third Section), sitting as a Chamber composed of: Josep Casadevall, President,Elisabet Fura-Sandström,Alvina Gyulumyan,Egbert Myjer,Ineta Ziemele,Işıl Karakaş,Ann Power, judges,and Santiago Quesada, Section Registrar, Having deliberated in private on 27 January 2009, Delivers the following judgment, which was adopted on that date: PROCEDURE 1. The case originated in an application (no. 38991/02) against the Republic of Turkey lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by two Turkish nationals, Mr Fevzi Saygılı and Mr Bülent Falakaoğlu (“the applicants”), on 26 July 2002. 2. The applicants were represented by Mr K.T. Sürek, a lawyer practising in Istanbul. The Turkish Government (“the Government”) were represented by their Agent. 3. The applicants alleged that their conviction by the Istanbul State Security Court and the closure of their newspaper for three days for having published declarations of detainees who were being kept in prisons in Turkey had amounted to a violation of their rights protected by Articles 6 and 10 of the Convention. 4. On 18 January 2008 the President of the Third Section decided to give notice of the application to the Government. It was also decided to examine the merits of the application at the same time as its admissibility (Article 29 § 3). THE FACTS I. THE CIRCUMSTANCES OF THE CASE 5. The applicants were born in 1966 and 1974 respectively and live in Istanbul. They are, respectively, the owner and the editor-in-chief of a daily newspaper called Yeni Evrensel. 6. On 23 October 2000, on payment of a certain amount of money, Yeni Evrensel newspaper published three declarations by detainees who were being kept in several prisons in Turkey and who were either convicted or being tried on charges of having been involved in the activities of left‑wing illegal armed organisations. By these declarations the detainees protested mainly against the F-type prison system put in place by the Government. They stated, in particular, that they would go on hunger strike until the Government abolished the F-type prison system. They also made a number of other requests to the Government, such as the abrogation of Law no. 3717 (Anti-Terrorism Law), the state security courts and anti-democratic laws as well as prosecution of those who tortured detainees. 7. The first declaration on page 9 of the newspaper was entitled “We warn the Government which tries to put in place a cell system, we will not enter the cells”, and in its relevant parts stated as follows: “As we fought off the 12 September Junta’s policies of controlling the prisons, As the circulars of 1 August were torn off, As the Eskişehir coffin house (prison) was forced to close down in 1991, As we forced the authorities to close down the Eskişehir coffin house once again in 1996 by our hunger strikes and we set up a barricade against the attacks on the people, today we the revolutionary prisoners who have come across the same duties will fight off this attack as well. We will pay off whatever it costs. But we will not enter the cells. From now on the strong voice of the resistance will resonate in the prisons of our country. As detainees of the DHKP-C and TKP (ML) cases kept in various prisons, we start an indefinite hunger strike from 20 October 2000 until the F-type cell assault ends and our demands are met... We will die but we will not enter the cells, Long live our general resistance, We will win...” 8. The second declaration on page 10 of the newspaper was entitled “We are on indefinite hunger strike, we will die but we will not enter the cells”, and stated in its relevant parts: “...With these beliefs and determination, and together with the prisoners of DHKP-C and TKP (ML) cases, we started our hunger strike resistance for an indefinite period. We call on all revolutionary prisoners, including the prisoners of PKK cases, to unite under the resistance flag and to set up a stronger and indestructible barricade of revolutionist mind. The fundamental requests of our resistance are as follows: * Abolish F-type prisons immediately, * Reinstate all rights seized in prisons, * Abolish the Anti-Terrorism Law, * Abolish the tripartite protocol, * Abolish the state security courts and invalidate the outcome of all judgments delivered by these courts, and * Try the torturers and perpetrators of massacres. ... We call on the working class, labourers, all oppressed people and revolutionary people and ask them to support us in this resistance, for which we are ready to sacrifice our lives for human honour. We call on you to fight off the cell system which is the most critical chain of assault aiming at turning our lives into cells. We will die but we will not enter the cells! Long live resistance, long live victory! In the name of TKIP detainees in all prisons.” 9. Finally, the third declaration, which appeared on page 10 of the newspaper, was entitled “To the public” and made calls similar to the first two declarations above. In particular, it called on all forces struggling to gain political freedom and class independence to take a stand against the fascist establishment and to spread the existing movement and actions and not to content themselves with mere declarations. It also called on these “forces” to use the request “F-type prisons should be closed” as leverage for their own political requests. 10. On 2 November 2000 the Chief Public Prosecutor at the State Security Court filed an indictment charging the applicants with publishing the declarations of terrorist organisations. The charges were brought under section 6/2 of Law no. 3713, section 2/1 of Law no. 5680 (Press Law) and Article 36 of the former Criminal Code. 11. On 17 April 2001 the applicants made their defence submissions to the Istanbul State Security Court. They argued that they had merely published declarations on payment of a certain amount of money and that they had had no intention of publishing the view of any terrorist organisation. They maintained that their trial by a state security court for exercising their right to impart ideas would amount to a breach of Articles 6 and 10 of the European Convention on Human Rights. 12. Following the hearing of 17 April 2001, the Istanbul State Security Court convicted the applicants as charged and sentenced them to heavy fines, of 10,995,840,000 Turkish liras (TRL) (6,380 euros (EUR)) and TRL 183,240,000 (EUR 105) respectively, which sums corresponded to 90% of the newspaper’s average sales in the previous month. The court further decided to ban the publication of Yeni Evrensel for three days. 13. On 20 April 2001 the applicants appealed, arguing that they were innocent of the crime and that the sanction imposed on them was disproportionate. 14. On 17 September 2001 the Court of Cassation quashed the Istanbul State Security Court’s judgment, holding that the fine imposed on the applicants was miscalculated. 15. On 11 December 2001 the Istanbul State Security Court delivered its reasoned judgment. Relying on Article 10 § 2 of the Convention and the Zana v. Turkey judgment (25 November 1997, Reports of Judgments and Decisions 1997‑VII), the court held that publication of terrorist organisations’ declarations was not protected by the right to freedom of expression. It also noted that freedom of expression was not absolute and that Article 10 § 2 of the Convention did not permit the publication of views expressed by armed terrorist organisations. 16. On 12 December 2001 the applicants appealed again and asked the Court of Cassation to hold a hearing and to quash the State Security Court’s judgment of 11 December 2001. They claimed that the incriminated declarations did not incite violence or harm national security. They only exercised their duty to impart political opinions. The applicants also challenged the constitution of the state security courts. 17. On 15 April 2002 the Court of Cassation dismissed the applicants’ request for a hearing and upheld the judgment of the Istanbul State Security Court. II. RELEVANT DOMESTIC LAW AND PRACTICE 18. A description of the relevant domestic law at the material time can be found in Özgür Gündem v. Turkey (no. 23144/93, § 32, ECHR 2000‑III) and Demirel and Ateş v. Turkey (no. 2) (no. 31080/02, § 12, 29 November 2007). THE LAW I. ALLEGED VIOLATION OF ARTICLE 10 OF THE CONVENTION 19. The applicants complained that their conviction and sentence under section 6 of Law no. 3713 and the temporary closure of the newspaper had infringed their right to freedom of expression. They relied in that connection on Article 10 of the Convention, which, in so far as relevant, provides: “1. Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority... 2. The exercise of these freedoms, since it carries with it duties and responsibilities, may be subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society, ... for the prevention of disorder or crime, [or] for the protection of the reputation or rights of others...” A. Admissibility 20. The Court notes that this complaint is not manifestly ill-founded within the meaning of Article 35 § 3 of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible. B. Merits 1. The applicants’ conviction and sentence under Article 6 § 1 of Law no. 3713 (a) The parties’ submissions 21. The Government maintained that the interference with the applicants’ right to freedom of expression was justified under the provisions of the second paragraph of Article 10. They argued that the content of the declarations was likely to provoke violence and disturbances. 22. The applicants maintained that they had published these declarations for commercial and journalistic purposes and that therefore their content should not be seen as their own views. (b) The Court’s assessment 23. The Court notes that it is not in dispute between the parties that the applicants’ conviction and sentence constituted an interference with their right to freedom of expression, protected by Article 10 § 1. Nor is it contested that this interference was prescribed by law and pursued a legitimate aim, namely the prevention of crime for the purposes of Article 10 § 2. In the present case what is in issue is whether the interference was “necessary in a democratic society”. 24. The Court reiterates the basic principles laid down in its judgments concerning Article 10 (see, in particular, the following judgments: Şener v. Turkey, no. 26680/95, §§ 39-43, 18 July 2000; İbrahim Aksoy v. Turkey, nos. 28635/95, 30171/96 and 34535/97, §§ 51-53, 10 October 2000; Lingens v. Austria, 8 July 1986, §§ 41-42, Series A no. 103; Fressoz and Roire v. France [GC], no. 29183/95, § 45, ECHR 1999‑I; Sürek v. Turkey (no. 1) [GC], no. 26682/95, § 61, ECHR 1999‑IV; and Kuliś v. Poland, no. 15601/02, §§ 36-41, 18 March 2008). It will examine the present case in the light of these principles. 25. The Court must look at the impugned interference in the light of the case as a whole, including the content of the declarations and the context in which they were published. In particular, it must determine whether the interference in question was “proportionate to the legitimate aims pursued” and whether the reasons adduced by the national authorities to justify it are “relevant and sufficient”. Furthermore, the Court takes into account the background to the cases submitted to it, particularly problems linked to the prevention of public disorder and terrorism (see Falakaoğlu and Saygılı v. Turkey, nos. 22147/02 and 24972/03, § 31, 23 January 2007). 26. Since the applicants were convicted of disseminating propaganda of terrorist groups through the medium of the newspaper of which they were the owner and editor-in-chief, the impugned interference must also be seen in the context of the essential role of the press in ensuring the proper functioning of political democracy (see Lingens, cited above, § 41, and Fressoz and Roire, cited above, § 45). While the press must not overstep the bounds set, inter alia, for the protection of vital interests of the State such as national security or territorial integrity against the threat of violence or the prevention of disorder or crime, it is nevertheless incumbent on the press to impart information and ideas on political issues, including divisive ones. Not only has the press the task of imparting such information and ideas; the public has a right to receive them. Freedom of the press affords the public one of the best means of discovering and forming an opinion of the ideas and attitudes of political leaders (see Sürek (no. 1), cited above, § 62) 27. Turning to the facts of the case, the Court notes that the applicants were convicted of publishing the declarations of terrorist organisations. These declarations were prepared by the detainees who were being kept in several prisons for their affiliation to various terrorist groups and carried messages concerning their dissatisfaction with the new F-type prison system which led to their “resistance by hunger strikes for an indefinite period”. The detainees called on the public, including other prison inmates and “revolutionary groups”, to support them by action in their struggle against the “fascist establishment” until their demands were met by the authorities (see paragraphs 7-9 above). 28. In the Court’s opinion, what is in question in these declarations is not the suggested goals that must be achieved; i.e. abolishment of the state security court, punishment of perpetrators of torture etc. There is no doubt that it is perfectly legitimate to make suggestions to achieve these goals. However, the problem results from the wording of the overall message given to the readers, where their authors state that they will rather die than enter the cells and call on others to take action in order to support their general resistance and not to content themselves with mere declarations. It is clear that the message given is not a peaceful one and cannot be seen as a mere criticism of the new prison system. While it is true that the applicants did not personally associate themselves with the views contained in these declarations, they nevertheless provided their writers, who expressed their affiliation to illegal armed groups, with an outlet to stir up violence and hatred. Accordingly, the content of these declarations must be seen as capable of inciting violence in the prisons by instilling an irrational reaction against those who introduced or were in charge of the new incarceration system. In other words, the message which is communicated to the readers is that recourse to violence is a necessary and justified measure of self-defence in the face of the aggressor who wants to turn their lives into prison cells (see paragraph 8 above). It is to be noted that in a similar case the Court had already expressed its concern about the making of such declarations at a time when serious disturbances had taken place in several prisons between the security forces and detainees, resulting in the deaths and injuries of parties to the conflict (see Falakaoğlu and Saygılı, cited above, § 33). In such a context, the Court considers that there were indeed reasons to fear for violent reactions and thus to be reticent in view of the events that had taken place in the prisons in less than two months after the publication of the impugned declarations (ibid.) 29. This being so, the Court cannot accept the applicants’ argument that they should be exonerated from any criminal liability for the content of the declarations on account of the fact that they only published them for commercial reasons. As the owner and editor-in-chief of the newspaper, the applicants were vicariously subject to the “duties and responsibilities” which the newspaper’s editorial and journalistic staff undertakes in the collection and dissemination of information to the public and which assume an even greater importance in situations of conflict and tension (see Sürek (no. 1), cited above, § 63). 30. Finally, the Court observes that the nature and severity of the penalty imposed are factors to be taken into account when assessing the proportionality of the interference. In this connection, it concludes that the heavy penalty imposed on the applicants as the owner and editor-in-chief of the newspaper could reasonably be regarded as answering a “pressing social need” and that the reasons adduced by the authorities for the applicants’ conviction are “relevant and sufficient”. 31. For these reasons and having regard to the margin of appreciation which national authorities have in such a case, the Court considers that the interference in issue was proportionate to the legitimate aims pursued. There has consequently been no breach of Article 10 of the Convention in the circumstances of this case. 2. The temporary closure of the newspaper in accordance with Additional section 2 § 1 of Law no. 5680 32. Having regard to the facts of the case, the submissions of the parties and its finding of a no violation under Article 10 above, the Court considers that it has examined the main legal question raised in the present application. It concludes therefore that there is no need to give a separate ruling on the applicants’ remaining complaint under Article 10 (see, for example, Eser Ceylan v. Turkey, no. 14166/02, § 33, 13 December 2007; K.Ö. v. Turkey, no. 71795/01, § 50, 11 December 2007; Mehmet and Suna Yiğit v. Turkey, no. 52658/99, § 43, 17 July 2007; and Uzun v. Turkey, no. 37410/97, § 64, 10 May 2007). II. ALLEGED VIOLATION OF ARTICLE 6 OF THE CONVENTION 33. The applicants complained that they were denied a fair hearing by an independent and impartial tribunal. In this connection, they complained about the structure of the State Security Court and the attachment of the judges sitting on the bench of this court to the Supreme Council of Judges and Public Prosecutors. In addition, the applicants complained about the lack of reasoning before the Court of Cassation and the latter’s refusal to hold a hearing in their case. 34. The Court observes that it has previously examined and rejected grievances of this kind (see, amongst others, Maçin v. Turkey (no. 2), no. 38282/02, § 31, 24 October 2006; Falakaoğlu v. Turkey (dec.), no. 77365/01, 5 June 2003; and Emire Eren Keskin v. Turkey (dec.), no. 49564/99, 16 December 2003). It finds no particular circumstances in the instant case which would require it to depart from its earlier findings. Consequently, this part of the application is manifestly ill‑founded within the meaning of Article 35 § 3 of the Convention and must be rejected pursuant to Article 35 § 4. FOR THESE REASONS, THE COURT 1. Declares unanimously the complaint concerning the alleged breach of the applicants’ right to freedom of expression admissible and the remainder of the application inadmissible; 2. Holds, by five votes to two, that there has been no violation of Article 10 of the Convention in respect of the conviction of the applicants; 3. Holds, by five votes to two, that there is no need to give a separate ruling on the applicants’ remaining complaint under Article 10. Done in English, and notified in writing on 17 February 2009, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. Santiago QuesadaJosep CasadevallRegistrarPresident In accordance with Article 45 § 2 of the Convention and Rule 74 § 2 of the Rules of Court, the joint dissenting opinion of Judges Gyulumyan and Power is annexed to this judgment. J.C.MS.Q. JOINT DISSENTING OPINION OF JUDGES POWERAND GYULUMYAN The criminal prosecution of the applicants as owner and editor-in-chief of a daily newspaper, the imposition upon them of a heavy financial penalty and the closure of their newspaper for three days constituted, in our view, a violation of Article 10 of the Convention and we voted in favour of such a finding. Their newspaper published declarations of detainees who called for support and resistance in their campaign against what they regarded as an oppressive and dehumanising prison regime. In their unsuccessful appeal against conviction before the domestic courts, the applicants claimed that they exercised their duty to impart political opinions and that the declarations published did not incite violence or harm national security. Freedom of the press is a value to be guarded, jealously, in a democratic society. For the flourishing of the common good of that social order, many journalists work in difficult situations and often at great personal risk. Whilst assassinations and disappearances of journalists who impart politically controversial opinion indicate the collapse of democratic order, their criminalisation undermines its very foundations. Given their critical function in the maintenance of democracy, the pre-eminent role of the press as “public watchdog” has been acknowledged, repeatedly, by this Court.[1] Thus, it has held that due to its “chilling effect” upon the profession, there can be no justification whatsoever for the imprisonment of journalists who are alleged to have defamed within the context of a debate on matters of public interest.[2] In certain cases, the fact alone of a criminal conviction of a journalist, even if minor, can be considered excessive.[3] While the “closest scrutiny” of an impugned expression is required to see if it could be integrated within a public interest debate[4] even a cursory examination of the declarations in this case demonstrates that the matters in question - the nature and conditions of prisoners’ detention - are issues of obvious public concern. The detainees’ “fundamental requests” included the abolition of “F” Type prison cells, the reinstatement of prisoners’ rights, the abrogation of an anti-terrorism law, the abolition of state security courts and the bringing to trial of torturers and perpetrators of massacres. Their grievances bear a remarkable resemblance to matters that come, not infrequently, before this Court. The potential vulnerability of prisoners, as a specific social group, is frequently acknowledged in Strasbourg and without the press one wonders how otherwise their voices might be heard? It appears from the reasoning of the majority, that the problem is not with the prisoners’ goals per se but rather with “the wording of the overall message”, namely, their willingness to die for their convictions and their call for support in their resistance. The majority considers that the message conveyed by the newspaper was “not a peaceful one” and that it went beyond “a mere criticism” of the new prison system (§ 28). Such a consideration is disquieting. ‘Watchdogs’ are not meant to be peaceful puppies; their function is to bark and to disturb the appearance of peace whenever a menace threatens. A new and, in our view, a dangerous threshold in the protection of free speech has been reached if expression may be suppressed, lawfully, because it is neither “peaceful” nor confined to “mere criticism”. Such qualifications are new conditions precedent to the right to exercise such freedom and are not reflected in this Court’s case law. There was nothing peaceful in the “virulent remarks” describing the Turkish government’s actions as “terror” and part of a “special war” against “the Kurdish people” in the case of Incal v Turkey. Nevertheless, the Court found that such words could not “be taken as incitement to the use of violence, hostility or hatred” (§ 50) and held that the criminal prosecution of the applicant was a disproportionate interference with the right to freedom of expression. By contrast, the majority in this case, without citing, by way of example, one violent word or any call to aggression, finds that the “overall message” was not peaceful and that the newspaper provided “an outlet to stir up violence and hatred”. The declarations were, undoubtedly, marked by a strong sense of passion, resolve, conviction and determination. They were, indeed, a rallying call for support and resistance but their authors (however well or misguided they may have been) did not advocate violence, injury or harm to any person. As such, there was no clear and pressing danger that required such a radical interference as the criminal prosecution of the applicants. The majority rely upon what they describe as “a similar case” in which the Court has already expressed its concern about the making of such declarations “at a time when serious disturbances had taken place in several prisons”. The case cited as authority for their finding in this case is distinguishable on its facts, timing and context and on the proportionality of the interference involved. The Court in Falakaoğlu and Saygılı (cited in § 25 of the judgment) came to its conclusion that there was no violation of Article 10 because the impugned publication was made in the aftermath of what were then recent and serious disturbances in prisons. By contrast, the publication in the instant case took place two months before any such disturbances had occurred. The majority considers that “there were indeed reasons to fear for violent reactions and thus to be reticent in view of the events that had taken place in the prisons in less than two months after the publication of the impugned declarations” (§ 28). How, one wonders, were the publishers to know in October 2000 that there were reasons for them “to be reticent” in view of events that were to take place the following December? In this regard, it should also be pointed out that the disturbances in question were not caused when the readership of Yeni Evrensel descended en masse upon the prisons inspired so to do by the rallying call in the published declarations. Rather, the events occurred when members of the security forces entered, simultaneously, into twenty penitential centres in which the hunger strikers were detained and violent clashes erupted between them and the protesting prisoners. The threshold of the “necessity” test of state interference with freedom of expression is not equivalent to nor does it have the latitude associated with such notions as “tolerable”, “acceptable” or “reasonable”. Necessity implies the existence of a “pressing social need” not a “possible” one.[5] Thus, the fact that social disturbances occur some two months after an article is published, cannot be used to justify radical state interference in a protected Convention right as exercised two months prior to such events. The majority, through a process of retrospective reasoning, impute a causal connection between a publication in a daily newspaper in October 2000 and subsequent events in prisons the following December. The logic of their position would require the press not just to look over its shoulder to ensure that its publications do not add fuel to flaming fires. They must, in addition, look into the future to try to ascertain whether a fire might some day occur and, if so, whether their publication could be identified as one of a number of matches that may be accused of having caused it! Such a burden places an unworkable restriction upon the freedom of the press and jeopardises the protection of a fundamental value in a democratic society. There is nothing in the case law of this Court to justify the imposition of such a restriction. Finally, the majority’s conclusion, in our view, is difficult to reconcile with this Court’s finding in Thoma v Luxembourg[6] in which the Court reiterated that punishing a journalist for assisting in the dissemination of statements made by another person would seriously hamper the contribution of the press to discussion of matters of public interest and should not be envisaged unless there were particularly strong reasons for doing so. We find no such reasons in this case. [1]. Dalban v. Romania [GC], no. 28114/95, § 49, ECHR 1999‑VI; Castells v. Spain, 23 April 1992, § 43, Series A no. 236. [2]. Cumpǎnǎ and Mazǎre v. Romania [GC], no. 33348/96, § 116, ECHR 2004‑XI. [3]. Scharsach and News Verlagsgesellschaft v. Austria, no. 39394/98, § 32, ECHR 2003‑XI. [4]. Incal v. Turkey, 9 June 1998, § 46, Reports of Judgments and Decisions 1998‑IV. [5]. Lingens v. Austria, 8 July 1986, §§ 39-40, Series A no. 103; Sunday Times v. the United Kingdom (no. 2), 26 November 1991, § 50, Series A no. 217. [6]. No. 38432/97, § 62, ECHR 2001‑III.

LORD JUSTICE LONGMORE: This is an appeal by Hani Hussain, the claimant and appellant, against the judgment of Mr Justice Eady handed down on 30 November 2012. The claim relates to an incident on 5 January 2005. It is alleged that the staff of King Edward VII Hospital, the respondent, negligently handled Mr Hussain whilst he was anaesthetised and undergoing a cystoscopy. It is said that he suffered a severe injury to his shoulder as a result. The judge found in favour of the hospital. The appellant seeks to appeal on the basis of fresh evidence contained in a faxed cover sheet from a Ms Awad dated 10 January 2005 and a statement of Dr Al-Abbasi dated 4 December 2012. If this evidence is admitted it will show, according to Mr Hussain, that the judge came to the wrong decision and/or that the decision was unjust on the grounds of serious irregularity, so that there should be a new trial. Factual background Mr Hussain was born on 18 February 1972 and was a electronic engineer employed by the Kuwait oil company, whom I will call KOC. In the course of his work he was exposed to noxious gases and when he was medically examined a cancerous growth was found. From April 2004 onwards, Mr Hussain suffered from bladder cancer and required regular inspections, for instance through cystoscopies. Mr Hussain's medical treatment in London was funded by his employer, which also had its own hospital in Kuwait. In December 2004 Mr Hussain was referred to Mr Julian Shah, a consultant neurologist at King Edward VII Hospital. A cystoscopy was undertaken by Mr Shah on 5 January 2005 while Mr Hussain was under general anaesthetic. On waking up from this surgical procedure, Mr Hussain suffered from severe pain in his left shoulder. He was seen on 5 January 2005 by the anaesthetist present during the operation, Dr Hamilton Davies, the senior medical officer, Dr Kojo Ndenencho, a physiotherapist, Ms Bridget Duffy and Mr Shah himself; he also had regular supervision from the general nurse, Ms Sarah Jones. Mr Hussain was kept overnight and discharged on 6 January 2005. On 11 January 2005, Mr Hussain saw Mr Shah again. As he was still suffering from shoulder pain, Mr Hussain was referred to Mr Lambert, a consultant orthopaedic surgeon. Mr Lambert saw Mr Hussain on 28 January, as recorded in a letter of 2 February 2005 to Mr Shah. From a subsequent MRI scan, it became apparent that there was chronic degenerative condition in Mr Hussain's shoulder. The expert witnesses at trial, Dr Al-Hussaini for the appellant, and Dr McCullough for the respondent, agreed that although there was an underlying problem, this had been complicated by an acute impingement syndrome which was the cause of Mr Hussain's pain. The acute impingement syndrome had itself been caused either by relaxation of the musculature under general anaesthetic, triggering the onset of an acute arthropathy, or by some sort of trauma i.e. injury during the operation. Mr Hussain first instructed solicitors in April 2005 after an operation to improve his shoulder failed. From 2005 to January 2010, Mr Hussain suffered from a range of illnesses and he was forced to retire in February 2006. In April 2010 a claim form was issued, the delay being, it is said, largely because Mr Hussain had not recovered sufficiently from his bladder complaints to concentrate on legal recovery for his shoulder injury until January 2010. The Claim Mr Hussain's case was that on the basis of the res ipsa loquitur doctrine some sort of injury had been inflicted on his shoulder during surgery on 5 January 2005 through the negligence of the staff at King Edward VII Hospital. This had caused his asymptomatic condition to become symptomatic earlier than it would otherwise have done. If there had been some such trauma or injury during the operation there would have been visible bruising. The judge therefore had to consider whether there was any evidence of bruising. Mr Hussain in his witness statement of 1 June 2012 said that he had seen bruising on 5 January 2005, but under cross-examination he said he first saw bruising the next day. The hospital argued that there was no negligence, no bruising had occurred and there was a lawful explanation for the arthropathy, which was that the musculature relaxed as a result of the anaesthetic. The hospital also put forward a positive case that the staff could be shown to have exercised all reasonable care. None of the hospital witnesses recorded or recalled seeing bruising. The Judgment The trial took place on 15 and 16 November 2012 before Mr Justice Eady. The judge found for the respondent, finding in his judgment of 30 November 2012 that: 1. The appellant needed to show a prima facie case of negligence, which the respondent would then have to rebut; 2. Something occurred during the period of anaesthesia on 5 January 2005 to cause the degenerative joint to become acutely painful; 3. Either the relaxation of the muscle under anaesthetic or careless handling could have caused an acute arthropathy; 4. The issue of visible bruising was important. The judge carefully considered the evidence and found that on the evidence before him he was not satisfied that bruising was present at any material time. 5. The appellant had not discharged the burden of showing the prima facie case of negligence; 6. In any event the respondent's positive case that all reasonable care was taken of the appellant in his handling was made out. Proposed New Evidence Mr Hussain says that he made a routine visit to the Al-Ahmadi hospital in Kuwait on 25 November 2012 and saw a Dr Kamal. With Dr Kamal's secretary's help he was able to locate a hard copy of his medical file. He claimed that contained in that file was a fax cover sheet, dated 10 January 2005, referring to a visit Mr Hussain had apparently made on 7 January 2005 to the London Health Office of the Kuwait Oil Company, resulting in an urgent appointment being made to see Mr Shah. This cover sheet purported to record traces of blood under the skin. Based upon this evidence Mr Hussain was then able to track down Dr Khalid Al-Abbasi, who had been head of the London Health Office at the time but was, by November 2012, in Kuwait. Dr Al-Abbasi provided a statement indicating that he had seen severe and extensive bruising on the shoulder on 7 January 2005. Permission to appeal was granted as a result of this possibly admissable new evidence by Rimer LJ in an oral hearing on 23 May 2013. Applications to adduce fresh evidence on appeal are governed by CPR 52.11 which provides that evidence not before the lower court will not be received unless the court orders otherwise. For this purpose, the requirements of Ladd v Marshall [1954] 1 WLR 1489 remain relevant namely that, (i) the evidence could not have been obtained before trial by the exercise of reasonable diligence on the part of Mr Hussain and his advisers; (ii) it would probably have an important influence on the result; (iii) it must be apparently credible but not incontrovertible. In my judgment the proposed new evidence fails tests (i) and (iii). Obtainable by the exercise of due diligence It is relevant that not merely is there no contemporaneous evidence of bruising, but there is, in fact, virtually contemporaneous evidence, as the judge pointed out in his judgment, that there was no bruising. After Mr Hussain woke up from the procedure with severe pain in his shoulder, he was examined by senior medical officer, Dr Ndenencho, who noted absence of "Redness or lumps." Mr Hussain was also seen by a physiotherapist and Mr Shah on the day with no evidence of bruising or trauma being recorded. He was discharged after seeing the physiotherapist on the following day. He return today see Dr Shah on 11 January who referred him to Dr Lambert, as I have already said. Mr Hussain saw Mr Lambert on 28 January, who referred him for a MRI scan. Mr Lambert then reported the result in a letter to Mr Shah of 2 February 2005 saying that he, Mr Lambert, had found no evidence of bleeding or bruising and also that Mr Hussain did not recall any such evidence. The existence of bruising was thus already a matter of discussion between Mr Hussain and his doctors. Mr Hussain instructed his solicitors on 25 April 2005. The first contemporary mention of bruising, as opposed to later evidence and recollection, occurs when the doctor who ultimately gave expert evidence for Mr Hussain first examined Mr Hussain on 14 January 2006. It was in the course of this consultation that Mr Hussain said that he observed bruising at the time of the operation. A letter of claim was then sent to the defendants on 17 May 2007 which prompted a request for Mr Hussain's medical records. At this date therefore the claimant and his advisers should have been discussing the case and trying to obtain more relevant documents. That should have included documents held by his employers, KOC, and their medical office. If Mr Hussain had had any connection with the hospital in Kuwait, any document in that hospital's possession would also be relevant. Instead nothing seems to have happened until 8 February 2011, a year after Mr Hussain had recovered sufficiently to think about legal action, when Ms Green of his solicitors says that Mr Hussain explained -- apparently for the first time -- that he had worked for KOC and that they had their own hospital. Even then neither Ms Green nor Mr Hussain seemed to have asked KOC for their documents at all promptly. There were apparently undocumented requests made to KOC which were said to have been unanswered. It was only when Mr Hussain went to the KOC medical office in London that he was informed that London had sent their documents to Kuwait, which would in any event apparently have destroyed them after five years. Only in September 2012, with the trial fixed for November 2012, did Mr Hussain's solicitors make a written request to KOC for Mr Hussain's medical notes, reports and other material relating to his health condition and treatment for January 2005. For some reason it was made under the Data Protection Act rather than under the CPR31.17, the procedure for third party disclosure. It was made to KOC in London even though Mr Hussain now knew the documents had gone to Kuwait. By this time Mr Hussain had served his witness statement of 1 June 2012 for the purposes of trial, in which he said at paragraph 32 that on 7 January 2005 that the bruising on his shoulder had begun to darken and that he realised something had happened to him when he was sedated. Even if, therefore, Mr Hussain and his solicitors had not realised the significance of possible bruising when he had seen Dr Lambert, he and they appreciated its significance at latest at the time of serving his witness statement. The faxed cover sheet was thus waiting to be discovered for a considerable time before trial. It was in fact only discovered on 25 November 2012 while the judge was considering his judgment. Unfortunately Mr Hussain waited until he had obtained Dr Al-Abbasi's statement before he forwarded both that statement and the faxed cover sheet to his solicitors. By that time Mr Justice Eady had handed down his judgment. A similar dilatoriness occurred in regard to Dr Al-Abbasi, who was the originally referring doctor from KOC to Dr Shah and to whom Mr Shah sent no less than four letters between 5 January and 9 February 2005. Mr Shah had also referred to Dr Al-Abbasi in his witness statement of 28 February 2012. Thus either Mr Hussain or his solicitors could easily have contacted him at any time between April 2005 and the trial, but they did not do so. In these circumstances I am not satisfied that the evidence, now sought to be adduced, could not with reasonable diligence have been available at trial. The credibility of new evidence The fax cover sheet. It is supposedly signed by Ms Awad, a senior medical administrator of the KOC medical office in London, but no attempt has been made to contact her to confirm her signature or any recollection she might have. We were told this morning that she is in fact in London, and I am therefore surprised that this document is put before the court without any evidence from her. It is addressed to the assistant manager of the Al-Ahmadi hospital in Kuwait, but there is no explanation why anyone at that hospital should be receiving information about Mr Hussain on 10 January 2005. The information is extremely vague: "We saw traces of blood under the skin." No explanation is given of "we". Ms Awad herself? Some doctor? A combination of the two? Mr Jones in his submission on Mr Hussain's behalf, says that "we" means Ms Awad, but without any evidence from her one just does not know. This evidence does not, in my view, pass the credibility test. Dr Al-Abbasi's statement. This is also not credible. A doctor purports to recall an examination, or if not an examination an encounter in a medical context, seven years and 11 months previously, when that doctor apparently made no contemporaneous note of that examination or encounter. He records "severe bruising" and "extensive bruising", which is hardly consistent with Ms Awad's reference to "traces of blood", nor is it consistent with Mr Hussain's own evidence in his statement of 1 June 2012 that on 5 January 2005 he noticed "some bruising on my skin" which on 7 January 2005 "began to darken further". Most worryingly of all, Mr Hussain records in his statement, in support of the application to adduce Dr Al-Abbasi's letter, that he wrote the letter of 4 December 2012: "On condition that I [Mr Hussain] will not go back to him or request any further reports or statements." Dr Al-Abbasi is evidently unwilling to come to court and give oral evidence on the matter, and in these circumstances it is inconceivable that any judge could give credence to what he has said in his letter. Mr Jones submits that the position might change, but this court can only act on what it now knows. Mr Jones forcefully submitted that if the proposed new evidence had been before the judge it would have had an effect on his judgment, thus the second criteria of Ladd v Marshall was therefore fulfilled. That may or may not be right, but the proposed new evidence comprehensively fails to meet the first and the third criteria. Of course one has considerable sympathy with Mr Hussain, who continues to be unwell, but I regret to say that this proposed new evidence cannot be adduced. The application to adduce it must be refused, and it follows that the appeal will therefore be dismissed. LORD JUSTICE LEWISON: I agree. LORD JUSTICE KITCHIN: I also agree.

MR JUSTICE WALKER: The question which arises on this appeal is whether the appellant's extradition to Poland is barred under section 11(1)(c) and section 14 of the Extradition Act 2003. Under those provisions a person is not to be extradited where it would be unjust or oppressive to do so by reason of the passage of time since the extradition offences. The respondent sought the extradition of the appellant in order to prosecute him for two alleged offences of fraud. The first of these related to the registration of a purchase of a car engine in 1995. The second concerned the making of a claim under an insurance policy for damage caused by a road traffic accident. The process of extradition was begun in the present case when a European Arrest Warrant ("EAW") was issued by the respondent in Poland on 13th August 2004. The EAW appears to have been translated into English on 22nd May 2006 and on that same date faxed to London. It was then certified as a Class 1 warrant by the Serious Organised Crime Agency on 7th July 2006. After an oral hearing on 9th October 2006, District Judge Purdy on 27th October 2006 ordered the appellant to be extradited. His conclusions, so far as material, included the following: (1) Given the nature of the fraud alleged, the Polish authorities conducted a proper and expeditious inquiry frustrated, if not actually obstructed, by the appellant's whereabouts being unknown or deliberately concealed from investigators. (2) The appellant had lived and worked since 2000 in the United Kingdom. However, given that his closest relatives were in Poland, it could not be said that he would suffer oppressive consequences, or anything like, if returned to Poland beyond the routine or inevitable disruption of compulsory return for trial. (3) There would be nothing unjust in a fraud trial of the kind alleged 11 years on. The Polish criminal justice system must be taken to have adequate safeguards to ensure a fair trial. No actual evidential difficulty had been demonstrated, merely possible speculative difficulties that might perhaps arise. This was not enough to discharge the burden of establishing the bar to extradition relied on. At the hearing before the District Judge, the appellant gave evidence that he was unaware of any criminal investigation against him until he was arrested in this country pursuant to the EAW on 19th September 2006. There is no express finding by the District Judge to the contrary. Mr Knowles who appears for the respondent contends, however, that we should treat the appellant as someone who was evading justice. I shall say more about this in due course. It is common ground that under sections 26 and 27 of the 2003 Act this court must consider whether the District Judge ought to have decided differently the question which was put before him as to whether the present case fell within sections 11(1)(c) and 14 of the Act. If this court concludes that he should have decided that question differently, then it must go on to consider whether if he had decided the question in the way he ought to have done, he would have been required to order the appellant's discharge. It is also common ground that section 14 is similar to section 11(3)(b) of the Extradition Act 1989, which was derived from section 8(3) of the Fugitive Offenders Act 1967, and that authority in relation to these provisions remains applicable. In particular, the court should examine the matter on the basis described by Lord Diplock in the House of Lords in Kakis v Government of the Republic of Cyprus [1978] 1 WLR 779, 782: "'Unjust' I regard as directed primarily to the risk of prejudice to the accused in the conduct of the trial itself, 'oppressive' as directed to hardship to the accused resulting from changes in his circumstances that have occurred during the period to be taken into consideration; but there is room for overlapping, and between them they would cover all cases where to return him would not be fair." Ms Rachel Barnes, who appears on behalf of the appellant, accepts that the burden lies upon him to show, on the balance of probabilities, that it would be unjust or oppressive to extradite him by reason of passage of time. She advances a number of reasons why the District Judge ought to have decided the relevant question differently. I shall start with the question whether it would be unjust to extradite the appellant. In this regard it is said to be sufficient to demonstrate a risk of prejudice in his defence by the passage of time. Reliance is placed on the judgment of Jack J, with whom Hallet LJ agreed, in Kociukow v District Court of Bialystok III Penal Division [2006] 2 AER 451. Jack J observed in that case that Lord Diplock had made the observations I identified earlier. In his judgment at paragraphs 9 and 10, Jack J referred to "a very real risk" and "a serious risk" of injustice. It seems to me that these two concepts are essentially the same. Adopting Lord Diplock's approach, the court in relation to an injustice is primarily concerned with the risk of prejudice to the accused in the conduct of the trial itself. In that context I shall refer in this judgment to the test as being whether there is a serious risk of injustice. At the hearing before the District Judge, the appellant gave evidence as to what he could recall of events giving rise to the charges against him. He owned a Polonez vehicle with the registration number BIF 2518, which is identified in the EAW, and was involved in an accident with a Volvo car in 1996. There was approximately £410 worth of damage to his car, for which he claimed against the insurance company identified in the EAW. He had bought the Polonez vehicle from a person called Lupinska, named in the EAW, and bought a replacement engine from a person named Czarnowski, also named in the EAW, and had registered these events with the local authorities. He denied any wrongdoing in relation to either of these events. He said he has had no contact with Lupinska since buying the Polonez, nor with Czarnowski since buying the replacement engine. Police officers attended the scene of the crash in 1996, took a statement from him, told him that the driver of the other car had broken the speed limit, and made a full report at the police station. He has no paperwork from this period and no contact details for either Lupinska or Czarnowski, or any other possible witnesses. He did say, however, that he had instructed Polish lawyers to investigate the matter. No description of the nature of the evidence against the appellant has been given by the respondent. In these circumstances, Ms Barnes submits that crucial witnesses are unlikely to be able to be located and if located are unlikely to be able to remember relevant events. The whereabouts of Lupinska and Czarnowski is unknown to the appellant. Even if they could be located and were able to give evidence to a Polish court, it is reasonable to assume that their memory of events 10 or 11 years ago would be significantly impaired. It is not known whether any documents that were produced by police at the time would still be in existence 10 years later, assuming that some form of written report was made. Nor is it known whether the police could identify the particular officers involved. Even if the officers could be identified and are still available, it is improbable that they would be able to remember the incident itself. Mr Knowles counters that the question under section 14 is not whether it would be unjust to try the defendant, but whether it would be unjust to return him to face trial. In deciding this question, he submits that the court is entitled to take into account protections for the defendant under the law of the requesting state. Authority for both these propositions is found in the judgment of Simon Brown LJ, with whom Royce J agreed, in Woodcock v Government of New Zealand [2004] 1 WLR 1979 at paragraph 21. For present purposes, I am prepared to accept those propositions, although I should observe that none of the authorities shown to us appear to me to have applied precisely the Woodcock approach to cases concerned with the European Arrest Warrant scheme. Accepting those propositions, however, the main question which arises is whether in the circumstances of the present case protections under Polish law will remove any serious risk of prejudice to the appellant. There is then a subsidiary question whether the appellant's conduct has been such as to disentitle him from relying on the passage of time. I shall return to that later in this judgment. On the main question, the appellant produced no evidence to show that the Polish court has no procedure designed to identify cases where proceeding to trial would, on account of delay, constitute an abuse of process. It was submitted by Mr Knowles that the burden lay on the appellant to show an absence of any such procedure. He added that the court should, in the context of a European Arrest Warrant case, give the benefit of mutual trust to the courts of the requesting state and proceed upon the footing that a requesting state which is a member state of the European Union and a party to the European Convention will comply with Article 6 of that Convention and thus afford to the appellant all the necessary safeguards. In the circumstances of this case, it is not, in my view, necessary to decide that question. Again, for the purpose of the present case only, I am prepared to assume that the Polish courts would indeed have an appropriate abuse of process jurisdiction and would, in accordance with Article 6, examine the question whether by reason of delay it would be unjust to allow the prosecution against the appellant to proceed. The fact remains that the evidence of the appellant that I have described earlier in this judgment was not countered by the respondent at the hearing before the District Judge. This appears to have led the District Judge to describe as speculative the risk of prejudice arising from delay. On the evidence of the appellant given before him, however, the risk of prejudice was far from speculative. In the absence of countering evidence there is, in my view, such an obvious risk of prejudice that it would plainly be unjust to allow the case to proceed. The present case in that regard is to be distinguished from cases such as Dziedzic v Government of Germany [2006] EWHC 1750 (Admin), where the court was furnished with information about the evidence that would be adduced in any trial and was satisfied that it was such that the requesting court would be able to provide the necessary safeguards. Mr Knowles submitted that the evidential picture is not concluded and that this court should think long and hard before shutting out a conclusion that the Polish court may, with fuller knowledge of the evidence, rule that a fair trial can be held. It is not clear to me that a submission of that kind was in fact advanced to the District Judge. In my view, if the Polish authorities wished to make a submission of that kind, it was incumbent on them, at the least, to put forward some evidence. The appellant had produced evidence which pointed clearly to the conclusion he would be prejudiced. True, as Mr Knowles points out, he had said that he had asked for investigations to be made, but at the time of the hearing there was nothing which had emerged from those investigations. We are told by Ms Barnes that that remains the position today. This court, in the decision in Woodcock at paragraph 21, acknowledged that the courts of the requesting state may be best placed to examine abuse of process issues. Before relying on this proposition, however, I consider that the requesting state must produce some evidence that there was good reason to think that there would be a basis for rejecting an abuse of process application. That has not been done here. Accordingly it does not seem to me that it is open to the respondent to suggest that this court should simply decline to deal with the matter and leave it to be examined by the court in Poland. I turn then to the subsidiary question. Both sides agree on the relevant legal principles. They are found in a passage in Lord Diplock's speech in the Kakis case which immediately follows the passage I cited earlier. What Lord Diplock said was this: "Delay in the commencement or conduct of extradition proceedings which is brought about by the accused himself by fleeing the country, concealing his whereabouts or evading arrest cannot, in my view, be relied upon as a ground for holding it to be either unjust or oppressive to return him. Any difficulties that he may encounter in the conduct of his defence in consequence of the delay due to such causes are of his own choice and making. Save in the most exceptional circumstances it would be neither unjust nor oppressive that he should be required to accept them." Mr Knowles submits that the appellant concealed his whereabouts. However, there is no express finding by the District Judge to that effect. Nor, in my judgment, could the evidence before the District Judge justify such a finding. The respondent said that the appellant's mother was questioned in Poland by the police, who executed a search warrant at her address on 5th March 2002, and said she was unable to give any information as to his whereabouts other than that he was "abroad". As against that, the appellant said in evidence to the District Judge that his mother did not tell him about the police raid on 5th March 2002. It was said by Mr Knowles that the Polish authorities had interviewed other relatives of the appellant and that it was incredible that they would not have told the appellant about the police enquiry. However, the information we have is that the appellant plainly said in evidence that he was unaware of any criminal investigation prior to 16th September 2006 and we have no finding by the District Judge to the contrary. In support of his contention that prior to 16th September 2006 he knew nothing of the criminal investigation, the appellant gave evidence before the District Judge that he had come to this country lawfully in 2000 and had held a UK Business Visa since 2002, that he had been back to Poland approximately 12 times since 2005 and that he last visited Poland in December 2005, having travelled openly by car. He said that on that occasion he stayed for three weeks and was not challenged by the Polish police during that time. The District Judge accepted expressly that the appellant's evidence about his visit to Poland in December 2005 may well be correct. It was said by Mr Knowles that evasion does not require a deliberate choice on the part of the appellant to seek to avoid the consequences of a criminal investigation. I am by no means satisfied that that is right. In any event, however, it seems to me that the conduct of the appellant, including a recent visit to Poland in December 2005, makes it quite impossible for this court to conclude that he has behaved in any way which would require this court to deprive him of the benefit of a conclusion in his favour that the delay has been such as to render a trial unjust. In my view, the most that can be said for the respondent is that the appellant's mother was uncooperative when enquiries were made in March 2002. It is, in my view, entirely plausible that a mother who decided to be uncooperative could equally have decided to say nothing whatever to her son about those enquiries. Overall, I can find no evidence to challenge the appellant's assertion that he has been completely open and above board, both when residing here and when returning to Poland on numerous occasions. I conclude that there is no factual basis to support the subsidiary argument advanced by the respondent. In these circumstances, I need not examine the alternative submission of Ms Barnes that it would be oppressive to extradite by reason of the passage of time. The appellant's position in that regard may be much less strong than it is in relation to the question of injustice. I conclude that the District Judge ought to have decided the question which arose under section 11(1)(c) differently. In the light of the conclusion which he ought to have reached, namely that section 11(1)(c) applied, the District Judge ought to have concluded that the defendant should have been discharged. For those reasons I would allow this appeal. LORD JUSTICE KEENE: I agree. It seems to me that the time lag of 10 to 11 years, even assuming a trial could take place now in 2006, is such as would bear out the points made by the appellant in the court below about his problems over evidence. I accept therefore that there is a serious risk that a fair trial cannot now be held. Despite Mr Knowles' very capable submissions, the findings of fact made below do not show that the appellant has, by his actions, deliberately caused the delay in bringing this matter to fruition. I would add only one further point, namely that, in my judgment, one needs to be careful about how far the issue of injustice in a European Arrest Warrant case can be determined merely by the fact that the requesting state is a signatory to the European Convention on Human Rights. Section 14 of the 2003 Act imposes a duty upon this court to make its own decision as to whether it would be unjust or oppressive to extradite someone by reason of the passage of time. The fact that the requesting state is a signatory to the ECHR is a relevant factor but I do not myself see it as being determinative of this issue in the absence of other evidence about the legal processes in that state. After all, states do not always comply with their Convention obligations in every case. It is a matter of record that many signatory states have been found to have breached Article 6 of that convention from time to time. Carried to its logical conclusion, Mr Knowles' argument would rob section 11 of most of its force in so far as it raises the issue of injustice. The decision in Woodcock does not bear on this point, since that was not an ECHR case and there was also evidence put before the court of the trial processes in the requesting state. For all these reasons, I too would allow this appeal and quash the extradition order. Are there any further applications from the bar? MS BARNES: My Lord, simply following on from your order quashing the extradition order, to make a formal order to discharge the appellant. LORD JUSTICE KEENE: Is he in custody at the moment? MS BARNES: He is not. He is on unconditional bail. LORD JUSTICE KEENE: He still needs to be discharged. Very well, we will make an order for his discharge. You have a representation order already, I suspect? MS BARNES: There is one for counsel, yes. LORD JUSTICE KEENE: Then you do not need any order from us. I do not think you need one for Legal Aid assessment either. MS BARNES: I do not believe so. LORD JUSTICE KEENE: I make it clear that if you do, you can have one. MS BARNES: I am obliged, my Lord. LORD JUSTICE KEENE: Thank you both very much.

ferred to. A distinction has to be made between statutory arbitrations and private arbitrations. What applies generally to settlement of disputes by authorities governed by public law need number be extended to a11 cases arising under private law such as those arising under the law of arbitration which is intended for settlement of private disputes. 178A-B Rohtas Industries Ltd. Anr. v. Rohtas Industries Staff Union Ors., 1976 3 S.C.R. 12, referred to. It is numberdoubt true that in the decisions pertaining to Administrative Law, this Court in cases has observed that the giving of reasons in an administrative decisions is a rule of natural justice by an extension of the prevailing rule. It would be in the interest of the world of companymerce that the said rule is companyfined to the area of Administrative Law. 179D-E The trappings of a body which discharges judicial functions and required to act In accordance with law with their companycomitant obligations for reasoned decisions, are number attracted to a private adjudication of the nature of arbitration as the latter is number supposed to exert the States sovereign judicial power. 180F-G It will number be justifiable for Governments or their instrumentalities to enter into arbitration agreements which do number expressly stipulate the rendering of reasoned and speaking awards. Governments and their instrumentalities should, as a matter of policy and public and private interest if number as a companypulsion of law-ensure that wherever they enter into agreements for resolution of disputes by resort to private arbitration, the requirement of speaking awards is expressly stipulated and ensured. It is for Governments and their instrumentalities to ensure in future this requirement as a matter of policy in the larger public interest. Any lapse in that behalf might lend itself to or perhaps justify the legitimate criticism that Government failed to provide against possible prejudice to public-interest. 181B-D A decision on the question involves a question of legislative policy which should be left to the decision of Parliament. It is significant that although nearly a decade ago the Indian Law Commission submitted its report on the law of arbitration specifically mentioning therein that there was numbernecessity to amend the law of arbitration requiring the arbitrator to give reasons, Parliament has number chosen to take any step in the direction of the amendment of the law of arbitration. 178H 179G-H In the circumstances and particularly having regard to the various reasons given by the Indian Law Commission for number recommending to the Government to introduce an amendment in the Act requiring the arbitrators to give reasons for their awards, it may number be appropriate to take the view that all awards which do number companytain reasons should either be remitted or set aside. 178G CIVIL APPELLATE JURISDICTION Civil Appeal Nos. 3 137-39 of 1985 etc. etc. From the Judgment and Order dated 10.4.1985 of the Madhya Pradesh High Court in Misc. Appeal Nos. 176 to 178 of 1983. S. Nariman, G.L. Sanghi, Aspi Chimoi, A.L. Pandiya, Rajan Karanjawala, S.C. Sharma, Ms. Meenakshi Arora, Manik Karanjawala, N. Nettar, G.S. Narayana, R.K. Mehta, Shri Narain, Sandeep Narain, D.P. Mohanty, Ashok Kumar Panda, K. Patri and Jatinder Sethi for the Appellants. Soli J. Sorabjee, A.K. Sen, M.H. Baig, Raja Ram Agarwalla, P.A. Choudhary, A.K. Ganguli, M.C. Bhandare, S. Ganesh, P.S. Shroff, Randeep Singh, Shrjawala, R. Sasiprabhu, S.S. Shroff, S.A. Shroff, Arun Madan, R.K. Sahoo, J.D.B. Raju, M.M. Kshatriya, T.V.S.N. Chari, T. Sridharan, Ms. Mridula Ray, S.K. Sahoo, N.D.B. Raju, Aruneshwar Gupta, P.P. Juneja, S.K. Bagga, P.N. Mishra, H.J. Zaveri and B.S. Chauhan for the Respondents. Milan Banerjee, P.P. Rao, A. Mariarputham, C.M. Nayar, K. Chakravorty, Mrs. J. Wad. Mrs. Aruna. Mathur for the Intervener. The Judgment of the Court was delivered by VENKATARAMIAH, J. The companymon question which arises for companysideration in these cases which are very neatly argued by learned companynsel on both the sides is whether an award passed Under the provisions of the Arbitration Act, 1940 hereinafter referred to as the Act is liable either to be remitted under section 16 1 c of the Act or liable to be set aside under section 30 c thereof merely on the ground that numberreasons have been given by the arbitrator or umpire, as the case may be, in support of the award. Ordinarily all disputes arising under a companytract have to be settled by companyrts established by the State. Section 28 of the Indian Contract Act, 1872 provides that every agreement by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any companytract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights, is void to that extent. Exception 1 to the said section 28, however, provides that the .said section shall number render illegal a companytract by which two or more persons agree that any dispute which may arise between them in respect or any subject or class of subjects shall be referred to arbitration, and that only the amount awarded in such arbitration shall be recoverable in respect of the dispute so referred. A brief history of the English Law of Arbitration, is given in the learned treatise--The Law and Practice of Commercial Arbitration in England by Sir Michael J. Mustill and Stewart C. Boyd. For centuries companymercial men preferred to use arbitration rather than the companyrts to resolve their business disputes on account of the inherent advantages in the settlement of disputes by arbitration. They preferred this alternative method of settlement of disputes to the ordinary method of settlement through companyrts because arbitration proceedings were found to be cheap and quick. It was numberdoubt true that the companyrts repeatedly expressed doubts as to the wisdom of this preference as reflected by the current opinion that arbitration was an ineffective procedure, number that it was undesirable in itself. The companymercial companymunity, has been however, insisting on the right to arbitration and has always exhibited an interest in seeing that the system is made to work as well as possible. This led to repeated statutory intervention. Accordingly laws were passed from time to time to make the arbitration proceedings effective. The English Arbitration Act of 1950 and the English Arbitration Act, 1979 are the two major pieces of legislation which number companytrol the arbitration proceedings in England. The legal requirements of an award under English Law are succinctly given in the Hand Book of Arbitration Practice by Ronald Bernstein 1987 . English Law does number impose any legal requirement as to the form of valid award but if the arbitration agreement companytains any requirement to the form of the award the award should meet those requirements. The award must be certain. It companyld be either interim or final. An award without reasons is valid. The absence of reasons does number invalidate an award. In many arbitrations the parties want a speedy decision from a tribunal whose standing and integrity they respect, and they are companytent to have an answer Yes or No or a figure of X. Such an award is wholly effective indeed, in that it cannot be appealed as being wrong in law it may be said to be more effective than a reasoned award. Section 1 of the English Arbitration Act, 1979, however, provides that if it appears to the High Court that an award does number or does number sufficiently set out the reasons for the award in sufficient detail to enable the companyrt to companysider any question of law arising out of it, the companyrt has power to order the arbitrator or umpire to give reasons or further reasons. In the United States of America as a general rule an arbitration award must companytain the actual decision which results from an arbitrators companysideration of the matter submitted to them but the arbitrator need number write opinion with any specificity as a companyrt of law does unless otherwise provided by a statute or by the submission itself. Arbitrators are number required to state in the award each matter companysidered or to set out the evidence or to record findings of facts or companyclusions of law. They need number give reasons for their award and companyclusions or the grounds which form the basis for the arbitration determination, describe the process by which they arrived at their decision or the rationale of the award. Although such matters are number required, the award is number necessarily invalidated because it sets out the reasons or the specific findings, matters, or companyclusions on which it is based and faulty reasoning if disclosed does number by itself vitiate the award. See Corpus Juris Secundum, Vol. VI pp. 324-325 . In Australia too an arbitrator, unless required under section 19 of the Australian Arbitration Act, 1902 to state in a special case a question of law is under numberobligation in law to give his reasons for his decision vide University of New South Wales v. Max Cooper Sons Pvt. Ltd., 35 Australian Law Reports p. 219 . An instructive survey of the Indian Law of Arbitration is to be found in the learned lecture delivered by Nripendra Nath Sircar in the Tagore Law Lectures series of the Calcutta University entitled Law of Arbitration in British India. After referring to the provisions of the Bengal Regulation Act and the Madras Regulation Act, the learned lecturer traces the history of the Law of Arbitration in India in detail companymencing with Act VIII of 1859 which companyified the procedure of civil companyrts. Sections 3 12 to 325 of Act VIII of 1859 dealt with arbitration between parties to a suit while sections 326 and 327 dealt with arbitration without the intervention of a companyrt. These provisions were in operation when the Indian Contract Act, 1872, which permitted settlement of disputes by arbitration under section 28 thereof as stated at the companymencement of this judgment came into force. Act VIII of 1859 was followed by later companyes relating to Civil Procedure, namely, Act X of 1877 and Act XIV of 1882 but number much change was brought about in the law relating to arbitration proceedings. It was in the year 1899 that an Indian Act entitled the Arbitration Act of 1899 came to be passed. It was based on the model of the English Act of 1889. The 1899 Act applied to cases where if the subject-matters submitted to arbitration were the subject of a suit, the suit companyld whether with leave or otherwise, be instituted in a Presidency town. Then came the Code of Civil Procedure of 1908. Schedule II to the said Code companytained the provisions relating to the law of arbitration which extended to the other parts of British India. The Civil Justice Committee in 1925 recommended several changes in the arbitration law and on the basis of the recommendations by the Civil Justice Committee, the Indian Legislature passed the Act, i.e., the Arbitration Act of 1940, which is currently in force. The salient provisions of the Act which are relevant for purposes of this case are these. The Act as its preamble indicates is a companysolidating and amending Act and is an exhaustive companye in so far as the law relating to arbitration is companycerned. An arbitration may be without intervention of a companyrt or with the intervention of a companyrt where there is numbersuit pending or it may be an arbitration in a suit. Unless there is an arbitration agreement to submit any present and future differences to arbitration to which a person is a party, he cannot be companypelled to have a dispute in which he is companycerned settled by arbitration. The foundation of any arbitration proceeding is therefore the existence of an arbitration agreement between the persons who are parties to the dispute. Every arbitration agreement unless a different intention is expressed therein, shall be deemed to include the provisions set out in the First Schedule to the Act in so far as they are applicable to the reference. The parties to an arbitration agreement may agree that any reference thereunder shall be to an arbitrator or arbitrators to be appointed by a person designated in the agreement either by name or as the holder for the time being of any office or appointment. The authority of an appointed arbitrator or umpire cannot be revoked except with the leave of the companyrt, unless a companytrary intention is expressed in the arbitration agreement. An arbitration agreement does number companye to an end by death of parties thereto but shall in such event be enforceable by or against the legal representative of the deceased. The authority of an arbitrator does number stand revoked by the death of any party by whom he was appointed. In any of the following cases a where an arbitration agreement provides that the reference shall be to one or more arbitrators to be appointed by companysent of the parties, and all the parties do number after differences have arisen, companycur in the appointment or appointments or b if any appointed arbitrator or umpire neglects or refuses to act, or is incapable of acting, or dies, and the arbitration agreement does number show that it was intended that the vacancy should number be supplied and the parties or the arbitrators, as the case may be, do number supply the vacancy or c where the parties or the arbitrators are required to appoint an umpire and do number appoint him any party may serve the other parties or the arbitrators, as the case may be, with a written numberice to companycur in the appointment or appointments or in supplying the vacancy. If the appointment is number made within fifteen clear days after the service of the said numberice, the companyrt may on the application of the party who gave the numberice and after giving the other parties an opportunity of being heard, appoint an arbitrator or arbitrators or umpire, as the case may be, who shall have like power to act on the reference, and to make an award as if he or they had been appointed by companysent of all parties. The Court may on an application of any party to a reference remove an arbitrator or umpire who fails to use all reasonable dispatch in entering on and proceeding with the reference and making an award. The companyrt may remove an arbitrator or umpire who has misconducted himself or the proceedings. Where the companyrt removes an umpire who has number entered on the reference or one or more arbitrators number being all the arbitrators , the companyrt may on the application of any party to the arbitration agreement, appoint persons to fill the vacancies. The arbitrators or umpire shall, unless a different intention is expressed in the agreement have power to administer oath to the parties and witnesses appearing state a special case for the opinion of the companyrt on any question of law involved, or state the award, wholly or in part, in the form of a special case of such question for the opinion of the companyrt make the award companyditional or in the alternative companyrect in an award any clerical mistake or error arising from any accidental slip or omission and administer to any party to the arbitration such interrogatories as may, in the opinion of the arbitrators or umpire, be necessary. Section 14 of the Act provides that when the arbitrators or umpire have made their award, they shall sign it and shall give numberice in writing to the parties of the making and signing thereof and of the amount of fees and charges payable in respect of the arbitration and award. While an award should companytain the decision of the arbitrators or umpire of the case, as the case may be, the Act does number say in express terms that an award should companytain the reasons in support of the decision. The arbitrators or umpire shall at the request of any party to the arbitration agreement or any person claiming under such party or if so directed by the companyrt and upon payment of the fees and charges due in respect of the arbitration and award and of the companyts and charges of filing the award, cause the award or a signed companyy of it, together with any depositions and documents which may have been taken and proved before them, to be filed in companyrt, and the companyrt shall thereupon give numberice to the parties of the filing of the award. Sections 15, 16, 17 and 30 of the Act which are relevant for purposes of this case read as follows Power of the Court to modify award.--The Court may by order modify or companyrect an award-- a where it appears that a part of the award is upon a matter number referred to arbitration and such can be separated from the other part and does number affect the decision on the matter referred, or b where the award is imperfect in form, or companytains any obvious error which can be amended without affecting such decision or c where the award companytains a clerical mistake or an error arising from an accidental slip or omission. Power to remit award. 1 The Court may from time to time remit the award or any matter referred to arbitration to the arbitrators or umpire for reconsideration upon such terms as it thinks fit-- a where the award has left undetermined any of the matters referred to arbitration, or where it determines any matter number referred to arbitration and such matter cannot be separated without affecting the determination of the matters or b where the award is so indefinite as to be incapable of execution or c where an objection to the legality of the award is apparent upon the face of it. Where an award is remitted under subsection 1 the Court shall fix the time within which the arbitrator or umpire shall submit his decision to the Court. An award remitted under sub-section 1 shall become void on the failure of the arbitrator or umpire to reconsider it and submit his decision within the time fixed. Judgment in terms of award. Where the Court sees numbercause to remit the award or any of the matters referred to arbitration for reconsideration or to set aside the award, the Court shall, after the time for making an application to set aside the award has expired, or such application having been made, after refusing it, proceed to pronounce judgment according to the award, and upon the judgment so pronounced a decree shall follow and numberappeal shall lie from such decree except on the ground that it is in excess of, or number otherwise in accordance with, the award. Grounds for setting aside award.--An award shall number be set aside except on one or more of the following grounds, namely a that an arbitrator or umpire has misconducted himself or the proceedings b that an award has been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid under section 35 c that an award has been improperly procured or is otherwise invalid. Section 15 of the Act deals with the power of the Court to modify award. Section 16 of the Act deals with its power to remit an award and section 30 of the Act deals with the power of the Court to set aside an award. Section 17 of the Act provides that where the companyrt sees numbercause to remit the award or any of the matters referred to arbitration for reconsideration or to set aside the award, the companyrt shall, after the time for making an application to set aside the award has expired, or such application having been made, after refusing it, proceed to pronounce judgment according to the award, and upon the judgment so pronounced a decree shall follow and numberappeal shall lie from such decree except on the ground that it is in excess of, or number otherwise in accordance with, the award. The period for getting an award remitted for reconsideration or for setting it aside is prescribed under Article 119 of the Limitation Act, 1963. Section 39 of the Act provides that an appeal shall lie from the following orders passed under the Act 1 superseding an arbitration 2 on an award stated in the form of a special case 3 modifying or companyrecting an award 4 filing or refusing to file an arbitration agreement 5 staying or refusing to stay legal proceedings where there is an arbitration agreement and 6 setting aside or refusing to set aside an award and from numberothers to the companyrt authorised by law to hear appeals from original decree of the companyrt passing the orders. Section 46 of the Act makes the Act applicable to statutory arbitrations, save in so far as is otherwise provided by any law for the time being in force, the provisions of the Act apply to all statutory arbitrations. These are broadly the provisions of the Act which govern an arbitration proceeding. In many of the cases in which awards are passed by arbitrators under auspices of institutions like Chambers of Commerce it may number be necessary for the parties to the disputes to go to the Court to get rules issued in terms of the awards since persons against whom awards are made would be willingly companyplying with the awards for it would be in their interest to do so in order to maintain their prestige in the business world. But in other cases where there is numberguarantee of ready companypliance with the awards by those against whom they are made it becomes necessary to take appropriate steps under the Act to get the awards filed in the Court under section 14 of the Act and to seek the assistance of the Court in getting decrees passed in terms of the awards so that the decrees can be executed through companyrt for the realisation of the fruits of the award. At the same time the Act provides the necessary machinery for getting the award remitted to the arbitrators or the umpire, as the case may be, for reconsideration or for getting the award set aside in cases falling under section 30 thereof. Under the Indian Arbitration Act, 1899 which applied to areas lying within the Presidency towns section 14 provided as follows Where an arbitrator or umpire has misconducted himself, or an arbitration or award has been improperly procured, the Court may set aside the award. This section was companyched in the same language in which section 11 2 of the English Arbitration Act, 1889 was companyched. Para 15 of the Second Schedule to the Code of Civil Procedure, 1908 which was applicable to the rest of British India read as follows 15 But numberaward shall be set aside except on one of the following grounds, namely a companyruption or misconduct of the arbitrator or umpire b either party having been guilty of fraudulent companycealment of any matter which he ought to have disclosed, or of wilfully misleading or deceiving the arbitrator or umpire c the award having been made after the issue of an order by the Court superseding the arbitration and proceeding with the suit or after the expiration of the period allowed by the Court, or being otherwise invalid. Then followed the Act, i.e., the Indian Arbitration Act, 1940 which extended to the whole of the British India w.e.f. July 1, 1940 superseding the Indian Arbitration Act, 1899 and the Second Schedule to the Code of Civil Procedure, 1908. Section 30 of the Act provides that an award shall number be set aside except on one or more of the following grounds, namely a that an arbitrator or umpire has misconducted himself or the proceedings b that an award has been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid under section 35 c that an award has been improperly procured or is otherwise invalid. It may be numbericed that the general ground, namely, the award being otherwise invalid for setting aside an award which appeared for the first time in the Second Schedule to the Civil Procedure Code, 1908 was number to be found either in the Indian Arbitration Act, 1899 or in the English Arbitration Act, 1889 which companytained inter alia two grounds for setting aside an award, namely that an arbitrator or an umpire had misconducted himself and the award had been improperly procured. In companynection with the English Arbitration Act, 1889 and the Indian Arbitration Act, 1899 certain principles had become wellsettled although neither of these statutes made reference to illegality or error apparent on the face of the award. In one of the cases frequently referred to in later decisions, namely, Hodgkinson v. Fernie and another, 1857 3 C.B. S. 189 140 English Reports. p. 712 it was recognised that the principle had been firmly established that where an error of law appeared on the face of the award or upon some paper accompanying or forming part of the award that companystituted a ground for setting aside the award. Williams, J. who agreed with Cockburn, C.J. in the said decision observed thus I am entirely of the same opinion. The law has for many years been settled, and remains so at this day, that, where a cause or matters in difference are referred to an arbitrator, whether a lawyer or a layman, he is companystituted the sole and final judge of all questions both of law and of fact. Many cases have fully established that position, where awards have been attempted to be set aside on the ground of the admission of an incompetent witness or the rejection of a companypetent one. The companyrt has invariably met those applications by saying, You have companystituted your own tribunal you are bound by its decision. The only exceptions to that rule, are cases where the award is the result of companyruption or fraud, and one other, which, though it is to be regretted, is number, I think, firmly established, viz. where the question of law necessarily arises on the face of the award, or upon some paper accompanying and forming part of the award. Though the propriety of this latter may very well be doubted, I think it may be companysidered as established. In Champsey Bhara Company v. Jivraj Balloo Spinning and Weaving Company Ltd., I.R. 1923 Privy Council, 66 which was a case arising from the High Court of Bombay, the Privy Council following the decision in Hodgkinson v. Fernie, supra observed thus Now the regret expressed by Williams, J., in Hodgkinson v. Fernie, 2 has been repeated by more than one learned Judge, and it is certainly number to be desired that the exception should be in any way extended. An error in law on the face of the award means, in their Lordships view, that you can find in the award or a document actually incorporated thereto, as for instance, a numbere appended by the arbitrator stating the reasons for his judgment, some legal proposition which is the basis of the award and which you can then say is erroneous. The ground arising out of an error of law apparent on the face of the award prima facie appears to fall either under section 16 1 c of the Act, which empowers the Court to remit the award to the arbitrator where an objection to the legality of the award which is apparent upon the face of it is successfully taken, or under section 30 c of the Act which empowers the Court to set aside an award if it is otherwise invalid. The following two decisions relied on the said two provisions of law respectively. This Court in Seth Thawardas Pherumal v. The Union of India, 1955 2 SCR 48 approved the view expressed in the case of Champsey Bhara Company supra in the following words at pages 53-54 thus In India this question is governed by section 16 1 c of the Arbitration Act of 1940 which empowers a Court to remit an award for reconsideration where an objection to the legality of the award is apparent upon the face of it. This companyers cases in which an error of law appears on the face of the award. But in determining what such an error is, a distinction must be drawn between cases in which a question of law is specifically referred and those in which a decision on a question of law is incidentally material however necessary in order to decide the question actually referred. If a question of law is specifically referred and it is evident that the parties desire to have a decision from the arbitrator about that rather than one from the Courts, then the Courts will number interfere, though even there, there is authority for the view that the Courts will interfere if it is apparent that the arbitrator has acted illegally in reaching his decision, that is to say, if he has decided on inadmissible evidence or on principles of companystruction that the law does number companyntenance or something of that nature. See the speech of Viscount Cave in Kelantan Government v. Duff Development Co., 1923 C. 395 at page 409. But that is number a matter which arises in this case. The law about this is, in our opinion, the same in England as here and the principles that govern this class of case have been reviewed at length and set out with clarity by the House of Lords in F.R. Absalom Ltd. v. Great Western London Garden Village Society, 1933 A.C. 592 and in Kelantan Government v. Duff Development Co., 1923 A.C. 395. In Durga Prasad v. Sewkishendas, 54 C.W.N. 74, 79 the Privy Council applied the law expounded in Absaloms case 1933 A.C. 592 to India see also Champsey Bhara Co. v. Jivraj Balloo Spinning and Weaving Co., 50 I.A. 324, 330 331 and Saleh Mahomed Umer Dossal v. Nathoomal Kessamal, 54 I.A. 427, 430. The wider language used by Lord Macnaghten in Ghulam Jilani v. Muhammad Hassan, 29 I.A. 51, 60 had reference to the revisional powers of the High Court under the Civil Procedure Code and must be companyfined to the facts of that case where the question of law involved there, namely limitation, was specifically referred. An arbitrator is number a companyciliator and cannot ignore the law or misapply it in order to do what he thinks is just and reasonable. He is a tribunal selected by the parties to decide their disputes according to law and so is bound to follow and apply the law, and if he does number, he can be set right by the Courts provided his error appears on the face of the award. The single exception to this is when the parties choose specifically to refer a question of law as a separate and distinct matter. In Jivarajbhai Ujamshi Sheth and Others v. Chintamanrao Balaji and Others, 1964 5 SCR 480 this Court held that an award can be set aside on the ground of error of law apparent on the face of the record under section 30 of the Act but it qualified the above legal position by saying that the Court while dealing with the application for setting aside an award has numberpower to companysider whether the view of the arbitrator on the evidence was justified according to this Court. The arbitrators justification was generally companysidered binding between the parties for it was a tribunal selected by the parties and the power of the Court to set aside the award was restricted to cases set out in section The Court further observed that it was number open to it to speculate, where numberreasons are given by the arbitrator, as to what impelled the arbitrator to arrive at his companyclusion. The Court declined to recognise the power of the Court to attempt to probe the mental process by which the arbitrator had reached his companyclusion where it was number disclosed by the terms of his award. The relevant part of the above decision reads thus An award made by an arbitrator is companyclusive as a judgment between the parties and the Court is entitled to set aside an award if the arbitrator has misconducted himself in the proceedings or when the award has been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid under section 35 of the Arbitration Act or where an award has been improperly procured or is otherwise invalid s. 30 of the Arbitration Act. An award may be set aside by the Court on the ground of error on the face of the award, but an award is number invalid merely because by a process of inference and argument it may be demonstrated that the arbitrator has companymitted some mistake in arriving at his companyclusion. As observed in Champsey Bhara and Company v. Jivraj Ballo Spinning and Weaving Company Ltd., L.R. 50 A. 324 at p. 331 An error in law on the face of the award means, in their Lordships view, that you can find in the award or a document actually incorporated thereto, as for instance a numbere appended by the arbitrator stating the reasons for his judgment, some legal proposition which is the basis of the award and which you can then say is erroneous. It does number mean that if in a narrative a reference is made to a companytention of one party, that opens the door to seeing first what that companytention is, and then going to the companytract on which the parties rights depend to see if that companytention is sound. The Court in dealing with an application to set aside an award has number to companysider whether the view of the arbitrator on the evidence is justified. The arbitrators adjudication is generally companysidered binding between the parties, for he is a tribunal selected by the parties and the power of the Court to set aside the award is restricted to cases set out in s.30. It is number open to the Court to speculate, where numberreasons are given by the arbitrator, as to what impelled the arbitrator to arrive at his companyclusion. On the assumption that the arbitrator must have arrived at his companyclusion by a certain process of reasoning, the Court cannot proceed to determine whether the companyclusion is right or wrong. It is number open to the Court to attempt to probe the mental process by which the arbitrator has reached his companyclusion where it is number disclosed by the terms of his, award. The same view was expressed by this Court in Bungo Steel Furniture Pvt. Ltd. v. Union of India, 1967 1 S.C.R. 633. There have been a number of decisions of this Court on the above question and it is number necessary to refer to all of them except to refer to a recent decision in State of Rajasthan v. M s. R.S. Sharma and Co., 1988 4 S.C.C. 353 decided by Sabyasachi Mukharji and S. Ranganathan, JJ. It is number well-settled that an award can neither be remitted number set aside merely on the ground that it does number companytain reasons in support of the companyclusion or decisions reached in it except where the arbitration agreement or the deed of submission requires him to give reasons. The arbitrator or umpire is under numberobligation to give reasons in support of the decision reached by him unless under the arbitration agreement or in the deed of submission he is required to give such reasons and if the arbitrator or umpire chooses to give reasons in support of his decision it is open to the Court to set aside the award if it finds that an error of law has been companymitted by the arbitrator or umpire on the face of the record on going through such reasons. The arbitrator or umpire shall have to give reasons also where the companyrt has directed in any order such as the one made under section 20 or section 21 or section 34 of the Act that reasons should be given or where the statute which governs an arbitration requires him to do so. The Law Commission of India, however, had occasion to companysider the question whether it should be made obligatory on the part of the arbitrator or umpire to give reasons in support of the award in the companyrse of its Seventy-sixth Report on Arbitration Act, 1940 which was submitted in 1978. The relevant part of the report of the Law Commission on the above question reads thus 4.42A. Before leaving section 14, it is necessary to deal with one suggestion that has been made to the effect that an arbitrator must be required to give reasons for the award. This suggestion was made by the Public Accounts Committee 1977-78 , Sixth Lok Sabha, Ninth Report, dealing with the Forest Department, Andaman. The suggestion has been brought to our numberice by the Ministry of Law. The Committee, after expressing its unhappiness over the manner in which certain arbitration cases which formed the subject-matter of the Report had been pursued, and after numbering the delay that took place in the disposal of cases, made the following observations In this distressing story, Government has repeatedly suffered loss. In the first arbitration case, Governments claim for royalty on shortfall of extraction was number upheld. As the arbitrators award gave numberreasons, Government companyld number even find out why their claim was rejected. It will be strange if Government really finds itself so helpless in such case. The Committee would like Government to make up its mind and amend the law in such a manner that it would be obligatory on the arbitrator to give reasons for his award. Meanwhile, it should be ascertained whether in an award which sets out numberreasons the aggrieved party would have numberremedy whatever. 4.43. We have also been informed that the Public Accounts Committee 1975-76 , in its 210 Report, has observed as follows Public Accounts Committee19776, 210th Report, page 136, para 5.17 Incidentally, the Committee also find that under the Arbitration Act, the Arbitrator is number bound to give any reason for the award. The result is that often it becomes difficult to challenge such number-speaking awards on any particular ground. The Committee are of the view that it should be made obligatory on arbitrators to give detailed reasons for their awards so that they may, if necessary, stand the test of objective judicial scrutiny. The Committee desire that this aspect should be examined and the necessary provision brought soon on the statute book. 4.44. We have given careful companysideration to the suggestion that the arbitrator should be required to give reasons. And we appreciate the embarrassment that must be caused to the Government by such awards in the cases referred to by the Public Accounts Committee in its Report referred to above. We are also number unmindful of the fact that the public interest might sometimes suffer by awards which are number supported by reasons. But we regret that we are unable to persuade ourselves to accept the suggestion for amending the law. Our reasons for this companyclusion will be set out presently. These reasons are, in our view, weighy enough to override other companysiderations. 4.45. There are, it seems to us, several companysideration that are relevant in determining the question whether an arbitrator should be required by law to give reasons for the award. The scheme of the Arbitration Act is to provide a domestic forum, for speedy and substantial justice, untrammelled by legal technicalities, by getting the dispute resolved by a person in whom the parties havefull faith and companyfidence. The award given by such a person under the scheme of the Act can be assailed only on very limited ground like those mentioned in section 30 of the Act. The result is that most of the awards at present are made rules of the companyrt despite objections to their validity by the party against whom those awards operate. To have a provision making it obligatory for the arbitrator to give reasons for the award would be asking for the introduction of an infirmity in the award which in most cases is likely to prove fatal. Many honest awards would thus be set aside. Once the arbitrators are companypelled to give reasons in support of the award, the inevitable effect of that would be that the validity of most of the awards would be challenged on the ground that the reasons, or at least some of them, are bad and number germane to the companytroversy. Sometimes, if four reasons are given in support of the award and one of the reasons is shown to be number companyrect or number germane, the award would be challenged on the ground that it is difficult to predicate as to how far the bad reason which is number germane has influenced the decision of the arbitrator. Many awards would number survive companyrt scrutiny in such circumstances. 4.46. It is also numbereworthy that in a large number of cases the arbitrators would be laymen. Although their final award may be an honest and companyscientious adjudication of the companytroversy and dispute, they may number be able to insert reasons in the award as may satisfy the legal requirements and the scrutiny of the companyrt. The arbitrators having been chosen by the parties, it would, in our opinion, be number companyrect to put extra burden on them of also giving reasons which are strictly rational and germane in the eye of law in support of their award. Once the parties have voluntarily chosen the arbitrators, presumably because they have faith in their impartiality, the law should number insist upon the recording of reasons by them in their award. 4.47. The previous experience, in fact, points out that it is awards incorporating reasons which have generally been quashed in companyrt. The awards number giving reasons have survived the attack on their validity, unless the arbitrator is otherwise shown to have misconducted himself or his award suffers from some other technical defect. Once we have the companypulsion for the incorporation of reasons in the award given by the arbitrators, validity of most of the awards, in our opinion, would number be able to survive in companyrt. As such, the object of the Arbitrations Act would be substantially defeated. 4.48. Once Parliament provides that reasons shall be given, that must clearly be read as meaning that proper, adequate, reasons must be given the reasons that are set out, whether they are right or wrong, must be reasons which number only will be intelligible, but also can reasonably be said to deal with the substantial points that have been raised. If the award in any way fails to companyply with the statutory provisions, then it would be a ground for saying that the award was bad on the face of it, as Parliament has required that reasons shall be incorporated Of. Re Poyser Mills Arbitration, 1964 2 Q.B. 467 1963 1 All E.R. 6 12, 6 16 Megaw J. . It is well established that where the arbitrator gives reasons for a companyclusion of law, companyrts can go into those reasons. Champsey Bhara Co. v. J.B. Spinning Weaving Co. Ltd., A.I.R. 1923 P.C. 66 S. Dutt v. University of Delhi, A.I.R. 1958 S.C. 1050. 4.49. It is sometimes stated that since an arbitrator is bound to apply the law, there should be some means of ensuring that he applied the law companyrectly. However, it is also to be remembered that parties resort to an arbitration voluntarily and select or agree to a particular arbitrator, because, inter alia, they have faith in him, and the proceedings will be more speedy and free from technicalities than in the companyrts. The object Of achieving speed and informality is likely to be largely frustrated if a statutory provision makes it companypulsory to give reasons for the award. The general rule is that the parties cannot object to the decision given by their own judge, except in case of misconduct and the like. Government of Kelantan v. Duff Development Co. Ltd., 1923 A.C. 395 Russell 1970 , pages 359,360 . This general principle should number be departed from unless weighty reasons exist for such departure. No doubt, it is desirable that the award should be companyrect in law. But the fundamental question is, how far should the finality of the award yield to the desirability of legal companyrectness, and what procedural requirements should be insisted upon to ensure that the award is sound in law? In this companynection, reference may be made to the observations of Barwick C.J. of the High Court of Australia . Tata Products Pvt. Ltd. v. Hutcheson Bros. Pvt. Ltd., 1972 127 C.L.R. 253, 258 1972 Australia Law Journal Reports 119 Australia . He observed that finality in arbitration in the award of the lay arbitrator is more significant than legal propriety in all his processes in reaching that award. The importance which the law attaches to the finality of arbitration goes against the suggestion number put forth for giving reasons for an award. A requirement that the reasons for an award should be given would open too wide a door for challenging the award, even if the grounds for setting aside are, by statute, restricted in other respects. 4.50. For these reasons, we are number inclined to recommend a provision requiring the arbitrator to give reasons for the award. Thus it is seen that the Law Commission did number recommend the inclusion of a provision in the Act requiting the arbitrator or umpire to give reasons for the award. It is number disputed that in India it had been firmly established till the year 1976 that it was number obligatory on the part of the arbitrator or the umpire to give reasons in support of the award when neither in the arbitration agreement number in the deed of submission it was required that reasons had to be given for the award vide Firm Madanlal Roshanlal Mahajan v. Hukumchand Mills Ltd., Indore, 1967 1 C.R. 105 Bungo Steel Furniture Pvt. Ltd. v. Union of India, supra and N. Chellappan v. Secretary, Kerala State Electricity Board Another, 1975 2 S.C.R. 811. It is, however, urged by Shri Fali S. Nariman, who argued in support of the companytention that in the absence of the reasons for the award, the award is either liable to be remitted or set aside, that subsequent to 1976 there has been a qualitative change in the law of arbitration and that it has number become necessary to insist upon the arbitrator or the umpire to give reasons in support of the award passed by them unless the parties to the dispute have agreed that numberreasons need be given by the arbitrator or the umpire for his decision. Two main submissions are made in support of the above companytention. The first submission is that an arbitrator or an umpire discharges a judicial function while functioning as an arbitrator or an umpire under the Act, and, therefore, is under an obligation to observe rules of natural justice while discharging his duties, as observed by this Court in Payyavula Vengamma v. Payyavula Kesanna and others, 1953 S.C.R. 119. This Court relied in that decision upon the observations made by Lord Langdale M.R. in Harvey v. Shelton, 1844 7 Beav. 455 at p. 462 which read thus It is so ordinary a principle in the administration of justice, that numberparty to a cause can be allowed to use any means whatsoever to influence the mind of the Judge, which means are number known to and capable of being met and resisted by the other party, that it is impossible, for a moment, number to see, that this was an extremely indiscreet mode of proceeding, to say the very least of it. It is companytrary to every principle to allow of such a thing, and I wholly deny the difference which is alleged to exist between mercantile arbitrations and legal arbitrations. The first principle of justice must be equally applied in every case. Except in the few cases where exceptions are unavoidable, both sides must be heard, and each in the presence of the other. In every case in which matters are litigated, you must attend to the representations made on both sides, and you must number, in the administration of justice, in whatever form, whether in the regularly companystituted Courts or in arbitrations, whether before lawyers or merchants, permit one side to use means of influencing the companyduct and the decisions of the Judge, which means are number known to the other side. This Court also relied on the decision in Haigh v. Haigh, 1861 31 L.J. Ch. 420 which required an arbitrator to act fairly in the companyrse of its duties. The two well recognised principles of natural justice are i that a Judge or an arbitrator who is entrusted with the duty to decide a dispute should be disinterested and unbiased nemo judex in cause sua and ii that the parties to dispute should be given adequate numberice and opportunity to be heard by the authority audi alteram partem See Administrative Law by H.W.R. Wade, Part V and Judicial Review of Administrative Action by S.A. de Smith, Third Edition, Chapter 4 . Giving reasons in support of a decision was number companysidered to be a rule of natural justice either under the law of arbitration or under administrative law. In Som Datt Datta v. Union of India and Ors., 1989 2 C.R. 177 a Constitution Bench of this Court held that there was numberobligation on the part of an administrative or statutory tribunal to give reasons for the order passed by it. The relevant part of the said decision in which this Court companysidered the prevailing legal decision in England at the time reads thus In the present case it is manifest that there is numberexpress obligation imposed by s. 164 or by s. 165 of the Army Act on the companyfirming authority or upon the Central Government to give reasons in support of its decision to companyfirm the proceedings of the Court Martial. Mr. Dutta has been unable to point out any other section of the Act or any of the rule made therein from which necessary implication can be drawn that such a duty is cast upon the Central Government or upon the companyfirming authority. Apart from any requirement imposed by the statute or statutory rule either expressly or by necessary implication, we are unable to accept the companytention of Mr. Dutta that there is any general principle or any rule of natural justice that a statutory tribunal should always and in every case give reasons in support of its decision. In English law there is numbergeneral rule apart from the statutory requirement that the statutory tribunal should give reasons for its decision in every case. In Rexv. Northumberland Compensation Appeal Tribunal, 1952 1 K.B. 338, it was decided for the first time by the Court of Appeal that if there was a speaking order a writ of certiorari companyld be granted to quash the decision of an inferior companyrt or a statutory tribunal on the ground ,of error on the face of record. In that case, Denning, L.J. pointed out that the record must at least companytain the document which initiates the proceedings the pleadings, if any, and the adjudication, but number the evidence, number the reasons, unless the tribunal chooses to incorporate them in its decision. It was observed that if the tribunal did state its reasons and those reasons were wrong in law, a writ of certiorari might be granted by the High Court for quashing the decision. In that case the statutory tribunal under the National Health Service Act, 1946 had fortunately given a reasoned decision in other words, made a speaking order and the High Court companyld hold that there was an error of law on the face of the record and a writ of certiorari may be granted for quashing it. But the decision in this case led to an anomalous result, for it meant that the opportunity for certiorari depended on whether or number the statutory tribunal chose to give reasons for its decision, in other words, to make a speaking order. Not all tribunals, by any means, were prepared to do so and a superior companyrt had numberpower to companypel them to give reasons except when the statute required it. This incongruity was remedied by the Tribunals and Inquiries Act, 1958 s. 12 , 6 7 Elizabeth 2 c. 66 , which provides that on request a subordinate authority must supply to a party genuinely interested the reasons for its decision. Section 12 of the Act states that when a tribunal mentioned in the First Schedule of the Act gives a decision it must give a written or oral statement of the reasons for the decision, if requested to do so on or before the giving or numberification of the decision. The statement may be refused or the specification of reasons restricted on grounds of national security, and the tribunal may refuse to give the statement to a person number principally companycerned with the decision if it thinks that to give it would be against the interest of any person primarily companycerned. Tribunals may also be exempted by the Lord Chancellor from the duty to give reasons but the Council on Tribunals must be companysulted on any proposal to do so. As already stated, there is numberexpress obligation imposed in the present case either by s. 164 or by s. 165 of the Indian Army Act on the companyfirming authority or on the Central Government to give reasons for its decision. We have also number been shown any other section of the Army Act or any other statutory rule from which the necessary implication can be drawn that such a duty is cast upon the Central Government or upon the companyfirming authority. We, therefore, reject the argument of the petitioner that the order of the Chief of the Army Staff, dated May 26, 1967 companyfirming the finding of the Court Martial under s. 164 of the Army Act or the order of the Central Government dismissing the appeal under s. 165 of the Army Act are in any way defective in law. It is, however, urged that this Court omitted to numberice an earlier decision of a Constitution Bench of this Court in Bhagat Raja v. The Union of India Ors., 1967 3 S.C.R. 302 and therefore, the decision in Som Datt Datta, supra should be companysidered as a decision per in curjam.

FIFTH SECTION CASE OF POBEGAYLO v. UKRAINE (Application no. 18368/03) JUDGMENT STRASBOURG 29 March 2007 FINAL 24/09/2007 This judgment will become final in the circumstances set out in Article 44 § 2 of the Convention. It may be subject to editorial revision. In the case of Pobegaylo v. Ukraine, The European Court of Human Rights (Fifth Section), sitting as a Chamber composed of: MrP. Lorenzen, President,MrK. Jungwiert,MrV. Butkevych,MrsM. Tsatsa-Nikolovska,MrJ. Borrego Borrego,MrsR. Jaeger,MrM. Villiger, judges,MrJ.S. Phillips, Deputy Section Registrar, Having deliberated in private on 6 March 2007, Delivers the following judgment, which was adopted on that date: PROCEDURE 1. The case originated in an application (no. 18368/03) against Ukraine lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Ukrainian national, Mr Vladislav Vasilyevich Pobegaylo (“the applicant”), on 27 August 2001. 2. The applicant was represented before the Court by Mr Aleksandr Vladimirovich Lesovoy, a lawyer, practicing in the town of Bakhchisaray, the Autonomous Republic of Crimea (“the ARC”), Ukraine. The Ukrainian Government (“the Government”) were represented by their Agents, Mrs Z. Bortnovska, Mrs V. Lutkovska and Mr Y. Zaytsev. 3. On 24 October 2003 the Court decided to communicate the application to the Government. Under the provisions of Article 29 § 3 of the Convention, it decided to examine the merits of the application at the same time as its admissibility. THE FACTS I. THE CIRCUMSTANCES OF THE CASE 4. The applicant was born in 1971 and currently resides in the village of Molodezhnoye, the ARC, Ukraine. 5. On 1 May 1998 the applicant suffered serious bodily injuries in a traffic accident caused by the negligent driving of a police officer. 6. In January 1999 the applicant instituted proceedings in the Kyivskyy District Court of Simferopil against the Simferopil Branch of the Main Department of the Ministry of Internal Affairs of Ukraine claiming compensation for material and moral damage caused by the accident. On 6 February 2001 the court awarded the applicant 2,288.93[1] Ukrainian hryvnias (“UAH”) in compensation for material damage and legal aid, UAH 2,100 in compensation for the loss of earnings and UAH 12,000 in compensation for moral damage. On 18 April 2001 the Supreme Court of the ARC upheld this decision in respect of the compensation for material damage and remitted the case for fresh consideration in respect of the compensation for the loss of earnings and for moral damage. 7. On 24 January 2002 the Bailiffs' Service instituted enforcement proceedings for the judgment of 6 February 2001 in that part which was upheld by the Supreme Court of the ARC and became final. On 19 April 2002 the enforcement proceedings were terminated on the ground that the judgment should be enforced directly by the State Treasury. On 16 August 2002 the judgment of 6 February 2001, as upheld by the Supreme Court, was enforced. 8. In the meantime, on 6 February 2002 the Kyivskyy District Court, after fresh consideration of the applicant's claims concerning compensation for the loss of earnings and moral damage, awarded the applicant UAH 1,470[2] and UAH 8,400[3], respectively. On 29 May 2002 the Court of Appeal of the ARC (former Supreme Court of the ARC) upheld this judgment. The applicant appealed against these judgments in cassation. The parties did not submit any further information about these proceedings. 9. By a decree of 21 March 2003 the Ministry of Justice of Ukraine and the State Treasury of Ukraine decided that all judgments which should be enforced at the expense of the State Budget of Ukraine should be enforced by the State Treasury of Ukraine. In May 2003 the applicant instituted proceedings in the Pecherskyy District Court of Kyiv requesting to invalidate this decree as its provisions had not complied with the Law on Enforcement Proceedings. On 25 June 2003 the Pecherskyy District Court of Kyiv found the decree invalid. On 30 October 2003 the Kyiv City Court of Appeal upheld this judgment. On 29 March 2006 the High Administrative Court of Ukraine rejected the cassation appeal of the Ministry of Justice of Ukraine. 10. In July 2003 the applicant instituted proceedings in the Kyivskyy District Court of Simferopil complaining about the decision of 19 April 2002 to terminate the enforcement proceedings and claiming compensation for material and moral damage. On 22 December 2003 the court found that the decision of 19 April 2002 was unlawful. The court however did not allow the applicant's claims for compensation because the judgment of 6 February 2001 in his favour was enforced. On 5 April 2004 the Court of Appeal of the ARC upheld the judgment of 22 December 2003. On 27 September 2006 the High Administrative Court of Ukraine quashed the judgments of 22 December 2003 and 5 April 2004 and remitted the case for a fresh consideration to the District Court. 11. The judgment of 6 February 2002 was enforced by instalments, the final amount being paid on 11 February 2004. II. RELEVANT DOMESTIC LAW AND PRACTICE 12. The relevant domestic law is summarised in the judgment of Romashov v. Ukraine (no. 67534/01, §§ 16-18, 27 July 2004). THE LAW 13. The applicant complained of the lengthy consideration of his cases in the court and of the lengthy enforcement of the judgments in his favour. He invoked Article 6 § 1 of the Convention, which provides, insofar as relevant, as follows: Article 6 § 1 “In the determination of his civil rights and obligations ... everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. ...” I. ADMISSIBILITY 14. In respect of the applicant's complaint about the lengthy non-enforcement of the judgments in his favour, the Government raised objections regarding the applicant's victim status in respect of the non-enforcement of the judgment of 6 February 2001 and exhaustion of domestic remedies similar to those which the Court has already dismissed in the case of Romashov v. Ukraine (cited above, §§ 23-33). The Court considers that the present objections must be rejected for the same reasons. 15. The Court concludes that the applicant's complaints under Article 6 § 1 of the Convention are not manifestly ill-founded within the meaning of Article 35 § 3 of the Convention. It further notes that they are not inadmissible on any other grounds. They must therefore be declared admissible. II. MERITS 16. The Government maintained that the judgment of 6 February 2001 in the applicant's favour was enforced in full and the length of its enforcement could not be considered as unreasonable. As for the non-enforcement of the judgment of 6 February 2002 the Government maintained that the Bailiffs' Service performed all necessary actions and cannot be blamed for the delay. They further stated that the judgment of 6 February 2002, which has not been enforced at the time the Government submitted their observations, would be enforced in full and that the present non-enforcement did not breach Article 6 § 1 of the Convention. 17. The applicant disagreed. 18. The Court reiterates that the court proceedings and the enforcement proceedings are stages one and two in the total course of proceedings (see, Scordino v. Italy (no. 1) [GC], no. 36813/97, § 197). Therefore, the enforcement proceedings should not be dissociated from the action and the proceedings are to be examined in their entirety (see, Estima Jorge v. Portugal, judgment of 21 April 1998, Reports of Judgments and Decisions 1998‑II, § 35 and, as a recent authority, Sika v. Slovakia, no. 2132/02, §§ 24-27, 13 June 2006). 19. The Court notes that the consideration of the applicant's case by the national courts lasted from January 1999 until 29 May 2002 when the Court of Appeal upheld the judgment in the applicant's favour. The applicant informed the Court that he had lodged a cassation appeal. However, as the applicant failed to show that the cassation proceeding are still pending, the Court considers that the proceedings in the applicant's case ended with the full enforcement of the judgments in the applicant's favour. The length of proceedings in the judicial phase is therefore three years and four months and there is no discernible period of inactivity which can be attributed to the domestic courts. 20. However, the judgments in the applicant's favour were not enforced for more than one year and five months and for more than one year and eight months. 21. The Court recalls that it has already found violations of Article 6 § 1 of the Convention in similar circumstances (see, Chizhov v. Ukraine, no. 6962/02, § 40-43, 17 May 2005; Zamula and Others v. Ukraine, no. 10231/02, § 43-45, 8 November 2005). 22. Having examined all the materials submitted to it, the Court considers that the Government have not put forward any fact or argument capable of persuading it to reach a different conclusion in the present case. 23. There has, accordingly, been a violation of Article 6 § 1 of the Convention. III. APPLICATION OF ARTICLE 41 OF THE CONVENTION 24. Article 41 of the Convention provides: “If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.” A. Damage 25. The applicant claimed UAH 100,000[4] in respect of non-pecuniary damage. 26. The Government contested the applicant's claims, which they alleged were unsubstantiated and exorbitant. 27. Making its assessment on an equitable basis, as required by Article 41 of the Convention, the Court awards the applicant EUR 300 in respect of his non-pecuniary claim. B. Costs and expenses 28. The applicant claimed UAH 9,000[5] for costs and expenses incurred in the Convention proceedings. He presented four invoices for that sum from his lawyer. 29. The Government maintained that only those expenses which were actually and necessarily incurred should be awarded. 30. The Court reiterates that, in order for costs and expenses to be included in an award under Article 41, it must be established that they were actually and necessarily incurred in order to prevent or obtain redress for the matter found to constitute a violation of the Convention and were reasonable as to quantum (see, among many other authorities, Nilsen and Johnsen v. Norway [GC], no. 23118/93, § 62, ECHR 1999-VIII). 31. The Court considers that these requirements have not been met in the instant case. In particular, it notes that the case is not particularly complex and the applicant was not required to be legally represented. However, the applicant may have incurred some costs and expenses for his representation before the Court. Regard being had to the information in its possession and to the above considerations, the Court awards the applicant EUR 300 for costs and expenses. C. Default interest 32. The Court considers it appropriate that the default interest should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points. FOR THESE REASONS, THE COURT UNANIMOUSLY 1. Declares the application admissible; 2. Holds that there has been a violation of Article 6 § 1 of the Convention; 3. Holds (a) that the respondent State is to pay the applicant, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, EUR 300 (three hundred euros) in respect of non-pecuniary damage and EUR 300 (three hundred euros) in costs and expenses, plus any tax that may be chargeable; (b) that the above amounts shall be converted into the national currency of the respondent State at the rate applicable at the date of settlement; (c) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points. 4. Dismisses the remainder of the applicant's claim for just satisfaction. Done in English, and notified in writing on 29 March 2007, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. Stephen PhillipsPeer LorenzenDeputy RegistrarPresident [1] At the material time approximately 449.13 euros (EUR) [2] At the material time approximately EUR 331.52 [3] At the material time approximately EUR 1,894.39 [4] Around EUR 16,246 [5] Around EUR 1,462

COURT OF APPEAL FOR ONTARIO CITATION: Turcotte v. Lewis, 2018 ONCA 359 DATE: 20180413 DOCKET: C63637 Strathy C.J.O., Juriansz and Huscroft JJ.A. BETWEEN Ryan Turcotte, Rick Turcotte and Kerry Turcotte Plaintiffs (Appellants) and Aaron Lewis, Courtney Lewis, First Student Canada , 1853780 Ontario Inc. o/a Kee to Bala , Ryan Zaroski , David Ribble , John Doe 1 and John Doe 2 Defendants (Respondents) Anita W.H. Wong and Scott Hawryliw, for the appellants Roger H. Chown and Marie Hynes, for the respondents, First Student Canada and David Ribble Andrew A. Evangelista and Justine Ajandi, for the respondents, Ryan Zaroski and 1853780 Ontario Inc. o/a Kee to Bala Heard: December 8, 2017 On appeal from the judgment of Justice Susan E. Healey of the Superior Court of Justice dated March 20, 2017, with reasons reported at 2017 ONSC 1773. Strathy C.J.O.: [1] Ryan Turcotte (“Turcotte”) and his parents appeal the dismissal of their action against the respondents on two motions for summary judgment. [2] On June 25, 2012, Turcotte attended “resort night” at the Kee to Bala bar (the “Kee”), operated by the respondent 1853780 Ontario Inc. He returned to Barrie early the next morning on a bus chartered by the Kee from the respondent First Student Canada (“First Student”) and driven by the respondent David Ribble (“Ribble”). The respondent, Ryan Zaroski (“Zaroski”), was hired by the Kee as a security guard at the bar and on the bus. [3] The defendants, Aaron Lewis and Courtney Lewis, are cousins. Aaron Lewis was a passenger on the bus. At some point before the bus arrived in Barrie, Aaron Lewis contacted Courtney to ask him to meet the bus at its drop-off point. [4] Almost immediately after he stepped off the bus, Turcotte was allegedly assaulted by Aaron Lewis, Courtney Lewis and other unknown assailants. He sustained a serious head injury. He sued Aaron Lewis, Courtney Lewis and the respondents. He claimed that the assault was foreseeable and that the respondents had failed to take reasonable care to prevent it. [5] The respondents, First Student and Ribble, brought a motion for summary judgment. [1] The Kee and Zaroski brought a second motion for summary judgment. The motions were heard together. [6] There were two issues on the motions. First, whether the case was suitable for disposition by summary judgment. The motions judge held it was. Second, whether the moving parties, the respondents on this appeal, had met the applicable standards of care. The motions judge held they had. She granted their motions, dismissing the action. [7] For the reasons that follow, I find that the motions judge failed to fully articulate and apply the standard of care, effectively treating Turcotte’s contributory negligence as a bar to his claim. In my view, the summary judgment should be set aside and the matter should be remitted to the Superior Court of Justice for trial. A. The Facts [2] [8] On Mondays during the summer, the Kee held “resort nights”, attracting resort and tourism staff in the Muskoka region. The ten dollar cover charge included a bus service, which picked up guests from various locations in the region, brought them to the bar, and returned them at the end of the evening. The buses typically arrived at the Kee at 11:00 p.m. and departed at around 1:30 a.m. [9] The Kee had a capacity of 1,215 customers. It had a “robust” security system on resort nights, no doubt necessary to deal with the predictable effects of the combination of youth and alcohol. In addition to 15 provincially licenced security guards, there were paid duty police officers on the premises, as well as on-duty police officers stationed outside. Police sometimes parked a prisoner transport van outside the bar. Measures were taken to prohibit intoxicated patrons from boarding the buses at the pick-up point and to prevent alcohol from being brought on board. The busing program, and the security measures, had been developed by the Kee and the police to discourage drinking and driving and to provide a safe environment for the Kee’s customers. [10] The Kee had a security protocol for the buses. In the event of an altercation, the security guard, who travelled with the bus in both directions, was to separate those involved and to telephone police if there was a concern that violence could flare up on arrival. Security guards were entitled to remove patrons from the bus if they considered it necessary to do so. [11] On the night in question, the bus left the Kee between 1:30 and 2:00 a.m. It was driven by Ribble and bound for its original pick-up point, Duckworth Plaza, in Barrie. The trip to Barrie took about an hour. The bus had approximately 48 passengers on board, including Turcotte and Aaron Lewis, both of whom had been at the Kee. Zaroski was the security guard on board. In accordance with the Kee’s security protocol, he sat at the front of the bus, facing backwards, to keep an eye on the passengers. [12] Shortly after the bus left the Kee, a dispute arose after Zaroski ejected a female passenger for smoking on board. Zaroski saw Aaron Lewis push Turcotte. He went to the back of the bus and separated them. Turcotte moved to the front of the bus, away from Aaron Lewis. Zaroski testified that although he assumed that both Turcotte and Aaron Lewis had been drinking, he did not see signs of intoxication. [13] The separation of Turcotte and Aaron Lewis ended physical aggression on the bus, but there was continued jeering and shouting coming from the back of the bus directed towards the front, where Turcotte was seated. Zaroski’s evidence was that the noise and tension levels increased about halfway to Barrie. Some of the aggressive language was coming from Aaron Lewis. [14] Zaroski testified that the noise level increased once again when the bus was about ten minutes outside Barrie. He learned that someone at the back of the bus had “called ahead for backup”. Concerned that the situation might escalate and that violence might occur between Turcotte and Aaron Lewis when they got to Duckworth Plaza, Zaroski called police in Barrie, asking that a cruiser meet the bus on arrival. Ribble slowed the bus in the hope of allowing police time to arrive at the plaza. [15] Various individuals were present in the plaza when the bus arrived. Some were there to pick up passengers, but others had received calls or text messages from passengers, asking them to come, presumably as “backup”. Two of Turcotte’s friends were asked to come, but there was no evidence of who had asked them to do so. Courtney Lewis received two calls from his cousin, Aaron Lewis, asking him to come. [16] Zaroski noticed Courtney Lewis in the plaza as the bus arrived. He did not know that Courtney Lewis was Aaron’s cousin. However, he recognized Courtney from his work doing security at bars in the Barrie area. He knew from these experiences that Courtney had a tendency to get involved in physical altercations. [17] Police had not yet arrived at Duckworth Plaza when the bus got there. Zaroski was still on the phone with them. Concerned for Turcotte’s safety, Ribble and Zaroski let him off first, to give him a “head start”, telling him not to stick around the plaza. [18] Turcotte was one of the first to get off the bus, through the front door, followed by others through the front and rear doors. But he did not leave the plaza immediately. He walked some 8 to 20 feet away and stopped. Within a minute, he was surrounded by a group that included Aaron and Courtney Lewis. He was punched and fell to the ground, striking his head on the pavement. He suffered a traumatic head injury, resulting in permanent deficits, including problems with his cognitive functions and memory. Police arrived at the plaza about two minutes later. [19] Aaron and Courtney Lewis were convicted of aggravated assault and were sentenced to terms of imprisonment of two years less a day. Their appeals to this court were allowed: see R. v. Lewis , 2018 ONCA 351. B. The summary judgment motions [20] There was an extensive evidentiary record adduced on the summary judgment motions. It included: · affidavits of Turcotte, Ribble, Zaroski and a representative of the Kee; · transcripts from the examinations for discovery; and · transcripts of Turcotte, Ribble and Zaroski at the criminal trial. [21] The motions judge had presided at the criminal trial of Aaron and Courtney Lewis. The parties consented to her presiding on the summary judgment motions. [22] No expert evidence was filed at the summary judgment motions concerning the standard of care applicable to the respondents. [23] The motions judge found that the case met the test for summary judgment in Hryniak v. Mauldin , 2014 SCC 7, [2014] 1 S.C.R. 87. In her view, all the relevant evidence was before the court, the vast majority of facts were not in dispute and, although there were some inconsistencies in prior statements given by Ribble and Zaroski, there were no conflicts in their evidence that were material to the issue of negligence. [24] Taking the evidence of Ribble and Zaroski at its most favourable to the appellants (as the respondents proposed the judge could), the motions judge accepted, at para. 71, for the purpose of the motions that “both Zaroski and Ribble knew that: tensions were escalating as the bus approached Barrie; someone had called for ‘backup’; one protagonist was Aaron Lewis; and the likely target of his anger was Turcotte.” She found that any inconsistencies in their evidence was immaterial in the face of these admissions. [25] She found as well, at para. 71, that: Ribble was aware of the fact that a call had been placed to the police by Zaroski, and both were concerned about the escalation of tension on the bus and the possibility that there might be an altercation in the Plaza involving Turcotte. Both knew that the police were not there when the bus arrived, and both suggested to Turcotte that he get off of the bus and not remain in the Plaza. In the view of this court, the standard of care is informed by these essential facts. [26] The motions judge identified, at para. 74, what she described as the only disputed fact that impacted on the applicable standard of care, namely, “Turcotte’s level of awareness of the danger that he was in, to the extent that that could have been foreseen.” Turcotte had made conflicting statements – first in his statement to police, when he had difficulties in recollection due to his brain injury; then at the criminal trial, where he claimed to recollect “many key details … that had been previously forgotten by him due to his brain injury.” However, the motions judge concluded, at para. 74: An assessment of the reliability of Turcotte’s evidence is something that can be accomplished without him taking the witness stand once again. Accordingly, although his state of knowledge and awareness is a triable issue, it is not necessary to have a trial in order to determine what that was. The evidence necessary to make such a determination is before the court, as will be explained below. [27] The motions judge held that the case was ideal for summary judgment as such an approach would provide a fair and just adjudication in which the necessary fact-finding could be done and the law applied based on the record before the court in a cost-effective and efficient manner. [28] The motions judge rejected the appellants’ submissions that expert evidence was required to determine the standard of care. She found, at para. 76, that the standard of care applicable to Ribble and Zaroski was that of “an ordinary, reasonable and prudent bus driver and security guard, in the circumstances of the case.” [29] She rejected the allegations that the respondents failed to keep either the Kee or the bus reasonably safe, or that there was negligence in relation to any acts or omissions at the Kee or on the bus trip. There was no evidence that any of the parties involved in the altercation were intoxicated, or that they had been over-served at the Kee. The respondents fulfilled their duty to take reasonable steps to ensure that Turcotte was safe while he was at the Kee and while being transported to Duckworth Plaza. [30] She also rejected allegations that the respondents failed to take measures in response to the escalating tension on the bus, such as diverting from the route and going to a police station or other secure location. Zaroski had followed the protocol by separating the antagonists, monitoring the situation and calling police to request that a cruiser meet the bus at the plaza. Ribble was responsible for driving the bus and not for security. [31] Nor were the respondents responsible for failing to call out to the assailants to break up the confrontation after Turcotte left the bus. Events happened quickly and verbal commands were not likely to have been effective in the circumstances. [32] The motions judge held that the sole issue for trial was whether the respondents should have prevented Turcotte from leaving the bus when they knew or ought to have known that a situation of danger was imminent. She concluded that they could not have known that Turcotte would stop in the parking lot instead of following their suggestion that he move along. Nor did they have authority to detain a passenger on the bus. While the potential for a physical altercation was foreseeable, to suggest that they should have known that one was imminent or inevitable “would require impossible clairvoyance.” [33] She found, at para. 93, that: The only basis upon which an argument could be made for either Ribble or Zaroski having fallen below the expected standard is if the circumstances were such that Turcotte was unaware that he was in danger once the bus had arrived at the parking lot. In those circumstances, Ribble and/or Zaroski’s failure to advise him of their concern that a physical altercation might take place in the Plaza may be said to create an unreasonable risk of harm to Turcotte. [34] But the motions judge rejected Turcotte’s evidence that he was unaware of the risk, finding that his recollection of the events of the evening was not reliable and was in conflict with the evidence of Zaroski, whom she found to be a careful and credible witness. Zaroski testified that Turcotte was involved in the yelling and profanity on the bus; had been moved to the front of the bus after being pushed by Aaron Lewis; had been sitting at the front of the bus beside Zaroski; and was sitting beside him when Zaroski was informed that someone at the back of the bus had called for “backup”. When the bus arrived at the plaza, Zaroski told Turcotte that he should “not hang around and make off to wherever he was going”. Instead Turcotte got off the bus and stood about 20 feet away. [35] The motions judge held that Ribble and Zaroski acted reasonably in letting Turcotte off the bus and giving him a “head start”, and could not be faulted if Turcotte ignored their advice and remained in the plaza. She concluded, at paras. 96 and 97: All of this leads the court to the conclusion that Turcotte was as aware of the circumstances that existed that night as Ribble and Zaroski were. He was aware of the potential for a physical altercation, and yet still got off the bus and remained in the parking area. There is no reason to hold either of these defendants to a higher standard. Even if a physical altercation involving Turcotte was foreseeable to Ribble or Zaroski, they had no absolute duty to ensure that Turcotte avoided harm or that no harm came to him once he got off the bus. Ribble and Zaroski both acted reasonably in letting Turcotte off the bus first, effectively giving him a “head start”, and Zaroski acted reasonably in suggesting that he continue on his way immediately. When they did so, they had every reason to believe that Aaron Lewis would be exiting out the front, as he did, and it was reasonable that they not have Lewis pass in front of Turcotte as he was exiting. It was not until Turcotte exited the bus that the alarm sounded to alert either to the possibility that Lewis might exit through the back, and in any event, this did not occur. These defendants are not responsible for the fact that Turcotte chose to ignore the advice given to him that he leave immediately. These defendants could no more have foreseen that Courtney Lewis, and perhaps others, would strike Turcotte than he himself could have foreseen. As the evidence shows that at no time did the conduct of any of these defendants fall below the standard of care required of them in all of the circumstances, I must dismiss the action against them in its entirety. C. Issues [36] There are two issues on this appeal: 1. Did the motions judge err in concluding that this was an appropriate case for summary judgment? 2. Did the motions judge err in her assessment of the standard of care? D. The parties’ submissions [37] The appellants make two principal submissions. First, they submit that the summary judgment motions were premature and inappropriate. Premature because expert reports had not been filed and a police report was not yet available. Inappropriate because a paper record was unsuitable for the resolution of credibility issues, including the credibility of Turcotte’s assertion that he was not aware of the danger he faced in getting off the bus. [38] Second, they submit that the motions judge’s duty of care analysis was flawed because it limited the scope of the duty to events on the bus, rather than in the parking lot, and failed to impose a duty on the respondents to take measures to avoid putting Turcotte in a situation of danger, given their knowledge of the risk. [39] The respondents submit that this was an appropriate case for summary judgment, for the reasons given by the motions judge. The appellants did not seek an adjournment to file expert or other evidence. The approach taken by the motions judge was reasonable and practical, particularly in light of the respondents’ submission that any conflicts in the evidence could be resolved in the manner most favourable to the appellants. [40] The respondents further submit that the motions judge’s findings related to the standard of care are entitled to deference. The motions judge applied the “but for” test of causation and found that any failure of the respondents to inform Turcotte of the risk was not causative, because he himself was aware of the risk. E. Analysis (1) Summary Judgment [41] The appellants did not tender expert evidence on the standard of care, nor did they seek an adjournment of the motions to obtain either expert evidence or a police report. They did not seek to cross-examine affiants and were content to use discovery transcripts supplemented by some evidence from the criminal trial. Nor did the appellants ask the motions judge to use the fact-finding powers available to her under r. 20.04(2.1) of the Rules of Civil Procedure , R.R.O. 1990, Reg. 194. They agreed to the motions judge presiding on the motions, even though she had conducted the criminal trial. [42] The motions judge’s conclusion that the case was suitable for summary judgment is entitled to deference: Hryniak , at para. 81. I would not give effect to the appellants’ submissions on this issue. (2) Standard of Care [43] It is useful to begin the analysis with first principles. A plaintiff suing in negligence must establish that: (1) the defendant owed him or her a duty of care; (2) the defendant’s conduct breached the applicable standard of care; (3) the plaintiff sustained compensable damage; and (4) the damage was caused, in fact and in law, by the defendant’s breach. See Deloitte & Touche v. Livent Inc. (Receiver of) , 2017 SCC 63, 416 D.L.R. (4th) 32, at para. 77; Mustapha v. Culligan of Canada Ltd. , 2008 SCC 27, [2008] 2 S.C.R. 114, at para. 3; Hill v. Hamilton-Wentworth Regional Police Services Board , 2007 SCC 41, [2007] 3 S.C.R. 129, at para. 96; Ediger v. Johnston , 2013 SCC 18, [2013] 2 S.C.R. 98, at para. 24. [44] In this case, it is acknowledged that the respondents owed Turcotte a duty of care. It is also clear that Turcotte sustained compensable damages. The real issues to be resolved are the standard of care and causation. [45] The standard of care defines the content of the duty of care and depends on the context: Crocker v. Sundance Northwest Resorts Ltd. , [1988] 1 S.C.R. 1186, at p. 1198. In Ryan v. Victoria (City) , [1999] 1 S.C.R. 201, a case considered by the motions judge, Major J. described, at pp. 221-222, the factors to be considered in the articulation of the standard of care: Conduct is negligent if it creates an objectively unreasonable risk of harm. To avoid liability, a person must exercise the standard of care that would be expected of an ordinary, reasonable and prudent person in the same circumstances. The measure of what is reasonable depends on the facts of each case, including the likelihood of a known or foreseeable harm, the gravity of that harm, and the burden or cost which would be incurred to prevent the injury. In addition, one may look to external indicators of reasonable conduct, such as custom, industry practice, and statutory or regulatory standards. [46] The causation analysis asks whether, applying the “but for” test, there is a causal connection between the breach of the standard of care and the compensable damage suffered. The test asks whether the damage would not have occurred “but for” the defendants’ negligence: Hill , at para. 93. [47] The respondents conceded they owed a duty of care to Turcotte. As noted above, the motions judge found that the standard of care was “that of an ordinary, reasonable and prudent bus driver and security guard, in the circumstances of the case.” But she did not refine the standard of care beyond that general statement. Nor did she define what the standard of care required in the circumstances as they unfolded during the bus ride or when the bus arrived at the plaza. Nor did she articulate her conclusions on the likelihood of foreseeable harm, the gravity of that harm or the reasonableness of measures that could be taken to prevent it. These factors inform the standard of reasonable care. [48] Instead, the motions judge defined the respondents’ standard of care by reference to Turcotte’s “level of awareness of the danger that he was in”. She absolved the respondents of responsibility because Turcotte was as aware of the risk as they were. As she put it, at para. 96, “[t]here is no reason to hold either of these defendants to a higher standard.” [49] Respectfully, this truncated the standard of care analysis. It put the responsibility of avoiding the risk entirely on Turcotte, without considering the content of the respondents’ duty to him, given their knowledge and appreciation of the risk and their ability to avoid the risk. [50] The motions judge also found that Ribble and Zaroski were not responsible for the fact that Turcotte ignored their advice to leave immediately. While that may go to the issue of whether Turcotte was contributorily negligent – an issue the motions judge did not address – it would not necessarily relieve them from liability if their breach of the standard of care put him in a dangerous position. Nor would it necessarily relieve them from liability if Turcotte had remained in the plaza for reasons they could have foreseen – for example, because he had to wait for a ride home. [51] A finding that the respondents breached the standard of care would not hold them to a higher standard than Turcotte. It would hold them to a different standard: the standard of care applicable to those who are charged with the transportation and security of patrons of the bar – patrons who have paid a fee for the purpose. [52] Cases such as Jordan House Ltd. v. Menow , [1974] S.C.R. 239, and Murphy v. Little Memphis Cabaret Inc. , [1996] O.J. No. 4600 (Gen. Div.), while not on all fours, are instructive. In both cases, an inebriated customer was injured after being ejected from a bar. Menow was hit by a car. Murphy was attacked by four other patrons who had also been ejected from the bar. In both cases, the bar was held liable. In Murphy , the trial judge found, at para. 16, that “the tavern owner had an obligation to exercise reasonable care in expelling [the plaintiff] from the tavern in view of the fact that imminent danger which originated within the tavern awaited him outside the door.” [53] The judge found that, as in Jordan House , an inordinate burden would not be placed on the tavern keeper in requiring him to take preventative measures, for example, by keeping the plaintiff inside the tavern until the hostile foursome had departed, or by calling a taxi or calling police. [54] Jordan House was applied by the Supreme Court of Canada in Crocker . In that seminal case, it was held that a ski resort had a positive duty to prevent a visibly intoxicated patron from participating in a dangerous tubing competition. Wilson J., who delivered the judgment of the court, summarized the application of Jordan House , at pp. 1196-97: The general approach taken in Jordan House has been applied in a number of cases. Car owners who have permitted or instructed impaired persons to drive their cars have been found liable (see: Hempler v. Todd (1970), 14 D.L.R. (3d) 637 (Man. Q.B.), and Ontario Hospital Services Commission v. Borsoski (1973), 54 D.L.R. (3d) 339 (Ont. H. Ct.)) as has the owner of a motorcycle who allowed a young unlicensed driver to use it (see: Stermer v. Lawson (1977), 79 D.L.R. (3d) 366 (B.C.S.C.)). The common thread running through these cases is that one is under a duty not to place another person in a position where it is foreseeable that that person could suffer injury . The plaintiff’s inability to handle the situation in which he or she has been placed – either through youth, intoxication or other incapacity – is an element in determining how foreseeable the injury is. The issue in the present appeal is whether the relationship between Sundance and Crocker gave rise to this kind of duty. [Emphasis added.] [55] Wilson J. agreed, at p. 1197, with Dubin J.A. in this court that the duty in that case was to “take all reasonable measures to prevent the plaintiff from continuing to participate in the very dangerous activity which was under its full control and supervision and promoted by it for commercial gain when it became apparent that the plaintiff was drunk and injured”. The plaintiff had not voluntarily assumed the risk, but his voluntary intoxication could be and was taken into account in fixing him with 25 percent contributory negligence. [56] These cases are, of course, distinguishable on their facts, including the fact that, in both Jordan House and Crocker , the plaintiffs’ extreme intoxication made them vulnerable and enhanced the risk and the standard of care. The cases have, however, the “common thread” referred to by Wilson J., of imposing a duty “not to place another person in a position where it is foreseeable that that person could suffer injury.” [57] In my view, the motions judge significantly understated the standard of care. The Kee operated a bar, which catered to a large number of youthful patrons. It provided transportation, through the services of First Student, so that its patrons could drink without driving. The Kee provided security, at the bar and on the bus, to address the foreseeable risk of violence between patrons. The individual respondents, Ribble and Zaroski, were part of the transportation and security system and were trained in their respective responsibilities to deal with foreseeable risks, including the risks posed by unruly or violent passengers. [58] There were conflicts and inconsistencies in the evidence of the individual respondents concerning the events on the bus. These conflicts and inconsistencies were not resolved by the motions judge because of her decision to take the evidence most favourable to the appellants. But on any version of the evidence the individual respondents were aware of a clear and substantial risk of violence when the bus arrived in Barrie. The events on the bus, the escalating tensions and shouting and the call for “back up” made a violent confrontation reasonably foreseeable. The individual respondents knew that Turcotte was a likely target of violence and that the risk came from someone on the bus (Aaron Lewis) and from those waiting in the plaza (the “back up”). The risk of violence was sufficiently high to warrant calling police to meet the bus on its arrival at the plaza in Barrie. [59] The motions judge found that while the potential for a physical altercation was foreseeable, the individual respondents could not have known that it was “imminent or inevitable”. This misstated the standard of care. The test is whether harm was reasonably foreseeable. In this case, it clearly was. [60] The motions judge’s abbreviated assessment of the standard of care led her to understate the means available to the respondents to avoid putting Turcotte in the midst of a dangerous environment or to take measures to protect him when he did get off the bus. For example, by telling him not to get off the bus until police arrived. Or by Zaroski accompanying him to a place of safety. Nor was there any satisfactory evidence of why, if the police were only two minutes away, some measures could not be taken to delay either the arrival of the bus or Turcotte’s exit. [61] While some of these issues go to security, others go to the duties of First Student and Ribble, as carriers, to guard against reasonably foreseeable dangers to passengers from external causes: see Domanski v. Hamilton , [1959] O.R. 262 (C.A.), at pp. 270-271. [62] I acknowledge the motions judge’s conclusion that the respondents could not have known that Turcotte would remain in the parking lot. That may well go to the issue of whether Turcotte was contributorily negligent, but it would not relieve the respondents from responsibility if their actions put him in danger that could reasonably have been avoided. [63] The motions judge’s conclusions with respect to the standard of care meant that she did not proceed to a causation analysis. I disagree with the respondents’ submission that the motions judge’s comments at paras. 96-97, referred to above, were directed to causation. In my view, she was clearly addressing foreseeability and the standard of care. Had the standard of care analysis been approached and applied properly, a causation analysis might well have determined that Turcotte would not have been injured “but for” the respondents’ negligence, notwithstanding his own contributory negligence. F. Disposition [64] For these reasons, I would allow the appeal and remit the matter to the Superior Court for determination in accordance with r. 20.05. [65] While the motions judge said that she accepted the evidence most favourable to the appellants, she never precisely articulated what evidence that was. Nor did she resolve inconsistencies in the evidence. We do not know the factual underpinnings of her analysis. For these reasons, a trial is necessary. The judge trying the matter shall be entitled to give pre-trial directions pursuant to rr. 20.05(1) and (2) to ensure the just, expeditious and efficient determination of the proceeding on its merits. [66] Costs to the appellants in the amount of $7,500, inclusive of disbursements and all applicable taxes. Released: “GS”  APR 13  2018 “George R. Strathy C.J.O.” “I agree. R.G. Juriansz J.A.” “I agree. Grant Huscroft J.A.” [1] Aaron Lewis and Courtney Lewis had been noted in default. The two other perpetrators of the assault have not been identified. [2] Much of this summary comes from the motions judge’s thorough findings of fact, which are not in dispute.

2002 2 SCR 283 The following Order of the Court was delivered This appeal, by special leave, is from the judgment of the Division Bench of the High Court of Punjab and Haryana at Chandigarh dismissing appellants CWP No. 5436 of 1995 on February 27, 1996, following the judgment of this Court in Gram Panchayat of Village Jamalpur v. Malwinder Singh and Ors., 1985 Suppl 2 SCR 28. To appreciate the companytroversy involved in this case it would be necessary to numberice the facts giving rise to this appeal. The first respondent filed application before the Development and Panchayat Officer-cum-Collector, Ludhiana for short. the Collector under Section 7 of the Punjab Village Common Lands Regulations Act, 1961 for short, the Act for possession of the land in dispute on the ground that the land has vested in it and the same was mutated in the name of Panchayat by order of the Tehsildar dated September 4, 1986. Appellant Nos. 2 and 3 companytested the claim of the first respondent pleading that the land belonged to the Government of Punjab and it was allotted in their favour under a package deal in lieu of which the amount was also deposited in the Treasury that the possession of the land was given to them as per the order of the Tehsildar in the year 1970 and on that basis they have been in possession of the same that the mutation in the name of Panchayat was done without numberice to them, therefore, it is illegal that by mutation the Panchayat did number become the owner of the land in which there was potato farm which was Government Agency that the Government of Punjab established the potato farm by spending crores of rupees that pucca buildings were companystructed on the site and 27 crores and 9 electric motors were also installed there and that there are 12 tractors of the farm on the site. It was further averred that the Government was spending about 10 to 11 lakhs per year on the potato farm. The Collector, after discussing the evidence placed on record by the parties, pointed out the appellant Nos. 2 and 3 the respondents therein had number produced any proof to show that the disputed land was allotted by the Punjab Government or that the potato farm was purchased from the Government that from the beginning the disputed land was being shown in Jamabandi as shamilar den and on September 4, 1986, the mutation of the land was effected in favour of the Gram Panchayat. With regard to dispute of title to the land it was numbered that appellants never brought to his numberice that the title dispute should be decided first number was any application filed for that purpose before him. It was held that the disputed land was owned by Gram Panchayat and in that view of the matter he ordered delivery of possession of the land to the Gram Panchayat. Appellant Nos. 2 and 3 herein filed an appeal against the said order before the Director Rural Development and Panchayat, Punjab exercising the powers of Commissioner under the Act hereinafter referred to as, the Commissioner . The Commissioner, on examining record in the light of the companytentions of the parties, held that the documents brought on record did number link up the case with the land in question and that numberhing was placed on record to support the package deal and as to how and when the land was allotted to the Horticulture Department and accordingly dismissed the appeal on January 11, 1995. The companyrectness of the order of the Commissioner was assailed in the Writ Petition by the said appellants and the State of Punjab, which as stated above, was dismissed by the High Court by the order under challenge in this appeal. Mr. Shiv, Pujan Singh, the learned companynsel for the appellants, has companytended that after the amendment of Section 3 by Act 8 of 1995 the land in question stood excluded from the land vested in the Panchayat, therefore, the order of the High Court has to be set aside. It may be useful to refer to the amended Section 3 of the Act, insofar as it is relevant, which reads as follows- Lands to which this Act applies- This Act shall apply and before the companymencement of this Act, the Shamilat Law shall be deemed always to have applied, to all lands which are shamilat deh as defined in clause g of Section 2. Notwithstanding anything ccntained in sub-section 1 of Section 4- Where any land has vested in a Panchayat under the Shamilat Law, but such land has been excluded from shamilat deh under clause g of Section 2 other than the land so excluded under sub-clause ii-a of that clause, all rights, title and interest of the Panchayat in such land as from the companymencement of the Punjab Village Common Lands Regulation Amendment Act, 1995, shall cease and all such rights, title and interest shall vest in the person or persons in whom they were vested, immediately before the companymencement of the shamilat law. where any land has vested in a Panchayat under this Act, but such land has been excluded from shamilat deh under sub-clause ii-a of clause g of Section 2, all rights, title and interest of the Panchayat in such land, as from the companymencement of the Punjab Village Common Land Regulation Amendment Act, 1995, shall cease, and all such rights, title and interest shall on or before the 9th day of July, 1 985, revest in the person or persons to whom the land so excluded has been allotted or otherwise transferred by sale or by any other manner whatsoever, subject to the companydition that- a b shall be paid by the Rehabilitation Department of the Government of Punjab to the Department of Rural Development and Panchayats for onward disbursement to the Panchayat to which such shamilat deh belonged. By Act 8 of 1995, sub-sections 2 and 3 are inserted in Section 3. But before reading the said sub-sections it would be necessary to numberice that by virtue of Section 4 of the Act all rights, title and interest whatsoever in the land which is included in the shamilat deh of any village had vested in the Panchayats except to the extent indicated therein. Clause g of Section 2 defines shamilat deh. It is an inclusive definition and is in two parts the first part enumerates five categories of land which are included within its meaning and the second part excludes as many as ten items of land which would fall outside the ambit of shamilat deh. By the same Amendment Act, ii-a is inserted in clause g of Section 2 in the list of the excluded items. Now adverting to the provisions of amended Section 3, we are companycerned here with sub-section 2 . It opens with number obstante clause and says that numberwithstanding anything companytained in sub-section 1 of Section 4 which deals with vesting of rights in Panchayat and numberproprietors , any land which has vested in Panchayat shall cease and all such rights, title and interest will revest in the person or persons in whom they were earlier vested. It has two limbs i deals with a case where the land has vested in a Panchayat under the Shamilat Law but such land has been excluded from shamilat deh under clause g of Section 2 other than the land so excluded under sub-clause ii-a of that clause and as from the companymencement of Act 8 of 1995 all rights, title and interest of the Panchayat in such land shall cease and vest in the person or persons in whom they were vested immediately before the companymencement of such law and ii provides, where any land has vested in a Panchayat under the Act but such land has been excluded from shamilat deh under sub-clause ii-a of clause g of Section 2, then as from the companymencement of Act 8 of 1995 all rights, title and interest of the Panchayat in such land shall cease on or before July 9, 1985 and revest in the person or persons to whom the land so excluded has been allotted or otherwise transferred by sale or by any other manner whatsoever, subject to the companyditions specified in clauses a and b therein which are number relevant for the present discussion . Section 3 2 i has numberapplication as the land in question does number fall under any of the items excluded under clause g of Section 2 other than sub-clause ii-a . For purposes of application under Section 3 2 ii , it has to be shown that the land falls within Section 2 g ii-a which reads as follows 2 g shamilat deh includes- 1 to 5 But does number include land which- ii-a was shamilat deh, but, has been allotted on quasi-permanent basis to a displaced person, or, has been otherwise transferred to any person by sale or by any other manner whatsoever after the companymencement of this Act, but on or before the 9th day of July, 1985. This sub-clause excludes the land which was shamilat deh and had been allotted on quasi-permanent basis to a displaced person, or has been otherwise transferred to any person by sale or by any other manner whatsoever after the companymencement of the Act 4th May, 1961 but on or before July 9, 1985. For invoking sub-section 2 of Section 3, quoted above, it has to be shown that the land in question had vested in the appellants immediately before the companymencement of the Shamilat Law or has been allotted or otherwise transferred by sale or by any other manner whatsoever. We have pointed out above that the question of dispute as to the title of the appellant was number referred to the companypetent authority under Section 11 of the Act, but on the application of the Panchayat under Section 7 both the Collector as well as the Commissioner found that the appellant Nos. 2 and 3 had number produced any material or any documentary evidence to show that the land had vested in them or had been transferred by sale or otherwise in their favour. In view of the above findings of fact the said amended provision would have numberapplication. In Gram Panchayat of Village, Jamalpur s case supra , a Constitution Bench of this Court held The law passed by the State Legislature being a measure of agrarian reform is companyducive to the welfare of the companymunity and there is numberreason why that law should number have effect in its full amplitude. By this process, the village Panchayats will be able to meet the needs of the village Panchayat companymunity and secure its welfare. Accordingly, the Punjab Act of 1953 would prevail in the State of Punjab over the Central Act of 1950 even in so far as shamilat deh land are companycerned From the above observation of the Constitution Bench judgment it follows that numberright can be claimed by the appellants on the basis of vesting of land under the Administration of Evacuee Property Act, 1950 as under the Punjab Act of 1953 shamilat deh would vest in the Panchayat. It is next companytended by the learned companynsel for the appellants that the case may be remanded to the Collector to enable the appellants to place necessary material on record. We are afraid we cannot accede to the companytention of the learned companynsel. As the litigation is pending for more than fifteen years we do number want to put the clock back after such a long time. It is brought to our numberice that with the huge investment of companyers of rupees the potato farm has been set up by the State Government in which many persons are working and the Government is spending Rs.10-12 lakhs per year and that the land was handed over to the Horticulture Department of the Government as an agency of the Government there are companystructed buildings and that the appellants would suffer grave hardship if the Panchayat would resort to demolish the same for purposes of taking dispossession. On instructions, the learned companynsel for the Panchayat submits that the respondents would lease out the area on which the building of the appellants are existing together with land necessary for ingress or egress to reach the said land.

criminal appellate jurisdiction criminal appeal number 520 of 1976. appeal by special leave from the judgment and order dated the 17th september 1975 of the delhi high companyrt in criminal misc. m 212 of 1974 mukherjee and o.p. sharma for the appellant. r. mridul b.p. mridul b.p. maheshwari and suresh sethi for the respondents. the judgment of the companyrt was delivered by sen j. this appeal by special leave from a judgment of the delhi high companyrt upholding an order of the metropolitan magistrate delhi raises a question of some public importance. the question is as to whether the appellant who is a member of the indian administrative service and whose services were placed at the disposal of the companyperative store limited a society registered under the bombay cooperative societies act 1925 hereinafter called the society was a public servant within the meaning of cl. twelfth of s. 21 of the indian penal companye 1860 for purposes of s. 197 of the companye of criminal procedure 1973. the question arises in this way. the appellant is a member of the indian administrative service. by numberification number 27-942-estt. 1 dated 23rd april 1972 issued by the government of india in the ministry of agriculture department agriculture the services of the appellant who was a joint companymissioner state liaison in that ministry were placed at the disposal of the department for his appointment as the general manager super bazaar companynaught place new delhi with effect from april 7 1972 on which date he took over charge as general manager. at the request of the managing committee of the society the government of india extended the period of his deputation for a further period of one year with effect from april 7 1973. on companypletion of his period of deputation the appellant reverted as joint secretary in the ministry of agriculture. on october 10 1973 the food inspector purchased a sealed bottle of honey from the super bazaar at the ina market. the public analysts report showed the honey to be adulterated. on april 5 1974 the municipal companyporation delhi filed a companyplaint against the appellant and other officials of the super bazaar as also against the manufacturer of honey for having companymitted an offence punishable under s. 7 read with s. 16 of prevention of food adulteration act 1954. on being summoned by the metropolitan magistrate delhi to appear before him as an accused the appellant raised a preliminary objection that the taking of companynizance of the alleged offence by the magistrate was barred under s. 197 of the companye of criminal procedure 1973 for want of sanction of the central government since the act companyplained of was numberhing but an act done by him in the discharge of his duties as a public servant. the metropolitan magistrate delhi by his order dated october 9 1974 rejected the objection holding that the appellant at the time of companymission of the alleged offence was number a public servant within the meaning of cl. twelfth of s. 21 of the indian penal companye and therefore he was competent to take companynizance of the alleged offence. in coming to that companyclusion the learned magistrate held that the services of the appellant having been placed at the disposal of the society he was in foreign service under fr 9 7 and therefore companyld number be regarded as a public servant within the meaning of cl. twelfth of s. 21 of the indian penal companye for two reasons namely a as the general manager he was number an officer in the service or pay of the government and b while functioning as general manager he was number employed in companynection with the affairs of the union. on appeal the high companyrt companyfirmed the view of the learned magistrate. the short question that falls for our determination in this appeal is whether a member of the indian administrative service whose services are placed at the disposal of an organisation which is neither a local authority number a corporation established by or under a central provincial or state act number a government companypany by the central government or the government of a state can be treated to be a public servant within the meaning of cl. twelfth of s. 21 of the indian penal companye for purposes of s. 197 of the companye of criminal procedure 1973. the answer to the question turns on the companystruction of cl. twelfth of s. 21 of the indian penal companye 1860 and s. 197 of the companye of criminal procedure 1973 which so far as they are relevant are as follows the words public servant denumbere a person falling under any of the descriptions hereinafter following namely- twelfth every person- a in the service or pay of the government or remunerated by fees or companymission for the performance of any public duty by the government b in the service or pay of a local authority a corporation established by or under a central provincial or state act or a government companypany as defined in section 617 of the companypanies act 1956. s. 197 prosecution of judges and public servants. when any person who is or was a judge or magistrate or a public servant number removable from his office save by or with the sanction of the government is accused of any offence alleged to have been companymitted by him while acting or purporting to act in the discharge of his official duty numbercourt shall take companynizance of such offence except with the previous sanction- a in the case of a person who is employed or as the case may be was at the time of companymission of the alleged offence employed in companynection with the affairs of the union of the central government in support of the appeal learned companynsel for the appellant has urged two grounds. the first is that the chain of departmental stores knumbern as super bazaar at companynaught place new delhi together with 12 other super bazaars in the metropolitan city of delhi including the one at the ina market is numberhing but a company- mercial activity of the central government and therefore the appellant was at the time of the companymission of the alleged offence employed in companynection with the affairs of the union. that being so the prosecution companyld number be launched without sanction from the central government under s. 197 of the companye of criminal procedure 1973. the second is that the companyperative store limited which runs the super bazaars having been registered under s. 10 of the bombay cooperative societies act 1925 was a body companyporate by virtue of s. 23 of that act and therefore the appellant was a public servant within the meaning of cl. twelfth of s. 21 of the indian penal companye. it is said that although the appellant may number be companyered by sub-cl. a he falls within the ambit of sub-cl. b of cl. twelfth. we find it difficult to accept these submissions. clause twelfth of s. 21 of the indian penal companye protects two classes of public servants viz. a every person in the service or pay of the government or remunerated by fees or companymission for the performance of any public duty by the government and b every person in the service or pay of a local authority a companyporation established by or under a central provincial or state act or a government companypany as defined in section 617 of the companies act 1956. the appellant does number answer any of these descriptions. during his period of deputation he was number an officer in the service or pay of the government number was he in the service of a local authority a companyporation established by or under an act or a government companypany. it is however urged that the expression companyporation appearing in sub-cl. b of cl. twelfth of s. 21 of the indian penal companye is wide enumbergh to include number only a corporation established by or under a central provincial or state act but also a body companyporate. the submission proceeds on the basis of s. 23 of the bombay companyperative societies act 1925 which reads the registration of a society shall render it a body companyporate by the name under which it is registered with perpetual succession and a companymon seal and with power to hold property to enter into contracts to institute and defend suits and other legal proceedings and to do all things necessary for the purposes of its companystitution. clause twelfth does number use the words body companyporate and the question is whether the expression companyporation contained therein taken in companylocation of the words established by or under a central provincial or state act would bring within its sweep a companyperative society. indubitably the companyperative store limited is number a corporation established by a central or state act. the crux of the matter is whether the word under occurring in cl. twelfth of s. 21 of the indian penal companye makes a difference. does the mere act of incorporation of a body or society under a central or a state act make it a companyporation within the meaning of cl. twelfth of s. 21? in our opinion the expression companyporation must in the companytext mean a corporation created by the legislature and number a body or society brought into existence by an act of a group of individuals. a companyperative society is therefore number a corporation established by or under an act of the central or state legislature. a companyporation is an artificial being created by law having a legal entity entirely separate and distinct from the individuals who companypose it with the capacity of continuous existence and succession numberwithstanding changes in its membership. in addition it possesses the capacity as such legal entity of taking holding and companyveying property entering into companytracts suing and being sued and exercising such other powers and privileges as may be conferred on it by the law of its creation just as a natural person may. the following definition of companyporation was given by chief justice marshall in the celebrated dartmouth college case a companyporation is an artificial being invisible intangible and existing only in companytemplation of law. being the mere creature of law it possesses only these properties which the charter of its creation companyfers upon it either expressly or as incidental to its very existence. these are such as are supposed best calculated to effect the object for which it was created. among the most important are immortality and if the expression may be allowed individuality proper ties by which a perpetual succession of many persons are companysidered as the same and may act as a single individual. they enable a companyporation to manage its own affairs and to hold property without the perplexing intricacies the hazardous and endless necessity of perpetual companyveyances for the purpose of transmitting it from hand to hand. it is chiefly for the purpose of clothing bodies of men in a succession with these qualities and capacities that companyporations were invented and are in use. by these means a perpetual succession of individuals are capable of acting for the promotion of the particular object like one immortal being. the term companyporation is therefore wide enumbergh to include private companyporations. but in the companytext of cl. twelfth of s. 21 of the indian penal companye the expression companyporation must be given a narrow legal companynumberation. companyporation in its widest sense may mean any association of individuals entitled to act as an individual. but that certainly is number the sense in which it is used here. companyporation established by or under an act of legislature can only mean a body companyporate which owes its existence and number merely its companyporate status to the act. for example a municipality a zilla parishad or a gram panchayat owes its existence and status to an act of legislature. on the other hand an association of persons constituting themselves into a companypany under the companypanies act or a society under the societies registration act owes its existence number to the act of legislature but to acts of parties though it may owe its status as a body companyporate to an act of legislature. there is a distinction between a companyporation established by or under an act and a body incorporated under an act. the distinction was brought out by this companyrt in sukhdev singh ors. v. bhagatram sardar singh raghuvanshi ors. it was observed a companypany incorporated under the companypanies act is number created by the companypanies act but companyes into existence in accordance with the provisions of the act. there is thus a well-marked distinction between a body created by a statute and a body which after companying into existence is governed in accordance with the provisions of a statute. in sabhajit tewary v. union of india and ors the question arose whether the companyncil of scientific and industrial research which was a society registered under the societies registration act was a statutory body. it was urged that because the companyncil of scientific and industrial research had government numberinees as the president of the body and derived guidance and financial aid from the government it was a statutory body. repelling the contention the companyrt observed the society does number have a statutory character like the oil and natural gas companymission or the life insurance companyporation or industrial finance corporation. it is a society incorporated in accordance with the provisions of the societies registration act. the fact that the prime minister is the president or that the government appoints numberinees to the governing body or that the government may terminate the membership will number establish anything more than the fact that the government takes special care that the promotion guidance and companyoperation of scientific and industrial research the institution and financing of specific researches establishment or development and assistance to special institutions or departments of the existing institutions for scientific study of problems affecting particular industry in a trade the utilisation of the result of the researches companyducted under the auspices of the companyncil towards the development of industries in the companyntry are carried out in a responsible manner. whatever has been said with regard to the companyncil of scientific and industrial research which was a society registered under the societies registration act equally applies to the companyperative store limited which is a society registered under the bombay companyperative societies act 1925. it is number a statutory body because it is number created by a statute. it is a body created by an act of a group of individuals in accordance with the provisions of a statute. the super bazaar at companynaught place together with its 12 branches in delhi is number an instrumentality of the state. in a welfare state like ours there is greater participation by government in various companymercial activities. some times the government directly engages itself in such companymercial activities by acquiring a monumberoly in trade in the public interest. or it may by an act of legislature establish statutory companyporations like the state trading companyporation life insurance companyporation of india the industrial finance corporation the oil and natural gas companymission etc. or it may set up government companypanies under s. 617 of the companies act 1956 like the hindustan steel limited etc. by numberstretch of imagination companyld it be said that the appellant was employed in companynection with the affairs of the union within the meaning of s. 197 of the code of criminal procedure 1973. the super bazaars are number owned by the central government. they are owned and managed by the companyperative store limited. pursuant to an agreement executed between the companyperative store limited and the union of india the central government has advanced a loan of rs. 4000000/- to the society for establishment and management of the super bazaars and the central government also holds more than 97 shares in the total share-holding of the society. clause 6 of the agreement provides that the incumbents of supervisory and other key posts including those of general manager deputy general manager finance manager asst. general manager purchase manager sales manager and accounts manager by whatever other designation they may be knumbern shall number be appointed or removed from their posts by the debtor except with the prior approval of the creditor in writing. the super bazaar at companynaught place and at various other places are run by the companyperative store limited under the control of the ministry of agriculture department of cooperation . the incumbents of supervisory and other key posts including that of the general manager cannumber be appointed or removed without the prior approval of the central government. the whole purpose of cl. 6 of the agreement in the matter of appointment of general manager and other incumbents holding key posts is to safeguard interests of the central government. legally speaking the super bazaars are owned and managed by the society and number by the central government and therefore the appellant was number employed in companynection with the affairs of the union within the meaning of s. 197 of the companye of criminal procedure 1973. explanation to r. 2 a of the all india services companyduct rules 1968 and r. 2 c of the all india services discipline and appeal rules 1969 on which reliance was placed can be of numberavail. explanation to r. 2 a enlarges the meaning of the expression serving in companynection with the affairs of the union or in companynection with the affairs of the state. it provides that a member of the service whose services are placed at the disposal of a companypany corporation or other organisation or a local authority by the central government or the government of a state. shall. for the purpose of those rules be deemed to be a member of the service serving in companynection with the affairs of the union or in companynection with the affairs of the state as the case may be numberwithstanding that his salary is drawn from the sources other than the companysolidated fund of india or the consolidated fund of that state. the legal fiction companytained in explanation to r. 2 a is for a limited purpose. this is evident by the use of the words for purposes of these rules. rule 2 c of the all india services discipline and appeal rules 1969 defines government to mean i in the case of a member of the service serving in companynection with the affairs of a state or who is deputed for service in any company association or body of individuals whether incorporated or number which is wholly or substantially owned or companytrolled by the government of a state or in a local authority set up by an act of legislature of a state the government of that state and ii in any other case the central government. that again is for purposes of these rules. these provisions cannumber be pressed into service for improving upon the language of cl.

CITATION: Sunnybrae Springbrook Farms Inc. v. Trent Hills (Municipality), 2011 ONCA 179 DATE: 20110304 DOCKET: C52743 COURT OF APPEAL FOR ONTARIO MacPherson, Rouleau and Epstein JJ.A. BETWEEN Sunnybrae Springbrook Farms Inc. Plaintiff (Appellant) and The Corporation of the Municipality of Trent Hills, William John Coroz , 1258099 Ontario Inc., Leonard David Brant, James George Butler, and Jacqueline Elizabeth Anne Butler, Mario Cabral and Leonor Cabral, Lina Marie Calomino , Anthony Terence Crosta , Afonso De Medeiros and Filomena De Medeiros, Teresa Dutkiewicz adn Romulad Dutkiewicz and Andrzej Dutkiewicz , Arkadi Karpelson , Laura Alice Kurhan , Nora Marcheasan and Edia Roberto, Marie Eve Mill, Michael Mitas , Keith Mocon , Joseph Victor Muller and Gloria Hildegard Muller, David Nelson Owles and Sharon Mayreen Owles , Noram Joyce Lucy and Thomas Laird Lucy, The Robert Webster Co. Limited, Simon Resch and Maria Resch and Frank Resch , Simon Resch , Daniel Sprongl and Frank Sprongl and Jennifer Cote and Ilana Osenshein , Elizabeth Mary Walker, Raymond Bartley Welsh adn Crol Anne Terris and Terry Luscombe Defendants (Respondents in Appeal) AND BETWEEN James George Butler and Jacqueline Elizabeth Anne Butler, Mario Cabral and Leonor Cabral, Lina Marie Calomino , Anthony Terence Crosta , Afonso De Medeiros and Filomena De Mederios , Nora Marchesan and Edio Roberto, Marie Eve Mill, Keith Mocon , Joseph Victor Muller and Gloria Hildegard Muller, Norma Joyce Lucy and Thomas Laird Lucy, The Robert Webster Co. Limited, Simon Resch and Maria Resch and Frank Resch , Simon Resch , Daniel Sprongl and Frank Sprongl and Jennifer Cote and Ilana Osenshein , Elizabeth Mary Walker, Raymond Bartley Welsh and Carol Anne Terris and Plaintiffs by Counterclaim and Sunnybrae Springbrook Farms Inc., Vincent Paneduro also known as Vincenzo Paneduro and Frances Paneduro Defendants by Counterclaim Stanley Fienberg, for the appellant Peter Robertson, for the respondents Heard and released orally: March 3, 2011 On appeal from the judgment of Justice Peter Lauwers of the Superior Court of Justice dated September 2, 2010. ENDORSEMENT [1] The appellant Sunnybrae Springbrook Farms Inc., the owner of property in Northumberland County, appeals the judgment of Lauwers J. of the Superior Court of Justice dated September 2, 2010. The appeal concerns the parties’ respective rights and interests in a laneway called “ Sunnybrae Lane”, which passes through cottage country in the municipality of Trent Hills (the “Municipality”). The parties are engaged in an ongoing dispute over who is responsible for upgrading Sunnybrae Lane, which has, over the years, fallen into disrepair. In some areas, it is too narrow for emergency vehicles to enter, and during the winter the road is susceptible to icing. [2] The appellant is the successor in title to the farm property adjacent to cottage properties owned by the respondents and holds title to most of the laneway. However, the appellant does not use the laneway and does not want to pay for its upgrading. It wants the Municipality to assume the laneway as a municipal road and bear the costs and liabilities of ownership. The Municipality refuses to assume the laneway until the appellant upgrades it to municipal standards, which would come at great expense. The  respondent cottagers, who have owned their lots for many years and are the laneway’s primary users, are also not prepared to contribute to its upgrading, although they have done some work on it from time to time. [3] The appellant commenced an action against the cottagers and the Municipality. It moved for summary judgment seeking a declaration that the cottagers have no prescriptive easement over the part of Sunnybrae Lane that the appellant owns. The appellant also sought an injunction preventing the cottagers from driving on Sunnybrae Lane during the winter months (from November 1 to April 15) of each year until they upgraded the laneway. The cottagers in turn filed a cross-motion for an order to strike the appellant’s statement of claim for disclosing no reasonable cause of action or, alternatively, for summary judgment dismissing the action against them. The cottagers’ primary argument was that their use of the laneway for more than 20 years gave them a prescriptive easement pursuant to s. 31 of the Real Property Limitations Act, R.S.O. 1990, c. L.15. [4] Justice Lauwers agreed with the cottagers’ position. He declared that they have acquired an easement by prescription over Sunnybrae Lane and he dismissed the appellant’s motion for an injunction preventing the respondents from accessing the laneway in the winter. The appellant appeals this judgment. [5] The appellant contends that the motion judge erred in two respects in concluding that the respondents had acquired an easement by prescription over Sunnybrae Lane. [6] First, the appellant submits that the motion judge erred by failing to apply the principle of illegality to the facts of this case – he should have held that the respondents’ breach of a municipal by-law, relating to buildings fronting on to improved public streets, disqualified them from arguing prescription. [7] We do not accept this submission. Even if the respondents are in breach of a municipal by-law, which, in our view, is doubtful, there is no connection between this breach and the ownership/easement issue in this case. As suggested by the motion judge, there are alternative remedies, and a regulatory process, for third parties, including the appellant, to challenge an alleged breach of a municipal by-law. [8] Second, the appellant contends that the motion judge erred in concluding that there was a sufficient evidentiary basis for finding a prescriptive easement, in particular in relation to the issue of winter use of Sunnybrae Lane. [9] We disagree. There is no palpable and overriding error in the motion judge’s treatment of the evidence. The deed by which the appellant and his predecessor in title acquired the property clearly indicates a right of way in favour of the cottagers. In addition, there was evidence of year round use of the lane going back at least to 1975. The evidence about continuity of use between 1975 and 2010 was a bit more ambiguous, but was sufficient to support the motion judge’s ultimate conclusion that the cottagers “used their properties year round for many years and that some have lived there full time since 1975”. [10] The appeal is dismissed. The respondents are entitled to their costs of the appeal fixed at $15,000 inclusive of disbursements and HST. “J. C. MacPherson J.A.” “Paul Rouleau J.A.” “Gloria Epstein J.A.”

LORD JUSTICE KEENE: On 21 August 2008, following a four day trial at Southwark Crown Court, before Mr Recorder Enoch QC and a jury, the appellant was convicted of wounding with intent to cause grievous bodily harm contrary to section 18 of the Offences against the Person Act 1861. On 12 September 2008 she was sentenced to five years' imprisonment (less 22 days spent on remand). She now appeals against conviction by leave of the single judge. The events which gave rise to the conviction took place in a London night club in March 2007. In the course of the evening the victim, Simmone Cooper, had been involved in a heated discussion with Sarah Black, a friend of the appellant. The appellant became involved and at some point the victim was struck in the face by a glass which the appellant had been holding. All the evidence was that the glass had been intact until the blow was struck, but that it broke on impact. The victim suffered a very nasty 10cm laceration to her face. This required surgical repair and further surgical intervention when a salivary duct was found to be leaking. The prosecution's case was that the appellant had deliberately struck the victim with the glass. An independent witness gave evidence that the victim had done nothing to the appellant. The defence case was that the victim had been aggressive and had grabbed the appellant by the throat, whereupon the appellant's hand had involuntarily flown up in some form of instinctive motion. This had brought the glass into contact with the victim's cheek. This account had some support from Sarah Black, who was a prosecution witness. The defence was therefore one of self-defence or accident. There was evidence from a consultant plastic surgeon called by the Crown that the injury could easily have occurred from one blow in an upward movement. He did not want to be drawn on the level of force required to cause the injury which was sustained. Given the defence being run, it was not easy for those acting for the appellant to put forward an argument in the alternative that this was a deliberate blow struck by her but without the intention to cause grievous bodily harm. Certainly, as it transpired, the Recorder did not leave the alternative verdict of section 20 wounding to the jury. The difference between the two is that section 20 wounding does not require a specific intent to cause grievous bodily harm. Indeed, in summing up the Recorder suggested to the jury that if it was a deliberate blow, they might think that "anybody smashing a glass into the face of another person cannot intend trivial harm, but is likely to intend serious harm". In due course the jury convicted the appellant of the only offence which was left to them, namely that of the section 18 wounding. It was the Recorder's failure to leave the alternative offence of section 20 wounding that appealed to the single judge and which now forms the basis of this appeal. On the appellant's behalf Mr Abell, who did not appear at trial but who has lodged a helpful skeleton argument, relies upon the now well-known House of Lords' decision in R v Coutts [2007] 1 Cr App R 6. He draws attention to their Lordship's emphasis upon the fact that, irrespective of the wishes of counsel on either side, it is the trial judge's responsibility to ensure that the relevant options are put before the jury in the form of verdicts which they can return. This is done by leaving for the consideration of the jury any "obvious" alternative verdict which there was evidence to support. The test of whether an alternative verdict is obviously raised by the evidence is whether such an alternative verdict should have suggested itself to an ordinary knowledgeable and alert criminal judge. It is submitted on behalf of the appellant that on the facts of this case section 20 wounding was an obvious alternative verdict which there was evidence to support, such that it should have been left for the consideration of the jury. For the prosecution Mr Shaw argues that to have left section 20 wounding as an alternative possible verdict would have distracted the jury from the real issues in the case. He emphasises that neither the Crown nor the defence had run section 20 wounding as part of its case. The real issue was one of self-defence. Moreover, he points out that the glass shattered on impact, so it must have been a blow wielded with at least some force. However, in the course of argument Mr Shaw acknowledged that it was open to a jury properly to conclude on the evidence in this case that the blow with the glass was a deliberate one (not accidental and not in self-defence), but that the appellant did not have the necessary intent for section 18, that is to say, the intent to inflict grievous bodily harm. Mr Shaw also tells us that there was no discussion at the end of the trial (or indeed earlier) with the Recorder about whether section 20 should be left to the jury. It appears that there were some discussions between counsel, which resulted in the conclusion that it should not; but at no stage did counsel discuss with the Recorder the propriety of not leaving such a verdict. Nor was his attention drawn to the House of Lords' decision in Coutts, to which we have just referred. We bear in mind the commentary on Coutts, which is contained in this court's decision in R v Foster [2008] 1 Cr App R 38. There is no automatic requirement on a judge to leave an alternative verdict if such a verdict would not properly reflect the facts of the case, when judged realistically, or would not do justice to the gravity of the case. This court stressed that whether it is necessary to leave such a verdict, even when legally available as an alternative, will depend on the facts of the individual case. But if it is a realistically available verdict on the evidence, as an interpretation properly open to the jury, without trivialising the offending conduct, then it should be left. It is, in our view, particularly important that this is done where the offence charged requires proof of a specific intent and the alternative offence does not. Even then there may be circumstances where the issue of specific intent does not truly arise. For example, if a man is shot at point-blank range in the head and the defence is simply that the defendant was not present, there is no requirement on the judge then to leave the alternative of manslaughter by way of killing without the necessary intent for murder. However, there will be cases, as Coutts recognised, where it is necessary to leave the lesser offence as an alternative to avoid the dangerous situation where the jury is faced with the stark choice of convicting for the serious offence or acquitting altogether. That may give rise to a miscarriage of justice. In the present case it seems to this court that it was properly open to the jury to have found on the evidence that the appellant had not acted in self-defence and had intended to hit the victim with the glass, unbroken as it was, but had not intended to cause her serious bodily harm (or at least may not have had that specific intent). As we have pointed out, the prosecution on this appeal accept that that would have been a proper interpretation available to the jury on the evidence they heard. The issue as to intent was something which the jury were going to have to decide by way of inference from the appellant's actions, and in particular her act in striking the blow. It must be borne in mind that such actions not infrequently do produce an offence of section 20 wounding, rather than section 18. The law reports contain numerous examples of section 20 glassing in a public house or a club: see, for example R v Robertson [1998] 1 Cr App R(S) 21 and R v Singleton [1998] 1 Cr App R(S) 200. We take those only as two of many possible examples. Singleton was a case where a verdict of section 20 wounding was returned on an indictment charging solely a section 18 offence. In the present case the Recorder's course of action seems to us to have presented the jury with that stark choice of either convicting the appellant of section 18 wounding -- a very serious offence -- or of acquitting her completely. We can well understand why they decided against the latter, once they had decided that self-defence and accident were not feasible. But there must be a concern that they may have convicted of section 18 wounding rather than permitting the appellant to go scot-free when, had they had a section 20 verdict available to them, they would not have decided to convict on the more serious charge. That being so, we can only regard the conviction in this case as being unsafe. The appeal is therefore allowed and the conviction is quashed. The appeal against sentence falls with it. We cannot conclude this judgment, however, without emphasising the duty upon counsel, at a trial such as this, to ensure that they raise with the judge, if he has not raised it of his own volition, the need at least to consider the propriety and necessity of leaving an alternative verdict such as section 20 to the jury if it is available on the facts. Particularly where there has been a fairly recent House of Lords' decision such as Coutts, it is the duty of counsel to draw such matters to the judge's attention to ensure that things do not go wrong, as they went wrong in this case. In any event, the upshot is that the appeal against conviction is allowed. Where do the Crown stand in that situation? MR SHAW: There will be a retrial, with the leave of the court. LORD JUSTICE KEENE: Well, you say there will be a retrial. You are asking us to order a retrial, I take it? MR SHAW: I apologise. I was saying that with your Lordships' leave there will be a retrial. I have canvassed the possibility. That is our preferred course of conduct. This is clearly a serious matter. The victim is scarred and will be scarred for life. It has had a traumatic effect on her personal and her professional life. It is in the public interest that this matter should be re-litigated. LORD JUSTICE KEENE: Yes. The appellant has served about ten-and-a-half months so far, I think, in custody? MR SHAW: Yes. LORD JUSTICE KEENE: Any more on that? MR SHAW: My Lord, no. LORD JUSTICE KEENE: Yes, Mr Abell? MR ABELL: My Lord, there is plainly little I can say. My Lord has made the point that the appellant has been in custody now for some ten-and-a-half months -- nearly a year, approaching a year, which equates to, approaching, a two year sentence. LORD JUSTICE KEENE: Twenty-one months it equates to, does it not? MR ABELL: Yes. LORD JUSTICE KEENE: Yes. That is certainly an argument for any retrial being heard with some dispatch, and we will say that as a note to the directions we give. Thank you. (The court conferred) LORD JUSTICE KEENE: Yes, we are satisfied that it is in the interests of justice that there should be a retrial in this case. We will make the usual orders in that situation. We will direct that a fresh indictment be preferred on which the appellant is to be arraigned within two months of today; the venue to be as directed by the Presiding Judge of the South-Eastern Circuit. You will presumably want a representation order, Mr Abell? MR ABELL: Indeed, my Lord, yes. LORD JUSTICE KEENE: To cover solicitor as well as counsel? MR ABELL: Yes, please. LORD JUSTICE KEENE: Is there any problem about the reporting of these appeal proceedings pending retrial? We have been dealing with a fairly narrow legal issue. MR ABELL: We have. I would be inclined to submit: better safe than sorry. I would respectfully submit it may be sensible to delay any public reporting of proceedings until the retrial has taken place. LORD JUSTICE KEENE: Do you have any views on that, Mr Shaw? MR ABELL: Only that your Lordships' judgment needs to be widely disseminated to the criminal bar as soon as possible, but I have no representations to make. (The court conferred) LORD JUSTICE KEENE: We cannot see any need for reporting restrictions here, Mr Abell. Insofar as we have recounted the facts, they are not facts which are in any way prejudicial to your client. The basic ones will come out at trial anyway. So there will be no reporting restrictions. You presumably have an application? MR ABELL: I do, my Lord, for bail. My learned friend may be able to assist more than I can as to what the conditions were. In my respectful submission, she is a young lady of hitherto good character and she was, as I understand it, on bail prior to the trial being heard. I would ask that she be re-admitted to bail. LORD JUSTICE KEENE: There must have been conditions? Probably one as to residence? I suspect another one not to contact any of the witnesses. MR ABELL: I am afraid I cannot assist. I was not in the trial. MR SHAW: My recollection is that there was a condition that she was not to contact the Crown witnesses -- in particular the three main witnesses: the complainant, Sarah Black and Donkas. We would also like a condition of residence to assist us because she will have to be notified in due course of the date and the venue of the re-arraignment. LORD JUSTICE KEENE: Yes. Can I just be clear? You have moved on very rapidly at my prompting to the question of conditions -- those that she was under before -- MR SHAW: Yes. LORD JUSTICE KEENE: -- when she was awaiting trial. Does the Crown seek to oppose bail on appropriate conditions? MR SHAW: No. LORD JUSTICE KEENE: Very well. We will grant bail on those conditions, but let us just make sure we are clear about them. Does she have a place to which the condition of residence can now relate? MR ABELL: Yes, indeed, my Lord. I am just having instructions taken as to the address. Perhaps I can hand it to my Lord's associate in due course? LORD JUSTICE KEENE: Yes, please. Would you do that, rather than doing it in open court? MR ABELL: My Lord, yes. LORD JUSTICE KEENE: There will be a condition clearly that she is not to contact those three named witnesses, which again the associate can obtain from Mr Shaw. Was there any reporting requirement -- reporting to a police station? MR SHAW: There was not, as I recall, no. LORD JUSTICE KEENE: Are there any other conditions the Crown would be seeking? MR SHAW: No. She is a woman of good character. We do not think she will flee the jurisdiction. LORD JUSTICE KEENE: Yes. We do not think that any further bail conditions are required. (To the defendant) Miss Hodson, you have heard what has been happening. You are going to be granted bail up until the retrial which will take place in this matter. There are conditions attached to that: a condition of residence and a condition not to contact Simmone Cooper, Sarah Black and David Donkas, the three prosecution witnesses. It will be in your own interests to observe those conditions. But equally, your bail can be revoked were you to break them and you would then find yourself in custody again awaiting your trial. Do you understand all of that? THE DEFENDANT (DANIELLE HODSON): I do. LORD JUSTICE KEENE: Anything further that we need to do with? MR SHAW: Nothing further from the Crown. LORD JUSTICE KEENE: Thank you very much indeed. ________________________________________

OPINION OF MR ADVOCATE GENERAL CAPOTORTI DELIVERED ON 5 OCTOBER 1982 ( ) Mr President, Members of the Court, 1. May I first briefly summarize the facts of this case. By two decisions of 30 July 1980 — which were confirmed on 28 July 1981 after being suspended for a short period — the Minister of Justice of the Grand Duchy of Luxembourg refused Miss M., who wat that time was a Portuguese citizen, permission to enter and reside in the Grand Duchy and withdrew her alien's identity card. Miss M. was then obliged to leave Luxembourg; but in October 1981 she returned in order to contract marriage with an official of the European Parliament residing in Luxembourg, Mr. D., a Belgian citizen. Immediately afterwards, Mrs D. (née M.) elected to adopt the nationality of her husband. Having been informed of these events the Luxembourg authorities, by a decision of 3 December 1981 which was confirmed on 10 December 1981, again refused to grant a residence permit to Mrs. D. and rejected her lawyer's request that the refusal to allow her to enter and reside in Luxembourg and likewise the withdrawal of her identity card should at least be suspended. On 4 January 1982, Mr D. and his wife brought an action before this Court against the Grand Duchy of Luxembourg, claiming that the measures taken against Mrs D. were contrary to Article 122 (b) of the Protocol on the Privileges and Immunities of the European Communities (adopted by the Member States pursuant to Article 28 of the Brussels Treaty of 8 April 1965 on the merger of Community institutions). I should point out that pursuant to Article 12 (b) neither officials or other servants of the Community, nor their spouses or dependent members of their families are subject to immigration restrictions or to formalities for the registration of aliens in the territory of the Member States. The defendant State has objected that the application is inadmissible on the ground that the Court lacks jurisdiction. That objection is based on the argument that the Protocol on the Privileges and Immunities of the European Communities now in force, by contrast with the previous European Coal and Steel Community Protocol, does not enable individuals to refer any disputes as to its interpretation and application directly to the Court. The Court has decided to deal with the matter of admissibility separately from the substance of the case. The oral procedure (on 14 September 1982) was therefore limited to that aspect, to which this opinion will also be confined. 2. The Treaty establishing the European Coal and Steel Community was accompanied by a Protocol on the Privileges and Immunities of the Community, Article 16 of which (in Chapter 6, General Provisions) provided as follows: “Any dispute concerning the interpretation or application of the present Protocol shall be submitted to the Court.” The manifestly wide nature of that provision enabled the Court to state in its judgment of 16 December 1960 in Case 6/60 (Humblet v Belgian State [1960] ECR 559) that an individual is empowered to bring an action in his own name before the Court of Justice to protect the rights conferred on him by the Protocol, notwithstanding the fact that no provision of the ECSC Treaty allowed individuals to have recourse direct to the Court of the Communities in the event of an alleged infringement of the Treaty by a Member State (cf. the passage in the judgment cited above regarding the admissibility of the application, [1980] ECR559, at p. 570 et seq.). The later Treaties establishing the EEC and the European Atomic Energy Community were also accompanied by Protocols (of identical content) on privileges and immunities. In them the text of the ECSC Protocol was expanded and revised, but no provision equivalent to the said Article 16 was included, or indeed any provision regarding the setlement of disputes. In 1965, the Treaty establishing a Single Council and a Single Commission of the European Communities expressly repealed the three Protocols on Privileges and Immunities (in the second paragraph of Article 28), substituting a single Protocol for them. That Protocol — which, moreover, is almost entirely modelled on the EEC and EAEC Protocols — likewise contains no provision corresponding to Article 16 of the ECSC Protocol or specifically governing the jurisdiction of the Court in disputes concerning the interpretation or application of the Protocol. These circumstances, in my opinion, clearly indicate what when the EEC and EAEC Treaties were signed the Member States intended to ensure that the Protocols on Privileges and Immunities did not alter the scope of the Court's jurisdiction, as provided for in those Treaties (Articles 169 and 186 of the EEC Treaty and Articles 141 to 158 of the EAEC Treaty). There is also justification for saying that when the Brussels Treaty of 1965 was signed, it was the intention of the contracting parties that the single Protocol on Privileges and Immunities annexed thereto should not in any way change or add to the jurisdiction of the Court, as provided for in the relevant provisions of the three treaties establishing the Communities. 3. The applicants, whilst noting the lack of any provision similar to that of the repealed Article 16 of the EAEC Protocol, maintain that a direct action may be brought by an individual against a Member State for infringement of the single Protocol on Privileges and Immunities now in force by virtue of Article 30 of the Brussels Treaty of 1965 on the merger of the Community institutions. That provision states: “The provisions of the Treaties establishing the European Economic Community and the European Atomic Energy Community relating to the jurisdiction of the Court of Justice and to the exercise of that jurisdiction shall be applicable to the provisions of this Treaty and of the Protocol annexed thereto, with the exception of those which represent amendments to Articles of the Treaty establishing the European Coal and Steel Community, in respect of which the provisions of the Treaty establishing the European Coal and Steel Community shall remain applicable.” The applicants appear to think that, since the provisions of the EEC Treaty relating to the jurisdiction of the Court are applicable to the Protocol on the Privileges and Immunities, they may deduce from Article 164 of that Treaty the principle that the Court has “general jurisdiction” and rely upon it to exercise a right of action against the Member State which they charge with infringement of the Protocol. That view is without foundation. It is clear that the first part of Article 30 is intended solely to extend to the Merger Treaty and to the Protocol annexed thereto the provisions governing the jurisdiction of the Court contained in the EEC and EAEC Treaties. In other words, the rules governing the jurisdiction of the Court laid down in those provisions apply also — in their entirety and without amendment — to disputes concerning the interpretation and application of the Brussels Treaty of 1965 and of the Protocol on the Privileges and immunities of the European Communities. However, those provisions do not state that an individual may bring a Member State before the Court for infringement of a Community provision. Therefore, the applicants were obliged to rely (in particular in their oral submission) on Article 164 of the EEC Treaty, endeavouring to infer from that the existence of a principle that the Court has general jurisdiction. The attempt is a vain one, however. It is a well-known fact that Article 164 concerns the function attributed to the Court, which is to ensure observance of the law in the interpretation and application of the Treaty, whilst its jurisdiction is governed by Article 169 et seq., and there is no doubt that the exercise of the Court's function is confined within the limits laid down by the rules governing its jurisdiction. It is appropriate at this stage to clarify the scope of the exception contained in the second part of Article 30 of the Merger Treaty. It applies to the provisions of the Merger Treaty itself and to those of the Protocol annexed thereto which “represent amendments” to articles of the ECSC Treaty; the rules on jurisdiction in the ECSC Treaty remain applicable to such provisions. In order to understand that exception, it should be borne in mind that inter alia the Merger Treaty supplemented and replaced certain provisions of the ECSC Treaty (and of the Statute of the Court of Justice annexed thereto) : consider, for example, Article 8 (2) and (3), Article 21 and Articles 26 and 27. They were drafted as amendments to the ECSC Treaty and therefore became part of the text of that Treaty. That is why in disputes on the interpretation and application of those provisions of the Merger Treaty questions as to the Court's jurisdiction must be resolved by applying the rules on jurisdiction in the ECSC Treaty. None of the foregoing in any way affects the solution of the problem with which the Court is concerned. The removal of Article 16 of the Protocol on the Privileges and Immunities of the ECSC was not brought about by means of a specific provision in the new sole Protocol, nor did it represent an amendment to the ECSC Treaty; the latter merely provided, in Article 76, that the European Communities were to enjoy privileges and immunities “under the conditions laid down in the Protocol” annexed to the Treaty, and Article 28 of the Merger Treaty repealed both Article 76 and the Protocol annexed to the ECSC Treaty. The repeal of Article 16 of the latter treaty was the consequence of the entry into force of the new sole Protocol, but the content of that Protocol was not in fact incorporated into the ECSC Treaty (as the Commission rightly pointed out in its observations). On the other hand, we have seen that where the exception introduced by the last part of Article 30 of the Merger Treaty applies, the rules on jurisdiction in the ECSC Treaty are applicable. Among those rules there can certainly not be included Article 16 of the ECSC Protocol on Privileges and Immunities, which formed part of a legal instrument repealed by the Merger Treaty (in that respect my opinion coincides with that expressed by Mr Advocate General Gand in his Opinion of 29 January in Case 23/68 Klomp, [1969] ECR 43, at p. 52). The conclusion must therefore be that no rule on jurisdiction contained in the ECSC Threaty enables an individual to bring an action against a Member State when be considers that he has suffered by reason of an infringement of the Treaty. In fact, the result is no different from that which would be arrived at by application of the rules on jurisdiction contained in the EEC and EAEC Treaties as regards the Court's lack of jurisdiction to adjudicate in disputes of the kind described earlier between individuals and Member States. 4. The applicants also referred to the judgment of the Court of 25 February 1969 in Case 23/68 (Klomp [1969] ECR 43) and cited the following passage of the decision: “In accordance with a principle common to the legal system of the Member States, the origins of which may be traced back to Roman law, when legislation is amended, unless the legislature expressed a contrary intention, continuity of the legal system must be ensured” (paragraphs 12-14 of the decision). From that principle of continuity the applicants wish to infer that the right of individuals to bring actions against Member States before the Court for infringement of the Protocol on the Privileges and Immunities of the European Communities has survived; they assert that: “the legislature has certainly not expressed any intention to do otherwise than to maintain the Court's jurisdiction regarding interpretation of the Protocol, indeed, the provisions of Article 30 of the Merger Treaty have the opposite effect” (observations of 18 March 1982, p. 7). But that argument cannot be upheld. Nobody disputes the fact that the Court is empowered to interpret the Protocol on Privileges and Immunities; the problem to be settled concerns the types of procedure in which the Court has jurisdiction. The Commission has rightly pointed out that three types of procedure may be considered, namely those provided for in Articles 169, 177 and 179 of the EEC Treaty: that is to say, an action by the Commission against a Member State charged with an infringement of the Protocol, a reference for a preliminary ruling from a national court and a dispute between an official and the administration where the official charges the administration (as Mr D. appears to have done in this case) with failure to comply with the so-called duty to provide assistance, by reason of the fact that a privilege or immunity conferred upon him has been breached. The view that the Member States wished to retain the remedy accorded by way of exception to individuals by Article 16 of the old ECSC Protocol is to be firmly resisted, however. In that regard, I have already had occasion to state that the absence of any equivalent rule in the EEC and EAEC Protocols, and subsequently the lack of any provision of a similar nature in the single Protocol on the Privileges and Immunities, clearly shows that the Member States intended to do away with that remedy, a fact which may be explained by reference to the possibilities offered by Articles 169, 177 and 179 of the EEC Treaty which I mentioned earlier. Finally, as regards the principle of continuity referred to in the Klomp judgment it is important not to lose sight of the circumstances surrounding that case. The Court was called upon to give a preliminary ruling on a question submitted by a national court on the interpretation of a rule in the Protocol on the Privileges and Immunities of the ECSC which was applicable at the time of the facts of the case; but when the ruling came to be delivered the Protocol had already been repealed and therefore it was no longer possible to rely on Article 16 as the basis for the Court's jurisdiction in the procedure for obtaining a preliminary ruling on interpretation (which, as is known, is not provided for in the ECSC Treaty). It was emphasized in the decision in Klomp that the procedure provided for in Article 16 of the ECSC Protocol and the procedure for obtaining preliminary rulings provided for in the EEC and EAEC Treaties, which is applicable to the new Protocol by virtue of Article 30 of the Merger Treaty, had the same purpose (“to ensure a uniform interpretation and application of the provisions of the Protocol in the six Member States”: see the judgment cited earlier, paragraph 12 of the decision). On that basis, and in the light of the principle of continuity of legal institutions, the Court decided that it had jurisdiction. Therefore, the principle of continuity served to enable the new rules governing the Court's jurisdiction in disputes on the interpretation and application of the sole Protocol to be applied likewise to a dispute which arose when Article 16 of the ECSC Protocol was in force (the question resolved was essentially which law applied during a period of transition). In the present case, however, the applicants wish the rule of jurisdiction contained in Article 16, which has long since been repealed, to be applied to a dispute which falls entirely within the scope of the new rules on jurisdiction governed by Article 30 of the Brussels Treaty of 1965. Since the two situations are radically different, the Klomp judgment cannot be regarded as a legal precedent capable of providing support for the applicants view. 5. During the course of this action there has also been discussion as to whether the applicants may have recourse to remedies provided for by national law and obtain from the competent national court a reference for a preliminary ruling on the interpretation of the Community provision relied upon. This Court's decision must not, of course, turn upon the difficulties with which the applicants may possibily find themselves confronted. However, I should like to make two brief remarks. On the one hand there is no doubt (and it is clear from the decisions of this Court) that the Member States are obliged to place at the disposal of individuals adequate means of ensuring legal protection of the rights conferred upon them by Community law (see the judgment of 19 December 1968 in Case 13/68, Salgoil v Ministero del Commercio con l'Estero [1968] ECR 453). In the event of a State's failing to discharge that obligation, it would be the responsibility of the Commission to initiate proceedings against that State on the basis of the provisions laid down for that purpose in each of the three Treaties establishing the Communities. On the other hand, however, the choice of the appropriate legal remedy at the appropriate time is the responsibility of the individual, who must not disregard the existence of limitation periods in any legal system. The old Latin maxim “Vigilantibus iura succurrunt” still applies! 6. I conclude by proposing that the Court declare the action brought on 4 January 1982 by Mr and Mrs D. against the Grand Duchy of Luxembourg inadmissible. The applicants should be ordered to pay the costs. ( ) Translated from the Italian.

Mr Justice Norris : By an order dated 8 October 2008 Kaupthing Singer & Friedlander Ltd ("KSF"), an authorised deposit taker, entered administration. The present applicants were appointed joint administrators. On the same day the Kaupthing Singer & Friedlander Limited Transfer of Certain Rights and Liabilities Order 2008 (SI 2674 of 2008) was made by HM Treasury in exercise its powers under the Banking (Special Provisions) Act 2008. This order provided for the transfer of certain deposits (known as "the Edge accounts") from KSF to ING Direct NV and charged the joint administrators with certain overriding objectives in the conduct of the administration. Those obligations have now been performed and the administration is presently being conducted with the objective of achieving a better result for the company's creditors as a whole than would be likely if the company were wound up. The creditors of KSF consist principally of the following:- (a) the FSCS (on behalf of itself and HM Treasury), which has a claim against KSF in respect of the sums that the FSCS paid to ING so that ING would take over liability to the 170,000 Edge deposit holders who had total deposits of about £2.6 billion; (b) the 3000 non-Edge depositors (individuals, charities, corporate customers, local authorities, building societies, banks, other KSF group companies and others), whose deposits totalled approximately £2.6 billion at the date of the Order; (c) trade and other creditors who will rank equally with the FSCS and the non-Edge depositors. Some of those to whom KSF owes money themselves owe KSF money. There are some 180 depositors with KSF who have also borrowed money from KSF. The total value of their outstanding deposits is approximately £15.5 million, €3 million and US$5.7 million. But the total value of their outstanding loans is approximately £678.4 million, €147.3 million and US$164 million (i.e. substantially in excess of their deposits). These loans will typically have been advanced at a floating rate of interest, usually linked to LIBOR. About half of the loans in number are repayable after August 2010 and some of them are not repayable until 2018. On the making of the administration order the rights of the depositors and others to enforce obligations owed by KSF were statutorily suspended because of the operation of paragraph 43 of Schedule B1 to the Insolvency Act 1986. The rights of KSF to enforce obligations owed by the depositors and others were not so suspended. The period of suspension would ordinarily last until the conclusion of the administration. The administration might conclude in a variety of ways, some of which might permanently alter or bring to an end the contractual and other arrangements between the creditors and KSF. The joint administrators might formulate proposals for a scheme of arrangement under section 899 of the Companies Act 2006 or for a company voluntary arrangement: or they may place KSF into creditors' voluntary liquidation under paragraph 83 of Schedule B1 or otherwise, or they might seek a compulsory liquidation on the discharge of the administration order. These were the usual means of distributing the assets realised in the administration until the advent of the present paragraph 65 of Schedule B1. The introduction of this paragraph enabled an administrator, with the permission of the Court, to make a distribution to an unsecured creditor directly (and then to proceed under paragraph 84 of Schedule B1 to a dissolution of the company without the intervening step of a liquidation). On 24 April 2009 the joint administrators obtained the permission of the Court pursuant to paragraph 65(3) of Schedule B1 to make a distribution to creditors of KSF who were neither secured nor preferential. The joint administrators were obliged by rule 2.95 of the Insolvency Rules 1986 ("IR") to give 28 days' notice of their proposal to make a distribution and were bound to invite creditors (by public advertisement) to prove their debts. On 20 May 2009 the joint administrators gave notice in the London Gazette of their intention to declare a first interim dividend to preferential and unsecured creditors, and the advertisement required such creditors to submit their proofs of debt on or before 18 June 2009. The joint administrators then declared and paid a first interim dividend on 22 July 2009. The process upon which the joint administrators embarked was a quasi liquidation involving an assessment of the claims of the depositors and other creditors. This was governed by Chapter 10 of the Insolvency Rules 1986. This Chapter in essence adapts the language, concepts and mechanics of the payment of a dividend within a liquidation to the payment of a distribution within an administration. So a creditor claiming to participate in a distribution is referred to as "proving" his debt, and the document by which he seeks to establish his claim is referred to as his "proof": and if he so "proves" then that will suffice if the company proceeds from administration into creditors' voluntary liquidation under paragraph 83. The rules relating to quantification of claims for the purposes of the distribution are to be found in Section C of Chapter 10. They are very similar to the rules which apply in a winding up and which are to be found in IR 4.86 to IR 4.99. In particular they address the questions that arise out of mutual credits, mutual debts or mutual dealings between the company and any proving creditor in essentially the same way: compare IR 2.85 and IR 4.90. When the joint administrators came to apply these rules to the circumstances of the KSF administration four issues arose on which they sought the directions of the court. On 29 June 2009 Peter Smith J ordered that the directions be given speedily and that, in order that the court giving the directions should have the benefit of adversarial argument, (a) Counsel for the joint administrators was to argue for their preferred construction of the Rules; and (b) the joint administrators were to instruct independent counsel to advance any properly arguable alternative construction that might be in the best interests of those creditors affected by the relevant issue. Mr Tom Smith and Mr Richard Fisher have discharged these respective duties and I am grateful for their help. The need for an instant answer was not as great as had at one time been thought. Before considering the detailed issues that arise in relation to mutual dealings it is useful to refer to certain general matters of policy and history which provide a context within which the technical questions must be answered. The general and long established rule in liquidations was that where, before a company went into liquidation, there had been mutual credits, mutual debts or mutual dealings between the company and any proving creditor then an account was to be taken of what was due to each party from the other in respect of those dealings, the sums due from one party being set-off against the sums due from the other, and only the balance being provable in the liquidation or being recoverable by the liquidator as part of the assets (depending on how the balance was struck). In Re M.S. Fashions [1993] Ch 425 Hoffman LJ (at 432F ff) noted three established features of the rule. (a) Its application was mandatory ("the mandatory principle"). In the Court of Appeal Dillon LJ noted (at 446B) that this principle meant that secured and unsecured debts were set-off. (b) The account was taken at the date of the winding up order (being an application of the wider principle that the realisation and distribution of assets are treated as notionally taking place simultaneously with the date of the order) ("the retroactivity principle"). Dillon LJ noted that this rule supplanted an earlier rule that the set-off took place at the date of presentation of the petition (ibid at p. 446G). (c) In taking the account the court has regard to events which have occurred since the date of the winding up ("the hindsight principle"). In Stein v Blake [1996] 1 AC 243 at 252E Lord Hoffman explained that this required the Court to take into account everything that had actually happened between the insolvency date and the moment when it becomes necessary to ascertain what, on that date, was the state of account between the creditor and the insolvent. In that same case at 251E Lord Hoffman drew attention to three further features of insolvency set-off. (d) Unlike legal set-off insolvency set-off affects the substantive rights of the parties, enabling the creditor to set-off pound-for-pound what he owes the insolvent and to prove for or pay only the balance. A creditor with relevant mutual dealings is thus treated much more favourably than an unsecured creditor with none. As Professor Roy Goode commented in "Principles of Corporate Insolvency Law" at para 7-22 "Set-off on insolvency represents a major incursion into the pari passu principle, for its effect is that a creditor who owes money to the company on a separate account may resort to self–help by setting off the debt due to him against his own indebtedness to the company, thus [ensuring] payment of his claim pro tanto ahead of other creditors" (e) Unlike legal set-off, insolvency set-off operates in relation to sums which are not necessarily due and payable at the date of the bankruptcy or winding up order, but which may be future or contingent. It addresses the problems arising from the adoption of this broad approach by using the hindsight principle and by estimating the value of claims of the creditor. As to claims against the creditor on the other side of the account Lord Hoffman observed (on the state of the law as it then was) (at 253B) "There is no similar machinery for quantifying contingent or unascertained claims against the creditor because it would be unfair upon him to have his liability to pay advanced merely because the trustee wants to wind up the bankrupt's estate". (f) Not only is the insolvency set-off mandatory, it is "self-executing" i.e. not dependent upon the taking of any procedural step such as lodgement of a proof. Although this is the general background to the operation of set-off in an insolvency setting it is, of course, the case that the actual operation of set-off in the context of an administration must be governed by the true construction of the relevant rules. The principal rule is IR 2.85, originally introduced by the Insolvency (Amendment) Rules 2003 SI 2003/1700 and then modified by the Insolvency (Amendment) Rules 2005 SI 2005/527. The Explanatory Memorandum annexed to the latter instrument stated:- "The rules dealing with set-off in liquidation and administration proceedings have been completely re-cast in order to make them as easily understood and comprehensible as possible. The amended rules have been considered by representatives of the insolvency and legal profession whose comments have been reflected in the drafting". In its amended form the heart of IR 2.85 states:- (1) This Rule applies where the administrator, being authorised to make the distribution in question, has, pursuant to Rule 2.95, given notice that he proposes to make it. (2) In this Rule "mutual dealings" means mutual credits, mutual debts or other mutual dealings between the company and any creditor of the company proving or claiming to prove for a debt in the administration……. (3) An account shall be taken as at the date of the notice referred to in paragraph (1) of what is due from each party to the other in respect of the mutual dealings and the sums due from one party shall be set-off against the sums due from the other. (4) A sum shall be regarded as due to or from the company for the purposes of paragraph (3) whether (a) it is payable at present or in the future; (b) the obligation by virtue of which it is payable is certain or contingent; or (c) its amount is fixed or liquidated, or is capable of being ascertained by fixed rules or as a matter of opinion ….. (8) Only the balance (if any) of the account owed to the creditor is provable in the administration. Alternatively, the balance (if any) owed to the company shall be paid to the administrator as part of the assets except where all or part of the balance results from a contingent or prospective debt owed by the creditor and in such a case the balance (or that part of it which results from the contingent or prospective debt) shall be paid if and when that debt becomes due and payable. It is to be noted that whereas in a liquidation or a bankruptcy the account is to be taken as at the date when the relevant insolvency regime commences, in an administration the account is taken at the date of the notice of intended distribution, not at the date of entry into administration. The first question to arise in the KSF administration relates to sums due to or from the company in the future. For the purposes of insolvency set-off IR 2.85(7) provides:- (7) Rule 2.105 shall apply for the purposes of this Rule to any sum due to or from the company which is payable in the future. This rule therefore applies both to sums due from the company (depositors' claims) and to sums due to the company (borrowers' obligations). IR 2.89 says that in an administration a creditor may prove for a debt payment of which was not due when the company went into administration but "subject to Rule 2.105 (adjustment of dividend where payment made before time)". IR 2.105 (like IR 11.13 which applies to liquidations) therefore deals generally with the treatment of debts payable at a future time (not simply claims in set-off). It does so in these terms:- (1) Where a creditor has proved for a debt of which payment is not due at the date of the declaration of the dividend he is entitled to dividend equally with the other creditors but subject as follows. (2) For the purpose of dividend (and no other purpose) the amount of the creditor's admitted proof shall be reduced by applying the following formula- X/105n where (a) "X" is the value of the admitted proof: and (b) "n" is the period beginning with the relevant date and ending with the date on which the payment of the creditor's debt would otherwise be due expressed in years and months in decimalised form (3) In paragraph (2) "relevant date" means – (a) in the case of an administration which was not immediately preceded by a winding up, the date that the company entered administration; (b) in the case of an administration which was immediately preceded by a winding up, the date that the company went into liquidation. In a case where there is no insolvency set-off a creditor who has a debt not payable at the date of administration will prove for the whole debt, and he will receive a dividend on the whole debt unless the debt falls due for payment after "the date of the declaration of dividend", when he will receive a dividend only on a discounted sum. How does this work if there is an insolvency set-off: by reference to what date is it determined whether a debt is "payable in the future"? IR 2.85(3) says that the account is taken as at the date of the notice of distribution, and that a sum is then "due" although only payable in the future, and that IR 2.105 applies. But IR 2.105 itself applies only to debts where payment is not due "at the date of declaration of the dividend". So how is a debt due to or from KSF to be treated if it falls due for payment between 20 May and 22 July? The administrators argue that if a debt is "future" at the date of the notice of distribution then the discounting machinery (which carries one back to the commencement of the administration even though the account is struck at a later date) is engaged even if the debt falls due for payment after the date of the notice but before the date of the distribution: they say that the intent of IR 2.85(7) was to adopt the machinery (but not the literal terms) of IR 2.105 so that one can ignore the reference to the debt being "not due at the date of the declaration of the dividend" and read the Rule purposively as if it said "not due at the accounting date". The unsecured creditors argue that there is no inconsistency between IR 2.85(3) and IR 2.105 because the former is concerned to identify what debts form part of the account-taking exercise whereas the latter is directed to the process of quantifying debts so identified. For the purpose of administration generally, a debt is "future" if it was not due for payment at the date of the administration. In my judgment for the purposes of the insolvency set-off in administration, a debt is "future" if it is not due for payment at the date of the notice of intention to make a distribution. This is the date at which the account of mutual dealings is struck and the date upon which (subject to the hindsight principle) it must be determined what is due from and to each party. IR 2.85(4) says that for the purpose of taking the account a sum is to be regarded as then due even if payable in the future. So the whole sum is brought into the account as then due (unless another rule imposes some limitation). IR 2.105 does impose a limitation, but only in respect of debts payable after the date of "the declaration of the dividend". It was agreed that this is the event provided for in IR 2.97. So a future debt payable before the date of the distribution is taken at full value for the purpose of taking the account of mutual dealings. But a future debt payable after the date of the distribution is taken at its discounted value for the purpose of taking that account. This is in effect the hindsight principle in operation, enabling events occurring after the accounting date but before the distribution date to be brought into the account so as to strike a true balance. It was suggested that this reading will give rise to difficulty when there is more than one distribution within an administration. A consideration of the question and of the range of possible answers has not assisted in my interpretation of IR 2.85(7), and I therefore propose to express no view. The second question arises upon IR 2.85(6). IR 2.85 is concerned to take account of mutual dealings so as to strike a balance, and only that balance is provable in the administration or recoverable by the administrator. IR 2.85(4) deals with the nature of the obligations which form the subject of the account-taking exercise and applies to any sum "due to or from the company". IR 2.85(5) deals with obligations that are contingent or otherwise of uncertain value, and it applies to "any obligation due to or from the company". IR 2.85(7) deals with future obligations and it applies to "any sum due to or from the company". IR 2.85(6) is also concerned with the mechanics of taking the account. But its language is strikingly different. It provides:- "Rules 2.86 to 2.88 shall apply for the purposes of this Rule in relation to any sums due to the company which (a) are payable in a currency other than sterling; (b) are of a periodical nature: or (c) bear interest." (emphasis added). IR 2.86 deals with claims by creditors generally (i.e outside the context of insolvency set-off) in respect sums payable in a currency other than sterling. Its key provision states:- "For the purpose of proving a debt incurred or payable in a currency other than sterling the amount of the debt shall be converted into sterling at the official exchange rate prevailing at the date when the company entered administration…" IR 2.87 deals with claims by creditors generally (i.e outside the context of insolvency set-off) in respect of periodical payments. Its key provision states:- "In the case of rent and other payments of a periodical nature the creditor may prove for any amounts due and unpaid up to the date when the company entered administration…." IR 2.88 deals with interest, and I shall have to consider it further. The question raised by the administrators is whether, for the purposes of the insolvency set-off, IR 2.86 to IR 2.88 ought also to apply to any sums due from KSF even though IR 2.85(6) does not expressly so state. To put it in concrete terms, IR 2.85(6) provides rules for the treatment of loans made by KSF in US $; but it does not expressly provide for how US$ deposits are to be treated for the purposes of the account of mutual dealings. In my judgment, although IR 2.85(6) does not expressly apply to sums "due to or from the company" the effect of the Rules read as a whole is to make the same valuation principles apply on each side of the account. In order for the provisions of IR 2.85 to be brought into play at all there must be "[a] creditor of the company proving or claiming to prove for a debt in the administration", and in that event an account is taken of mutual credits, mutual debts or other mutual dealings between himself and the company. But a creditor proving for a debt incurred or payable in a currency other than sterling can only prove in accordance with IR 2.86 or 2.87: he cannot seek to recover anything else from the company. The company, however, is not "proving" anything in the administration and absent IR 2.85(6) would be able to value its debt for the purposes of set-off at any advantageous date it chose. The purpose of IR 2.85(6) is to subject the company to the same valuation rules as those to which the creditor is already subject. That is why it is confined to sums due to the company. The difference in language between IR 2.85(6) and 2.85(7) is curious. But I am clear in my view that the difference was not intended to mean that a creditor with a dollar or euro deposit should be subject to the valuation rules in IR 2.86 unless he had also borrowed money from KSF in euros or dollars (in which event KSF would be bound by those valuation rules but the creditor would be bound by none). The third question relates to the treatment for set-off purposes of interest payable by depositors who are also borrowers from KSF. IR 2.85(6)(c) says that IR 2.88 is to apply in relation to any sums due to the company that bear interest. IR 2.88 deals with interest on any sums due from the company. It provides in paragraph (1) that pre-administration interest is provable as part of the debt, but that interest arising post-administration may not be proved for. Paragraphs (2) to (4) inclusive then deal with two sets of circumstances in which the creditor may prove for interest "although not previously reserved or agreed" i.e. for non-contractual interest. The period for which and the rate at which such interest "not previously reserved or agreed" is provable are then set out in paragraphs (5) and (6). Paragraph (7) then deals with the possibility that there is a surplus in the administration after the payment in full of all proved debts. It says that the surplus shall first be applied in paying interest on "those debts" (i.e. all proved debts which bear interest or on which interest can be claimed although not previously reserved or agreed) in respect of the periods for which they were outstanding after the administration date. Paragraph (9) says that the rate at which such subordinated post-administration interest is paid is the greater of judgment debt rate and "the rate applicable to the debt apart from the administration" (i.e. the contractual rate). These are the rules that apply generally to any sums due to creditors from the company (i.e. to deposits repayable by KSF to creditors). It is these rules that IR 2.85(6) says must apply to any sums due to the company which bear interest (i.e. to loans payable by borrower/creditors to KSF) for the purpose of implementing the insolvency set–off. The joint administrators contend that that, for the purpose of conducting the account of mutual dealings, post-administration interest payable by creditors on loans due to KSF must be taken into account for the purpose of set-off. They submit that IR 2.88 is incapable of literal application to sums due to KSF: it is for example meaningless to think of a "surplus" existing in the assets of borrowers out of which subordinated post-administration interest could be payable to KSF. So one has to identify those bits of the rules relating to interest claims by creditors that were meant to apply to interest claims by the company. They submit that the exclusion from proof of post-administration interest due to a creditor was not intended to exclude from the company's set-off claim in taking the account post-administration interest due to the company - because that would be productive of significant anomaly. This is the alleged anomaly. Where KSF has a claim to repayment of a loan from a borrower who is not also a depositor then there is no doubt that KSF can recover from the customer all interest due (including post-administration interest). The administration does not affect claims by the company, only claims against the company. So why should it make any difference if the borrower is also a depositor? Customer A has borrowed £100 from KSF. He must repay £100 plus interest from the date of administration. Customer B has borrowed £100 and deposited £1. Insolvency set-off applies at the date of the notice of intention to distribute. Can it be right that for the purpose of taking the account at that date all interest accruing due on the £100 loan since the date of the administration must be ignored because in relation to the depositor's £1 "interest is provable as part of the debt except insofar as it is payable in respect of any period after the company entered administration"? In my judgment this approach is not correct. The very nature of insolvency set-off greatly advantages those who can avail themselves of it as against ordinary creditors: see paragraph 9 above. Given that the insolvency set-off exists, is mandatory and self-executing, the task in hand is to see what the rules that embody it mean: see paragraph 10 above. IR 2.85(6) says that IR 2.88 shall apply: it does not say that "paragraphs (2) to (6) of Rule 2.88 shall apply" (i.e. the provisions that deal with non-contractual interest), which is the way the joint administrators want the Rule read. It is the rule as a whole that applies so far as conceptually possible. When IR 2.85(6) says that IR 2.88 shall apply for the purposes of the insolvency set-off to any sums due to the company it requires one to substitute in IR 2.88 for the expression "debt proved in the administration" and cognate expressions an expression such as "sum due to the company", for terms such as "provable" expressions such as "allowable in the account" and for the word "creditor" the word "company" wherever the sense permits: in other words, to apply to one side of the account as nearly as possible the rules as regards interest that apply on the other. In my judgment IR 2.88(1) as applied by IR 2.85(7) means that where a sum due to the company bears interest, then interest is allowable in the account on set-off as part of the sum due except in so far as it is payable in respect of any period after the company entered administration. So, for the purpose of striking the balance of mutual dealings, post-administration interest is left out of consideration on both sides of the account. Once the account is taken there will be a balance: either a balance provable by the creditor in the administration or a balance recoverable by the company. The balance will itself be an interest bearing debt (the part of the deposit or of the loan not extinguished on set-off). The joint administrators raise a secondary question as to how this should be treated. If the balance is due to the creditor then the position is clear: the balance will already include any pre-administration interest, and under the general rule applicable in the administration the creditor is not permitted to prove for post-administration interest (save by way of the subordinated claim in the event of a surplus in the administration). If the balance is due to the company the position as regards interest is said to be less clear. The administrators say that the balance bears interest in accordance with the terms of the loan, and that interest on that balance remains recoverable. The creditors submit that the process of taking the account destroys any right to interest which arises post-administration (even though a borrower who had no cross-claim is undoubtedly liable for post-administration interest). In my judgment the joint administrators are right. The creditor cannot recover post-administration interest on his deposit because IR 2.88 imposes a general bar on his right to claim it. There is no such general bar on the right of the company to claim and recover post-administration loan interest. The only inhibition is on claiming post-administration interest in the process of taking the account of mutual dealings. IR 2.85(6) says that "Rule ...2.88 shall apply for the purposes of this Rule in relation to any sums due to the company" i.e. for the purposes of conducting the insolvency set-off and nothing else. Once the balance is struck then IR 2.85(8) says:- "..the balance…owed to the company shall be paid to the administrator as part of the assets..." But there is no need to read this as if it said "and the balance shall not bear interest notwithstanding what the contract says". The balance is not a newly created liability, the novel product of a statutory process. It is the balance due under a contract, the remainder of which has been extinguished in the insolvency set-off. Indeed it is quite plain that "the balance" continues to be subject to the terms of the contract under which it arises, for in the case of a contingent or prospective debt the Rule goes on to say that such a balance "shall be paid if and when that debt becomes due and payable" (i.e. under the contract, on the loan maturity date or earlier under any default provisions). The creditors say that allowing post-administration interest to be claimed on the balance is productive of great difficulty. First, what if the borrower has several loans with differing interest terms? How does one know which have been satisfied by set-off and which continue as part of the balance? I acknowledge that they are difficult questions: but I do not have to decide them. I think they are capable of answer by reference to the rules as to appropriation of payments or by resort to the technical rules of equity matching payments into and out of a running account: and the difficulties are not so great as to persuade me that the framers of the rules intended that the process of insolvency set-off should completely extinguish a borrower's liability for interest on the entire balance of his loan for the duration of that loan. Second, from what date is interest due on the balance? Interest is payable on the loan notwithstanding the administration. It is only the notice of intention to distribute which triggers the insolvency set-off at that date. In the insolvency set-off (on my reading of IR 2.85(6)) the rules require the balance to be struck on the footing that no post-administration interest is payable. Once ascertained, the balance bears contractual interest. But is interest to be paid on that balance from the date of administration (on the footing that it was always due)? Or is such interest to be paid only from the date of the notice of distribution, being the accounting date (on the footing that a creditor with a cross claim can say that the statutory account proceeds on the footing that post administration interest in not payable on debts due to the company)? Again I readily acknowledge the difficulty, and confess that I do not find the rules as easily understood and comprehensible as the framers (and the members of the insolvency and legal profession who considered them) hoped. I think the answer is that IR 2.85(6) only requires the statutory account to be conducted on a particular footing as regards post-administration interest arising before the date of the taking of the account: it does not purport to alter the actual liability for interest. A depositor who is also a borrower will therefore have to pay interest on the balance found by conducting the insolvency set-off as from the date of the administration (not simply as from the date of the notice of distribution). He will have to be credited with any interest that he has paid since the date of administration on so much of his borrowing as was extinguished by the process of set-off. But the balance has always been an interest bearing debt on which the administrators have been entitled to recover interest under the loan contract. This brings me to the final issue. It involves a consideration of the interrelationship between the provisions for the payment of future debts in rule 2.105(2) and the interest provisions as I have interpreted them. Assume that a creditor has made a £100 two-year term deposit at 4% repayable on 8 October 2009, and that the borrower has taken a £100 two-year loan at 6% repayable on 8 October 2009. These are both future interest-bearing debts. How are they treated? Rule 2.105(2) contains the formula for the discounting of debts payable at a future time by reference to "X", which the rule itself defines as "the value of the admitted proof". Its most straightforward application is in relation to a simple claim by a creditor. In the example I have given above the creditor will be able to prove for the amount of his two-year term deposit plus accrued but unpaid interest up to the date of the administration, but his dividend will be adjusted because it is being paid before the deposit matured. (Even the part of his admitted proof which represents interest payable before the administration date will be discounted: because the formula operates by reference to the admitted proof as a whole). His debt does not include any post-administration interest (because that cannot form part of the "admitted proof"), and the discount is calculated by reference to the commencement of the administration (not date of the declaration of the dividend on 22 July 2009). If the depositor is also a borrower the position is exactly the same on his side of the account in the operation of the insolvency set-off. Thus although the account is taken as at 20 May 2009 the discount period is still calculated by reference to the commencement of the administration on 8 October 2008. Likewise a claim by the company against a borrower who is not also a depositor is perfectly straightforward. The terms of the loan contract remain enforceable by KSF, and the mere fact of the administration and the desire of the joint administrators to realise KSF's assets for the purposes of distribution do not accelerate the borrower's liability. On the other hand, he remains liable to pay interest on his loan on the dates and at the rate provided for under the loan contract. The case which causes the joint administrators concern is a claim by KSF where the depositor is also a borrower. An insolvency set-off applies. Both IR 2.85(6) and IR 2.85(7) appear to apply because the loan is both future and interest-bearing. How do the provisions interrelate? In particular the question is whether the value of "X" as used in the formula should be an amount which is inclusive or exclusive of interest to the scheduled future payment date. The matter is put in this way in the witness statement of Mr Brazzill: "By way of example, if a creditor owes a loan debt of £100 in principal sum to KSF, payable in 2015 and also has a deposit of £100, will the "X" as used in rule 2.105(2) of the rules include simply the £100 as principal sum or also the interest that will accrue on the £100 up until the final repayment date in 2015?... If "X" is to be exclusive of interest until the final repayment date then there seems to be a double discount….. This is because "X" would already represent the value of the relevant sum as at the date of the administration i.e. the principal of £100 only in the above example) pursuant to Rule 2.88. It would then be discounted a second time to present value in using the formula as set out in Rule 2.105(2) of the Rules." The suggested way in which this perceived difficulty is to be overcome is to treat IR 2.85(7) as applying IR 2.105 only to non-interest-bearing debts. In my judgment "X" is exclusive of interest (other than accrued interest as at the date of administration) when the formula is applied to discount an unmatured loan due to the company for the purpose of finding the balance on the account to be taken for the purposes of insolvency set-off. First, there is no warrant in the language of IR 2.85(7) for treating it as confined only to non-interest-bearing debts. It expressly says that it applies to "any sum" due from the company which is payable in the future. Second, it seems to me that the principle upon which Rule 2.85 proceeds is that in the taking of the account on the insolvency set-off the same system of categorisation of recoverable/allowable items and the same valuation approach is to apply on each side of the account. "X" does not include interest on the depositor's side of the account and I do not see why as a matter of construction "X" should include interest on the company's side. Third, I have already held that Rule 2.88 is to be read as excluding post-administration interest from the sums allowable to the company in ascertaining the balance on the insolvency set-off: it would be inconsistent with that to hold that in the formula to be used to discount to present value "X" is to include post-administration interest. I acknowledge that this reading might have unfortunate consequences for the general body of creditors. When the account is taken, sums payable in the future are entered in the account on each side. In each case interest arising after the administration and before the date of the intended distribution is left out of account. In each case the sums that are to be set off against one another are reduced to their present value. The accounting exercise will produce a balance one way or the other. If the balance is in favour of the depositor the depositor will receive a dividend only upon the unextinguished part of the present value of his deposit, because he is being paid early. If the balance is in favour of the company, however, the company is not entitled to demand immediate payment of the unextinguished part of its loan, even though the loan has been reduced to present values. That discounted loan remains outstanding until the contractual maturity date, bearing contractual interest. To take a concrete example: a customer has deposited £100 repayable in July 2010 and borrowed £1000 repayable in July 2018. Set-off is necessary. Both deposit and loan are future debts and must be discounted to present value. The £100 is discounted by one year. The entire £1000 is discounted by nine years, even though only the present value of £100 is needed to set-off against the deposit, and even though the assumed present payment of the remaining £900 cannot occur. But I feel compelled to this conclusion because of the terms of the statutory formula, and because the rules apply to "all sums" due to the company (not simply to so much of the sums due to the company as are required to match the depositor's claim in the account). There is an undoubted tension between the principles underlying IR 2.85(7) (requiring a reduction to present values not only of future sums required for the purposes of set-off but of any sum due from the company in the future) and IR 2.85(8) (which says that that present value cannot be demanded immediately but must be left outstanding). Because in my judgment "X" excludes the interest payable until maturity, no difficulties are occasioned by the fact that many of the loans are by reference to a floating rate of interest linked to LIBOR. (If X included the interest payable until maturity it would have been necessary to identify some principles to enable "X" to be ascertained now when the rates applicable between the present and 2018 are unknown). My reading of IR 2.105 as applied to insolvency set-off by IR 2.85 proceeds on the footing that discounting rules are applied to the sums that are entered on either side of the account: this was the basis upon which the case was argued before me. Neither Counsel thought that any particular importance was to be attached to the words "for the purpose of dividend (and no other purpose)", reading them as meaning (in the context of an insolvency set-off) "for the purpose of giving value for the debt proved". I have nonetheless considered whether the framers of the Rule intended that the set-off exercise should be conducted on the basis of the gross sums (not reduced to present value) and that the provisions of IR 2.105 should apply only to the resulting balance, that balance being the amount "provable" under IR 2.85(8). But I concluded that that was not the way that the scheme was intended to work, and that Counsel's approach was correct. If it had been intended that the discount to present value should only occur in relation to the balance due after operating the insolvency set-off then IR 2.85(7) would not have applied IR 2.105 to any sums due to the company. Under IR 2.85(8) such a sum (the unextinguished balance of a future debt) can never become presently payable. It is only to be paid to the administrator "if and when that debt becomes due and payable". So if IR 2.105 was intended to apply only to the balance resulting from the operation of the insolvency set-off then its terms could never apply to sums due to the company. Since IR 2.105 expressly applies to sums due to the company the reference must be to the sum that is "due" under IR 2.85(3). So Counsel argued the case on the correct basis. For these reasons I hold (a) In the conduct of the insolvency set-off debts falling due for payment before the distribution date are given full value, and debts falling due for payment after the distribution date are discounted; (b) The quantification rules in IR 2.86 to 2.88 apply as much to sums due from KSF as they do to sums due to KSF; (c) For the purpose of trying to ascertain the balance arising from mutual dealings between creditor and company post-administration interest is ignored on each side, but the company remains able to claim interest on the balance so found from the date of administration; (d) In striking the balance on insolvency set-off relation to interest-bearing debts which are also future debts, the discount formula is applied to the debt (ascertained in accordance with the other provisions of IR 2.85) as it stands at the date of the notice of distribution, and the company cannot add in interest arising between that date and the maturity date of the loan. Mr Justice Norris…………………………………………………2 October 2009

These appeals are against the judgment of the Customs, Excise Gold Control Appellate Tribunal for short the Tribunal dated 27-8-1997. The question for companysideration is whether the product manufactured by the appellant-assessee namely Dimethicone is classifiable under Tariff Item No. 3003.20 as claimed by the appellant or under Tariff Item No. 3910.00 as claimed by the Respondent-Revenue . The Assistant Collector held that the product was classifiable under Tariff Item No. 3910.00. The Collector Appeals allowed the appeal and held that the product was classifiable under Tariff Item No. 3003.20. The Tribunal by the impugned judgment has reversed the order of the Collector Appeals and has held that the product is classifiable under Tariff Item No. 3910.00. For companysideration of the question, it is necessary to numbere the Tariff Items. They read as follows - 4.1.1 Heading No. Sub-heading Description of goods 39.10 3910.00 Silicones in primary forms 4.1.2 Note 6 to Chapter 39. 6. a In Heading Nos. 39.01 to 39.14, the expression primary forms applies only to the following forms - Liquids and pastes, including dispersions emulsions and suspensions and solutions Blocks of irregular shape, lumps, powders including moulding powders , granules, flakes and similar bulk forms. b Notwithstanding anything companytained in Note 3 to this Chapter, Heading Nos. 39.01 to 39.14 shall also include primary forms obtained from companyversion of another primary form, falling under the same heading, and such companyversion shall amount to manufacture. 4.1.3. Heading 38.23 and sub-heading 3823.00 38.233823.00 Prepared binders for foundry moulds or companyes 20 chemical products and preparations of the chemical or allied industries including those companysisting of mixtures of natural products , number elsewhere specified or included residual products of the chemical or allied industries, number elsewhere specified or included. 4.1.4 Note 1 to Chapter 38 This chapter does number companyer a b Medicaments heading No. 30.03 4.1.5 Heading No. 30.03 sub-heading No. 3003.20 30.03 Medicaments including veterinary medicaments . 3003.20 Medicaments other than patent or proprietary Nil other than those which are exclusively used in Ayurvedic, Unani, Siddha, Homeopathic or Bio-chemic systems. 4.1.6 Note 2 i to Chapter 30 For the purposes of headings No. 30.03 Medicaments means goods other than foods or beverages such as dietetic, diabetic or fortified foods, tonic beverages number falling within heading No. 30.02 or 30.04 which are either - a products companyprising two or more companystituents which have been mixed or companypounded together for therapeutic or prophylactic uses or b unmixed products suitable for such uses put up in measured doses or in packings for retail sale or for use in hospitals. At this stage, it must be mentioned that the question whether the product Dimethicone is a Silicone or number came up for companysideration before this Court in Hico Products Ltd. v. Collector of Central Excise . This Court after companysidering the then Tariff Items came to the companyclusion that it was a Silicone and inter alia held as follows - The products of the appellants as specifically classified in the lists and described as such separately are number numbericed and classified as such in the Pharmacopoeia as drugs by themselves or drugs intermediate. Rather the products of the appellant are found by expert opinion to be Silicones in the primary form, of the grades specified. There is thus numberbasis herein to distinguish Silicone as industrially used or medicinally used. The Tribunal in the impugned judgment has held that the judgment of this Court was number applicable as it was based on different tariff items. Undoubtedly, the judgment was in respect of different tariff items. But the fact remains that this Court has given a categoric finding that this product is a Silicone in primary form. This finding would therefore companytinue to be binding. Tariff Items may change but it cannot number be urged that this product is number Silicone in primary form. Of companyrse even though this product is a Silicone in primary form by virtue of Note 1 to Chapter 38, it would number be companyered by Entry 39.10 if it is Medicament. The question therefore is whether it can be companysidered to be a Medicament. The Tribunal, without the aid of the Hico Products case supra , came to the companyclusion that the product is a Silicone in primary form. In doing so, it has recorded that it is number denied that Dimethicone BPC is otherwise a Silicone in primary form. It was submitted that this observation was number companyrect. It was submitted that it was always disputed that the product was a Silicone in primary form. However, we find that there is numberground in the Memo of Appeal that this finding of the Tribunal has been wrongly recorded. Even otherwise, it is a settled law that if a Court or Tribunal records something then that has to be taken as companyrect unless the party gets the same clarified from that Court or Tribunal itself. As the Appellants have number made any effort to get this position clarified from the Tribunal number taken any ground in the Memo of Appeal it is number possible to accept this submission. The submission on behalf of the Appellant is that their product is a Medicament inasmuch as it falls under Note 2 1 a of Chapter 30. It is claimed that it is a product companyprising of two or more companystituents which have been mixed or companypounded together. The Tribunal has number accepted this. Before, we companysider reasoning of the Tribunal it must be numbered that the Assistant Collector had given a categoric finding that Dimethicone BPC was an unmixed product and that it was a Silicone in primary form. The Collector Appeals has number dealt with the finding that it is an unmixed product. The Collector Appeals has proceeded on the footing that as the product has therapeutic or prophylactic use it would be a Medicament. Of companyrse, the Collector Appeals numberes that the product has two or more companystituents but has number numbericed that the Appellants themselves have shown this product to be an unmixed product in the classification list filed by them. The Tribunal which is a final fact finding authority has companysidered both these opinions. It has observed that the Appellants themselves filed the classification list showing this product to be an unmixed product. If the product is an unmixed product merely because a process of hydrolysis of two or more chemicals is involved the product would number fall within Chapter Note 2 1 a of Chapter 30. With this finding of the Tribunal we are in full agreement. Even otherwise, the law on the subject is clear. The Tribunal is final fact finding authority. Unless it is shown that there is something perverse in its finding, this Court would number interfere. No authority is required for this purpose. But as a large number of authorities are cited, we refer to them Pragati Computers Pvt. Ltd. v. Collector of Customs, Madras Also reported in Also , Reliance Silicon 1 Pvt. Ltd. v. Collector, Central Excise, Thane Also , Asian Paints India Ltd. v. Collector of Central Excise Also and Collector of Customs, Bombay v. Swastic Woollens P Ltd. and Ors.

FIRST SECTION CASE OF LEDYAYEVA, DOBROKHOTOVA, ZOLOTAREVA and ROMASHINA v. RUSSIA (Applications nos. 53157/99, 53247/99, 53695/00 and 56850/00) JUDGMENT STRASBOURG 26 October 2006 FINAL 26/03/2007 This judgment will become final in the circumstances set out in Article 44 § 2 of the Convention. It may be subject to editorial revision. In the case of Ledyayeva and Others v. Russia, The European Court of Human Rights (First Section), sitting as a Chamber composed of: MrC.L. Rozakis, President,MrsN. Vajić,MrA. Kovler,MrsE. Steiner,MrK. Hajiyev,MrD. Spielmann,MrS.E. Jebens, judges,and Mr S. Nielsen, Section Registrar, Having deliberated in private on 5 October 2006, Delivers the following judgment, which was adopted on that date: PROCEDURE 1. The case originated in four applications (nos. 53157/99, 53247/99, 53695/00, and 56850/00) against the Russian Federation lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by Lyudmila Konstantinovna Ledyayeva, Elena Grigoryevna Dobrokhotova, Zhanna Vladmirovna Zolotareva and Ekaterina Efimovna Romashina, (“the applicants”), on 9 September, 1 September, 7 October and 27 August 1999, respectively. 2. The applicants, who had been granted legal aid, were initially represented by Mr Yuriy Vanzha, and, subsequently, by Mr Kirill Koroteyev, Ms Dina Vedernikova (“Memorial”), lawyers practising in Moscow, and Mr Bill Bowring and Mr Phillip Leach (“European Human Rights Advocacy Centre”), sollicitors in England and Wales. The respondent Government were represented by Mr Pavel Laptev, Representative of the Russian Federation at the European Court of Human Rights. 3. The applicants alleged that the operation of a steel-plant in close proximity to their homes endangered their health and well-being. They relied on Article 8 of the Convention. 4. The applications were allocated to the Second Section of the Court (Rule 52 § 1 of the Rules of Court). Within that Section, the Chamber that would consider the cases (Article 27 § 1 of the Convention) was constituted as provided in Rule 26 § 1 5. On 1 November 2001 the Court changed the composition of its Sections (Rule 25 § 1). The cases were assigned to the newly composed First Section (Rule 52 § 1). 6. By a decision of 16 September 2004, the Court declared the applications partly admissible. The Chamber also decided to join the proceedings in the applications (Rule 42 § 1). 7. The applicants and the Government each filed further written observations (Rule 59 § 1). The Chamber having decided, after consulting the parties, that no hearing on the merits was required (Rule 59 § 3 in fine), the parties replied in writing to each other's observations. 8. On 1 November 2004 the Court changed the composition of its Sections (Rule 25 § 1). This case was remained with the newly composed First Section (Rule 52 § 1). THE FACTS I. THE CIRCUMSTANCES OF THE CASE A. Background 9. The first applicant was born in 1948, the second in 1928, the third and the fourth applicants were born in 1932. They all live in the town of Cherepovets, Vologda region, an important steel-producing centre situated about 300 km north-east of Moscow. 10. The Cherepovets steel plant (“the steel-plant”) was built in the 1950-s and owned by the Ministry of Black Metallurgy of the Russian Soviet Federative Socialist Republic (RSFSR). The plant was and remains the largest iron smelter in Russia and the main contributor to the environmental pollution: it is responsible for 95-97 per cent of industrial emissions into the town's air. According to the annual report by the Federal Agency for State Statistics, in 2003 overall emissions from stationary sources of atmospheric pollution were 97 thousand tons for Moscow, a city of more than ten million people, and 349 thousand tons for Cherepovets, which counts less than 350,000 residents. As a result, the concentration of certain dangerous substances in the residential areas around the steel-plant is high above the safe levels, as defined by the domestic legislation. 11. In order to delimit the areas in which pollution caused by steel production could be excessive, the authorities established a buffer zone around the steel-plant premises – “the sanitary security zone”. Although this zone was, in theory, supposed to separate the plant from the town's residential areas, in practice thousands of people (including the applicants' families) lived there. 12. The apartment buildings in the zone belonged to the plant and were designated mainly for its workers, who occupied the flats as life-long tenants. Since the 1970-s several consecutive State programs have been adopted and implemented in order to reduce the pollution to acceptable levels and/or to resettle the inhabitants of the zone. Despite certain success in reducing the levels of atmospheric pollution and resettling some of the residents of the zone, these programs failed in bringing the atmospheric pollution down to the safe levels, as defined by Russian legislation. 13. The zone was first delimited in 1965. It covered a 5,000 metre-wide area around the territory of the plant. By municipal decree no. 30 of 18 November 1992 the boundaries of the sanitary security zone around the plant were redefined. The width of the sanitary security zone was reduced to 1,000 metres from the territory of the plant. 14. In 1993 the steel-plant was privatized and acquired by “Severstal” PLC. In the course of privatisation the apartment buildings owned by the steel-plant and situated within the zone were transferred to the municipality. 15. In 2002 the municipality challenged its own decree no. 30 of 1992, which had established the zone's boundaries. On 13 June 2002 the Cherepovets Town Court declared decree no. 30 invalid. The Town Court ruled that at the relevant time the municipality had not had jurisdiction to define the width of the zone. The boundaries of the sanitary security zone around the Severstal facilities currently remain undefined. 16. For further details concerning the status of the zone and the environmental situation in Cherepovets in general see the judgement Fadeyeva v. Russia (no. 55723/00, §§ 10-19, and §§ 29-43, ECHR 2005‑...). B. The applicants' housing conditions 17. At the relevant time the applicants lived in the council houses situated within the sanitary security zone, as delimited by municipal decree no. 30 of 1992. They acquired those flats from the local authorities or the plant itself and lived there under the “social tenancy agreement” (see the “Relevant domestic law” part below). Their respective housing conditions may be summarised as follows. 18. In the 1960-s the first applicant's family moved to a flat situated at 49, Metallurgov Street in Cherepovets. That flat was provided by the plant to the applicant's father under a “protected tenancy” agreement. After his death in 1968 the applicant became the tenant. In the 1970-s she left Cherepovets but then returned to the city and settled in that flat. In the early 1990-s the applicant's family had obtained from the State a right of protected tenancy to another flat in Cherepovets. The applicant registered that flat as her main place of residence (место прописки). However, there is no indication that she had physically moved there. 19. In 1996 the municipality started repair works in the apartment block where the first applicant lived. In May 1996 the applicant registered again the flat at 49, Metallurgov street as her place of permanent residence. The municipality proposed the applicant to move temporarily to another flat in the same building during the works in her flat. The applicant refused to do so, claiming that she had to be resettled outside the sanitary security zone once and for all. On 7 July 1999, upon the municipal authorities' request, the applicant was temporarily evicted from her flat and moved to another apartment in the same building. In 2002, however, she returned to the flat no. 49. 20. The second applicant lived in a flat at 38, Lomonossova street. In 1992 she privatised the flat. However, in 1997, upon her request, the court declared the privatisation contract null and void. She continues to live in the flat as a tenant. 21. The third applicant lives in a flat at 12, Babushkina street as a tenant. She moved to that flat in 1985. 22. The fourth applicant lived in a flat at 20, Gagarina Street as a tenant. On 2 March 2000 she moved to another flat at 86, Leningradskaya street, which was situated outside the sanitary security zone as defined by the municipal decree of 18 November 1992. That flat was provided to her by the municipality of Cherepovets. She recently privatized that flat. C. Pollution levels at the applicants' place of residence and their effects on the applicant's health and well-being 1. Summary of the findings in the Fadeyeva judgment 23. On 19 May 2005 the Court adopted a judgement in the case Fadeyeva v. Russia, cited above. Ms Fadeyeva, the applicant, lived within the sanitary security zone and complained about the effects of the operation of the “Severstal” steel-plant on her health and well-being. 24. In that judgment the Court found that the concentration of certain toxic substances in the air near the applicant's home had constantly exceeded the safe levels established by the Russian legislation. The Court also established that the nuisances endured by the applicant were in direct relation with the operation of the steel-plant. 25. In reaching that conclusion the Court relied, inter alia, on the information on air pollution in the whole town. In addition, the Court referred to the data collected by the State Agency for Hydrometeorology at the monitoring post situated at 4 Zhukov Street (post no. 1). That post was the closest one to the applicant's house, and in the absence of any more precise measurement, the data obtained from post no. 1 was regarded as the nearest approximation to the applicant's individual situation. 26. Information referred to in the Fadeyeva judgment is fully relevant for the purpose of the proceedings in the present four cases and will be taken into account by the Court. However, the parties produced certain new evidence as to the pollution in the area and its effects on the applicants' health and well-being. This information will be examined below. 2. Information specific to the present cases (a) Evidence produced by the Government[1] 27. The first and fourth applicants' houses are located in the vicinity of post no. 1, situated at 4, Zhukov Street. The data collected from that post showed that in 1999-2003 the concentration of dust, carbon disulphide and formaldehyde in the air constantly exceeded the “maximum permissible limits” (MPLs, safe levels of various polluting substances, as established by Russian legislation, предельно допустимые концентрации). Moreover, an over-concentration of various other substances, such as manganese, benzopyrene and sulphur dioxide, was registered during that period (for further details see § 28 et seq. of the Fadeyeva judgment, with further references). In 2004 an over-concentration of manganese (1.12 times higher than MPL), dust (1.18 times higher), and formaldehyde (6.29 times higher) was registered. 28. As regards the houses of the second and third applicants, they are located somewhere in between post no. 1 and post no. 2, situated at 43, Stalevarov street. As follows from the data produced by the Government in the Fadeyeva case, the pollution levels registered there were slightly lower than those registered at post no. 1. Nevertheless, in 1999-2003 the concentration of formaldehyde in the air was from 2.6 to 4.4 times higher than the respective MPL. The concentration of carbon disulphide was from 1.24 to 3.6 times higher (except for 2002, when it did not reach dangerous levels). Other pollution levels were below MPL (except for the over-concentration of dust registered in 1999). In 2004 the over-concentration of the following substances was registered: nitrogen dioxide (1.06 times higher than MPL), carbon disulphide (1.2 times), and formaldehyde (3.73 times). 29. As regards general effects of industrial pollution on the population of Cherepovets, the Government produced a report, prepared in 2003 by the Mechnikov Medical Academy in St-Petersburg in order to delimit the boundaries of the sanitary security zone. The conclusions of the report may be summarised as follows. The steel-plant's emissions in 2000 were half as much as in 1982. However, in 2000-2001 the concentration of several polluting substances in the air of the residential areas of the town still exceeded safe levels. At the same time the birth rate in the town was higher than the average in the country and the morbidity rate was lower. Most of the deceases registered in the town were not place-specific. However, prevalence of some chronic respiratory diseases was directly linked to the distance of the patients' houses from the territory of the steel-plant. The measures provided by the steel-plant in order to reduce emissions, would be capable of reducing health risks for the population of Cherepovets. If all these measures were implemented, by 2015 the concentration of pollutants in the air of the residential areas of the town could reach 1 MPL, which is the acceptable level. It would be possible to establish a sanitary security zone at a distance of one kilometre from the main sources of pollution. Having regard to the measures, scheduled for the period of 2002-2015, it would be possible to fix the boundaries of the sanitary security zone at the confines of the residential areas of the city. 30. On the basis of that report the Chief Sanitary Inspector of the Russian Federation issued a certificate, confirming that the project “On creating a sanitary security zone around the Severstal PLC” was in conformity with the requirements of the relevant Russian legislation. That certificate concluded that the realisation of the project would allow by 2015 a complete reduction of the concentration of air contaminants to hygienic standards, which would “guarantee reaching acceptable levels of public health hazards”. 31. The Government further produced a set of materials, prepared by the “Severstal” PLC called “For the important contribution to the environmental protection”. These materials described the environmental protection policy of the plant, environmental risks assessment mechanisms in place, the management structure of the environmental protection programs, particular technological measures implemented by the plant in order to reduce pollution levels and to normalise the environmental situation in the town, payments to the local budget for excessive pollution levels, participation of the plant in environmental education programs etc. 32. The Government further produced a certificate, issued by the Bureau Veritas Quality International, which confirmed that the management systems of the “Severstal” PLC in the areas of environmental protection and occupational hazards were in accordance with the standards, applied by that organisation. 33. As regards the effects of the pollution on the applicants' health, the Government produced the following information. As regards the first applicant, the Government did not have official information on her state of health, and, therefore, could not comment on it. As to the second and third applicants, according to the Public Health Department of the Vologda Region, their diseases were occupational or age-related. As to the fourth applicant, the Government stated that in 1997 she had been excluded from the list of people in need of regular examinations by the TB dispensary. In sum, the Government claimed that the applicants' diseases were of general character and had not been caused by the their living near the steel-plant. (b) Evidence produced by the applicants 34. The applicants claimed that the air pollution in the area where they lived was and continued to be above safe levels. Thus, according to a letter of the Cherepovets Centre for Sanitary Control, between 1990 and 1999 the average concentration of dust in the air within this zone exceeded the MPL by 1.6 to 1.9 times, the concentration of carbon bisulphide – by 1.4 to 4 times, the concentration of formaldehyde – by 2 to 4.7 times. The State Weather Forecast Agency of Cherepovets reported that the level of atmospheric pollution between 1997 and 2001 within the zone was rated as “high” or “very high”. Notably, a high concentration of hazardous substances, such as hydrogen sulphide, ammonia and carbolic acid was registered. According to a resolution of the Chief Health Inspector (главный санитарный врач) of 7 August 2000, the atmospheric pollution in the zone adversely affected public health, increasing the risk of cancer, as well as of respiratory and cardiac diseases. 35. According to the letter of the Head of the Environment Protection Department of the Vologda Region, in 2003 atmospheric pollution in the town was rated as “high”. Namely, over-concentrations of formaldehyde, benzopyrene, dust and carbon disulphide were registered. 36. As regards 2004, the applicants referred to the information published on the website of the Northern Department of the State Agency for Hydrometeorology. This source reported that in January-October 2004 the concentration of formaldehyde in Cherepovets was from 4 to 8 times higher than the respective MPL. According to an article published in the local newspaper “Golos Cherepovtsa” in May 2004 the concentration of dust registered at post no. 1 was 2 times higher than MPL, the concentration of nitrogen dioxide was 1.2 times higher, the concentration of carbonic oxide was 1.9 times higher. Pollution levels registered at the post no. 2 were 1.2, 2.6 and 1.6 higher than the corresponding MPLs. 37. The applicants also produced various medical documents, which confirmed that they suffered from certain chronic diseases. However, none of these documents certified that there was a link between any given illness and the place of residence of the respective applicant. 38. Finally, the applicants relied on the expert report of Mark Chernaik, Ph.D., submitted to the Court in the Fadeyeva case. In that report Dr. Chernaik analysed the effects of several polluting substances, present in the town's air in excessive quantities. As a result of his research Dr. Chernaik concluded that he would expect that the population residing within the sanitary security zone would suffer from excess incidences of various diseases, such as respiratory infections, cancer of nasal passages, chronic irritation of the eyes etc. Dr. Chernaik attributed these effects to the emissions of the steel industry (for further details see the Fadeyeva judgment, § 45). 39. In April 2005 Dr. Chernaik updated his report, taking into account data produced by the Government. In this new report Dr Chernaik concluded that emissions of harmful pollutants from the Severstal steel-plant and ambient levels of pollutants in the vicinity of it had not substantially declined in recent years; levels of dust, carbon disulfide and formaldehyde were still above permissible levels and were generally higher at monitoring stations closest to the Severstal facility. Dr. Chernaik also found that there was no substantiation of the claim that the Severstal Company had complied with the European and international environmental requirements. C. Domestic proceedings 1. Proceedings concerning the first applicant 40. On 30 March 1999 the first applicant requested the municipality to confirm that her house was located within the sanitary security zone. On 27 May 1999 the municipality replied that the boundary of the zone had not been officially delimited. On 9 July 1999, upon the applicant's request, the Cherepovets Town Court ordered the municipality to provide her with the information sought. That decision was upheld on 29 September 1999 by the Vologda Regional Court. The Regional Court found that, pursuant to Resolution no. 30 of 1992, the applicant's house was indeed located within the zone. 41. Shortly thereafter the first applicant brought proceedings against the “Severstal” company. She claimed that the “City Planning Regulations”, a Government Decree adopted in 1989, imposed on the owners of the plant an obligation to take various environmental protection measures in the zone, including the resettlement of its inhabitants, which obligation the company had failed to observe. Consequently, she claimed the resettlement outside the zone or the payment of a sum sufficient to purchase new housing in a safer area. 42. On 8 December 1999 the Cherepovets Town Court rendered a judgment in that case. The court discharged the company from any obligation to resettle the applicant, and ordered the municipality to put the applicant on the general waiting list for the new housing. This judgment was upheld by the Vologda Regional Court on 1 March 2000. The applicant was placed on two waiting lists. In 2004 the first applicant was no. 7613 on the general waiting list and no. 3692 on the priority waiting list. 43. On 11 February 2002 the Presidium of the Vologda Regional Court quashed, by way of supervisory review, the judgment of 8 December 1999. The Presidium established that the applicant lived in the sanitary security zone of the plant, where the concentration of by-products of steel production regularly exceeded the health limits. The Presidium further criticized the judgment of 8 December 1999 in the following words: “The lower court did not assess whether the measures taken in order to resettle the residents of the sanitary security zone were adequate in comparison to the degree of the threat that the plaintiff encounters. As a result, the court did not establish whether providing [Ms Ledyayeva] with new housing under the provisions of the housing legislation by placing her on the waiting list could be regarded as giving her a real chance to live in an environment that is favourable for her life and health”. The Presidium further analysed the legislation and concluded that it was for the polluting enterprise to take all necessary measures and to “develop” the sanitary security zone around its premises. The Presidium remitted the case to the Cherepovets Town Court for a fresh examination. 44. In 2002 the municipality challenged before the town court Resolution no. 30 of 1992 fixing the boundary of the zone. The applicant requested that she participate in the proceedings as a third party but this motion was refused. On 13 June 2002 the Cherepovets Town Court declared Resolution no. 30 invalid as ultra vires, in the presence of the only interested party – the municipality. 45. On 12 July 2002 the Cherepovets Town Court rejected the applicant's claims against the steel-plant. The court, referring to its judgment of 13 June 2006, held that the new boundary of the sanitary security zone had not been defined yet. The Federal Program of 1996, referred to by the applicant, contained such measure as the resettlement of the zone residents. However, that program has been abolished by Government Decree no. 860 of 7 December 2001, which did not provide for any resettlement. 46. Further, the court found that the 1989 town planning regulations provided that no housing should be situated within the sanitary security zone. However, those regulations had been adopted after the applicant's house had been built and, therefore, could not be referred to. Finally, the court noted that the applicant's family had moved to the flat at issue voluntarily. 47. The court also observed that the “Severstal” PLC was aware of the environmental consequences of its activities and was taking measures in order to reduce their impact. 48. The court concluded that the “Severstal” PLC could not be held responsible for not resettling the applicant from the zone. On 14 August 2002 this decision was upheld by the Vologda Regional Court. 2. Proceedings concerning the second, third and fourth applicants 49. In 1996 the second, third and fourth applicants brought a court action against the company, seeking their resettlement outside the zone. 50. On 25 April 1996 the Cherepovets Town Court rendered a judgment regarding the third applicant. On 10 July 1996 this judgment was upheld by the Vologda Regional Court on appeal. The judgment in respect of the second applicant was rendered by the town court on 23 May 1996, and upheld on appeal on 31 July 1996. The judgment with respect to the fourth applicant was delivered on 30 October 1996 and upheld on 25 December 1996. 51. In each case the courts came to the same conclusion by using a similar line of reasoning, which can be summarised as follows. 52. The courts noted that, before 1993, the applicants' flats had been owned by the Ministry of Steel Production, which had also owned the steel plant. Following the privatisation of the plant in 1993, it became a privately-owned entity, while the applicants' flats had become the property of the local authorities. The courts concluded that the company was therefore under no obligation to resettle the applicants. 53. The courts further recognised that the applicants lived in the sanitary security zone, where the concentration of dangerous substances and the level of noise exceeded the maximum limits permitted. The courts in principle accepted the applicants' claims, stating that they had the right in domestic law to be resettled by the local authorities. However, no specific order to resettle the applicants was made by the courts in the operative parts of the judgments. Instead, the courts stated that the municipality should put the applicants on a waiting list to obtain new housing (see the 'Relevant domestic law and practice' part below). 54. Enforcement proceedings were opened in this respect. In the absence of any special procedure for the resettlement of residents of the sanitary security zone, the applicants were put on the general waiting list for those entitled to better housing on social grounds. The second applicant was put on the list on 23 May 1999 with the number 6859, and the third and fourth applicants on 23 April 1999 with the numbers 6827 and 7032, respectively. 55. In 1999 the applicants brought new court proceedings, alleging that the judgments of 1996 had not been duly enforced. The applicants claimed flats in an ecologically-safe area, or the means to buy new flats themselves. 56. The Cherepovets Town Court dismissed their claims. The court established that no special waiting list existed for the zone residents and that on different dates the applicants had been put on the general waiting list. Therefore, the judgments of 1996 had been duly executed, and there was no need to undertake any further measures. These decisions were upheld by the Vologda Regional Court with respect to the second, third and fourth applicants on 4 August, 22 September and 7 July 1999 respectively. II. RELEVANT DOMESTIC LAW AND PRACTICE 57. Article 42 of the Constitution of the Russian Federation reads as follows: “Everyone has the right to a favourable environment, to reliable information about its state, and to compensation for damage caused to his health or property by ecological offences” 58. Pursuant to the Federal Law of 30 March 1999 on Sanitary Safety (О санитарно-эпидемологическом благополучии населения), the Federal Sanitary Service establishes State standards for protecting public health from environmental nuisances. In particular, these standards are applied in assessing air quality in cities: atmospheric pollution is assessed in comparison to the maximum permissible limits (MPLs), the measure which defines the concentration of various toxic substances in the air. It follows from Regulation 2.1 of the Sanitary Regulations of 17 May 2001 and section 1 of the Atmospheric Protection Act (Об охране атмосферного воздуха, 1999) that if the MPLs are not exceeded the air is safe for the health and well-being of the population living in the relevant area. Pursuant to Regulation 2.2 of the Sanitary Regulations, the air quality in the residential zones of cities should not exceed 1.0 MPL for all categories of toxic elements, and should not exceed 0.8 MPL in recreational zones. 59. Pursuant to the Atmospheric Protection Act, the federal environmental agency establishes environmental standards for various types of polluting sources (cars, farms, industrial enterprises etc). These general standards are applied to specific enterprises by the regional environmental agencies. In principle, an industrial enterprise's operations should not result in pollution which exceeds the MPLs (section 16 of the Act). However, for the sake of a region's economic development, a regional environmental agency may issue a temporary permit authorising an enterprise to exceed these norms (sections 1 and 12 of the Act). The permit should contain a schedule for the phased reduction of toxic emissions to safe levels. B. Sanitary Security Zones 1. Legislation 60. Every polluting enterprise must create a “sanitary security zone” around its territory – a buffer area separating sources of pollution from the residential areas of a city (Regulations 3.5 and 3.6 of the 1996 Sanitary Regulations, enacted by Decree no. 41 of the State Sanitary Service of 31 October 1996; similar provisions were contained in the sanitary regulations of 2000, 2001 and 2003, which replaced the 1996 regulations). The levels of pollution in this buffer area may exceed the MPLs. 61. The minimum width of the zone is defined by the sanitary regulations for different categories of enterprises. Pursuant to the 1996 regulations, the sanitary security zone around a steel-plant of the size of Severstal ought to be 2,000 metres from the boundaries of the territory of the industrial zone. Pursuant to the sanitary regulations of 1 October 2000, the width of the sanitary security zone for a metallurgical enterprise of this size ought to be at least 1,000 metres. In certain cases the State Sanitary Service may enlarge the zone (for example, where the concentration of toxic substances in the air beyond the zone exceeds the MPLs). The width of the sanitary security zone is calculated from the confines of the industrial territory or from the sources of pollution depending upon the type of polluting emissions. 62. Regulation 3.6 of the 1989 city planning regulations provided that an enterprise must take all necessary measures in order to develop (обустроить) its sanitary security zone in accordance with the law, with a view to limiting pollution. 63. Regulation 3.8 of the 1989 town planning regulations provided that no housing should be situated within the sanitary security zone. This provision was later incorporated into the Town Planning Code (Градостроительный Кодекс) of 1998 (Article 43) and the sanitary regulations of 17 May 2001 and 10 April 2003. Art. 43 of the Town Planning Code of 1998 provided: “Industrial zones are intended for placement of industrial objects, public utilities, warehouses... as well as for sanitary security zones thereof. Development of sanitary security zones should be conducted at the expense of the owners of the industrial objects. Placement of houses, kindergartens, schools, hospitals, [...]within the sanitary security zones of industrial objects [...] is prohibited”. 64. According to Regulation 3.3.3 of the 2001 sanitary regulations, a project to develop the zone may include, as a high-priority objective, resettlement of the zone's residents. However, there is no direct requirement to resettle the residents of the sanitary security zone around an enterprise which is already in operation. 65. Article 10 § 5 of the Town Planning Code of 1998 provided as follows: “In cases where State or public interests require that economic or other activities be conducted on environmentally unfavourable territories, the temporary residence of the population on these territories is permitted, subject to the application of a special town planning regime ...” 66. On 29 December 2004 the new Town Planning Code was adopted. It came into force on 30 December 2004. The new Code does not contain the regulations on sanitary security zones, similar to article 43 of the former Code. The only provision on the matter is the inclusion of sanitary security zones in the category of “zones with special conditions in the use of territories”. The legal regime for this type of zone remains to be determined in accordance with article 36(5) of the new Code. 2. Practice 67. It follows from a judgment of the North-Caucasus Circuit Federal Commercial Court (decision of 3 June 2003, No. Ф08-1540/2003) that the authorities may discontinue the operation of an enterprise which has failed to create a sanitary security zone around its premises in accordance with the law[2]. 68. The applicant produced an extract from the decision of the Supreme Court of the Russian Federation in the case Ivaschenko v. the Krasnoyarsk Railways (published in “Overview of the case-law of the Supreme Court”, Бюллетень Верховного Суда РФ, № 9, of 15 July 1998, § 22). In that case the plaintiff had claimed immediate resettlement from a decrepit house. The lower court had rejected the plaintiff's action, indicating that she could claim resettlement following the order of priority (i.e. should be put on the waiting list). The Supreme Court quashed this judgment, stating as follows: “the [plaintiff's] house is not only dilapidated [...], but is also situated within 30 metres of a railway, within the latter's sanitary security zone, which is contrary to the sanitary regulations (this zone is 100 metres wide, and no residential premises should be located within it)” The Supreme Court remitted the case to the first-instance court, ordering it to define specific housing which should be provided to the individual concerned as a replacement for her previous dwelling. C. Background to the Russian housing provisions 69. During the Soviet period, the majority of housing in Russia belonged to various public bodies or State-owned enterprises. The population lived in those flats as life-long tenants under “social tenancy agreements” (for further details see Teteriny v. Russia, no. 11931/03, § 19 et seq.,, 30 June 2005). In the 1990s extensive privatisation programmes were carried out. In certain cases, property that had not been privatised was transferred to local authority possession. 70. By the time of the events at issue, a certain part of the Russian population continued to live as tenants in local council homes on account of the related advantages. In particular, council house tenants were not required to pay property taxes, they paid a rent that was substantially lower than the market rate and they had full rights to use and control the property. Certain persons were entitled to claim new housing from the local authorities, provided that they satisfied the conditions established by law. 71. From a historical standpoint, the right to claim new housing was one of the basic socio-economic rights enshrined in Soviet legislation. Pursuant to the Housing Code of the RSFSR of 24 June 1983 in force at the time of the relevant events every tenant whose living conditions did not correspond to the required standards was eligible to be placed on a local authority waiting list in order to obtain new council housing. The waiting list established the priority order in which housing was attributed once it was available. 72. However, being on a waiting list did not entitle the person concerned to claim any specific conditions or timetable from the State for obtaining new housing. Certain categories of persons, such as judges, policemen or handicapped persons were entitled to be placed on a special “priority waiting list”. However, it appears that the Russian legislation guaranteed no right to be placed on the priority waiting list solely on the ground of serious ecological threats. 73. Since Soviet times, hundreds of thousands of Russians have been placed on waiting lists, which become longer each year on account of a lack of resources to build new council housing. The fact of being on a waiting list represented an acceptance by the State of its intention to provide new housing when resources become available. The applicants submit, for example, that the person who is the first on the waiting list in the Cherepovets municipality has been waiting for new council housing since 1968. On 29 December 2004 the new Housing Code of the Russian Federation was adopted. It came into force on 1 February 2005. Pursuant to the provisions of the new code the social housing may be obtained on very limited grounds. However, those who were placed on the “waiting lists” before the entry into force of the new Housing Code remained on the “waiting lists” (article 6 of the Federal Law “On the Entry into Force of the Housing Code of die Russian Federation” of 29 December 2004). THE LAW I. ALLEGED VIOLATION OF ARTICLE 8 OF THE CONVENTION 74. The applicants complained that there had been a violation of Article 8 of the Convention on account of the State's failure to protect their private lives and homes from severe environmental nuisance arising from the industrial activities of the Severstal steel-plant. 75. Article 8 of the Convention, insofar as relevant, reads as follows: “1. Everyone has the right to respect for his private and family life, [and] his home ... 2. There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of ... public safety or the economic well-being of the country, ... for the protection of health ..., or for the protection of the rights and freedoms of others.” A. The Government's submissions 76. The Government's submissions in the present cases may be summarised as follows. 77. First, the Government emphasised that the applicants had moved to the houses situated within the zone voluntarily, and, therefore, the State could not be held responsible for resettling them outside of it. 78. Secondly, they claimed that after the annulment of municipal decree no. 30 the sanitary security zone has not been delimited, and the applicants, therefore, were not living in the zone. In any event, the applicants' temporary residence in an environmentally unfavourable territory was permissible under Article 10 of the Town Planning Code. 79. Thirdly, the domestic courts had never examined the influence of industrial pollution on the applicants' health nor assessed the damage caused by it, because the applicants had not raised these issues in the domestic proceedings. Numerous examinations of the state of environmental pollution in the town did not reveal any extreme cases of environmental pollution. The applicants have failed to use the means prescribed by the Russian legislation for assessing environmental hazards. Namely, they did not obtain a report from the State Sanitary and Epidemiologic Service, as provided by decree no. 326 of the Public Health Ministry of the Russian Federation of 2001. Their flats were not declared unfit for living by a special commission, as provided by the Government Decree no. 552 of 2003. The different illnesses from which the applicants suffered have not been caused by the emissions from the Severstal steel plant, but were of general or occupational character. 80. Fourthly, the Government claimed that, although the law provided for suspension or cessation of industrial activities of the polluting enterprises, “such question has never come up” with respect to the Severstal steel-plant. Since the 1980-s, the volume of overall emission of the steel-plant was reduced almost to one third. The most dangerous industrial units were closed and the emissions of high-risk chemical substances were reduced by 100 times. Every year the “Severstal” PLC spent about 250 million Roubles on environmental protection programs. In 2000 the company was audited by the “Bureau Veritas Quality International”, an international organisation, which established that the system of the environmental protection management of the company was in conformity with international standards. Further, in 1999 the Severstal steel-plant underwent technical and ecological expertise of the European Bank of Reconstruction and Development (EBRD). As a result, the operation of the steel-plant was recognised to be in conformity with EBRD standards. The Government concluded that these aspects of the present cases permitted to distinguish them from the case López Ostra v. Spain (judgment of 9 December 1994, Series A no. 303‑C, p. 46-47, § 16-22), where the plant had operated without the appropriate licence and had been finally closed. 81. Finally, the Government argued that the authorities had conducted regular examinations of the public health situation and had adopted various programs in order to improve it. In recent years the implementation of a number of federal and municipal programmes, as well as projects funded by the “Severstal” PLC resulted in a reduction of pollution in Cherepovets. Thus, in 1991 the proportion of “irregular samples” of the town's air was 37,6 per hundred. In 1998 it was 32,8 per hundred, and in 2004 only 23,6 per hundred. The Government stressed that the environmental monitoring carried out by State agencies revealed an improvement in the overall environmental situation throughout the town, and that the pollution levels near the applicants' houses did not differ significantly from the average levels across the town. They produced reports, prepared by the “Severstal” PLC for the general public, which described the plant's environmental policy and the progress made in recent years. Therefore, unlike in the López Ostra case, cited above, in the present cases the applicants' situation was improving, and not degrading with the course of time. 82. The Government asked the Court to conclude that there had been no violation of the applicants' rights guaranteed by Article 8. B. The applicants' submissions 83. The applicants submitted that the histories of how and why their families had moved to the houses located within the zone had no relevance for the purpose of the present proceedings. 84. Further, they claimed that it was illogical to require them to prove the presence of their homes in the sanitary security zone in the absence of its limits. However, it was the finding of the domestic courts that the houses where the applicants lived were located within the sanitary security zone of the Severstal steel-plant. It was only after their applications had been lodged with the Court that the Russian authorities changed the regulations pertaining to the sanitary security zone of the Severstal steel plant. Consequently, the applicants submitted that they should be considered as having lived in the sanitary security zone at the material time. They lived there for many years, so Article 10 of the former City Planning Code, referred to by the Government, which allowed temporary dwelling in conditions of unfavourable environment, was not applicable. 85. The applicants asserted that the emissions from the Severstal steel plant exceeded and continued to exceed safe levels. The Government's argument that the steel plant operated in full compliance with domestic legislation could not be upheld. As to the link between the state of their health and the steel-plant's industrial emissions, the applicants noted that they have never alleged that the sole cause of their diseases was the operation of the steel-plant. The primary argument that they had consistently made was the fact that the persons suffering from such illnesses were more vulnerable than others to living in such an unhealthy environment. 86. As regards the measures, taken by the authorities and the plant itself in order to improve the environmental situation, the applicants noted the following. The federal programme of improvement of the ecological situation in Cherepovets for 1997 — 2010, referred to by the Government, was abolished by the Government's Decree of 7 December 2001. Since 1996 no official inquiry into the environmental situation in Cherepovets, which could influence the Government's actions towards the resolution of environmental problems, has ever been carried out. The specific consequences of any official inquiries have never been stated by the Government and such information has not been made adequately publicly available. The yearly National Report on Ecological Situation in Russia indicated year by year that the environmental situation in the Vologda region remained “difficult”, which significantly undermined the Government's arguments on effectiveness of the measures alleged aimed at amelioration of the environmental situation in the Vologda Region. 87. The only legal mechanism which could force the Government to introduce stricter regulations relating to dangerous industrial activities was the adoption of new legislation. However, the applicants were not in a position to introduce amendments to the legislation in force. The applicants were not aware of any fines ever having been imposed on the “Severstal” PLC, although the Code of Administrative Offences provided for such possibility. 88. For these reasons the applicants submitted that there had been a violation of Article 8 of the Convention, on the same grounds as in the above-cited case Fadeyeva v. Russia. C. The Court's assessment 1. Nature and extent of the alleged interference with the applicants' rights under Article 8 of the Convention 89. At the outset, the Court recalls that in assessing evidence it uses the standard of proof “beyond reasonable doubt”. However, it has never been its purpose to borrow the approach of the national legal systems that use that standard. Its role is not to rule on criminal guilt or civil liability but on Contracting States' responsibility under the Convention. The specificity of its task under Article 19 of the Convention – to ensure the observance by the Contracting States of their engagement to secure the fundamental rights enshrined in the Convention – conditions its approach to the issues of evidence and proof. In the proceedings before the Court, there are no procedural barriers to the admissibility of evidence or pre-determined formulae for its assessment. It adopts the conclusions that are, in its view, supported by the free evaluation of all evidence, including such inferences as may flow from the facts and the parties' submissions. According to its established case-law, proof may follow from the coexistence of sufficiently strong, clear and concordant inferences or of similar unrebutted presumptions of fact. Moreover, the level of persuasion necessary for reaching a particular conclusion and, in this connection, the distribution of the burden of proof are intrinsically linked to the specificity of the facts, the nature of the allegation made and the Convention right at stake (see Nachova and Others v. Bulgaria [GC], nos. 43577/98 and 43579/98, § 147, 6 July 2005, with further references). 90. Whereas in many cases the existence of an interference with a Convention right is evident and does not give rise to any discussion, in other cases it is a subject of controversy. The present four applications belong to this second category. There is no doubt that serious industrial pollution negatively affects public health in general. However, it is often impossible to quantify its effects in each individual case, and distinguish them from the influence of other relevant factors, such as age, profession etc. The same concerns possible worsening of the quality of life caused by the industrial pollution. The “quality of life” is a very subjective characteristic which hardly lends itself to a precise definition. Therefore, taking into consideration the evidentiary difficulties involved, the Court has no other choice than to repose thrust primarily, although not exclusively, in the findings of the domestic courts and other competent authorities in establishing factual circumstances of the case (see Buckley v. the United Kingdom, judgment of 25 September 1996, Reports of Judgments and Decisions 1996‑IV, pp. 1291-93, §§ 74-77). However, the Court cannot rely blindly on the decisions of the domestic authorities, especially when they are obviously inconsistent or contradict each other. In such situation it has to assess the evidence in its entirety. (a) Summary of the Court's findings in the Fadeyeva judgment 91. The Court recalls its findings in the Fadeyeva case, where it found that the applicant's private life and enjoyment of her home had been seriously affected by the pollution, caused by the industrial emissions of the Severstal steel-plant. In reaching that conclusion, the Court paid special attention to the following facts. 92. First of all, it was widely recognised that the environmental situation in Cherepovets was unfavourable for the residents of the town and adversely affected their health and well-being. Although the situation improved since the 1980-s, when it was almost catastrophic, it still remained unsatisfactory, at least from the standpoint of the domestic standards. Namely, concentration of several polluting substances in the air of the city continuously exceeded safe levels, established by the domestic legislation, the MPLs. 93. Secondly, it was established that Ms Fadeyeva lived in the territory of the zone, which was initially designated to separate residential areas from the sources of pollution, but, in the course of time, was turned into a residential area. Although the law did not clearly require the resettlement of the residents of such zones, it prohibited any permanent dwelling in it because of the dangers it represented. 94. Thirdly, the Court relied on the reports on the environmental situation in Cherepovets, which confirmed that the over-concentration of certain pollutants in the town's air caused an increase in the morbidity rate for the city's residents (see §§ 11, 14, 33, 45 and 46 of the Fadeyeva judgment). 95. In that case the Court did not establish that the applicant's health had deteriorated solely because of her living within the zone. Nevertheless, the Court found that the excessive levels of industrial pollution inevitably made her more vulnerable to various diseases. Moreover, there was no doubt that it had adversely affected the quality of life at her home. (b) The Court's conclusions in the present cases 96. Turning to the present cases, the Court notes that the applicants' situations do not differ significantly from that of Ms Fadeyeva. Although at the relevant time all of them lived at different addresses, their flats were located within the sanitary security zone of PLC “Severstal”, as defined by municipal decree no. 30. It should be noted that on 2 March 2000 the fourth applicant obtained a new flat from the authorities and moved outside the zone. The Court is thus prepared to accept that she is no longer exposed to dangerous levels of pollution. However, the interference complained of was of a continuing nature and lasted almost two years, if counted from 5 May 1998 (the date when the Convention entered into force with respect to Russia). Therefore, her moving outside the zone did not by itself eradicate the adverse effects of her living there, and for a certain period of time she was in the same situation as other applicants (for further details see paragraph 106 below). 97. The Court does not agree with the applicants that the circumstances in which they had acquired their flats were absolutely irrelevant. However, it appears that at the time the applicants were unable to make an informed choice, or were not in a position to reject the housing offered by the State, or move elsewhere at their own expense (see the Fadeyeva judgment, §§ 119 and 120). Thus, it cannot be claimed that the applicants themselves created the situation complained of or were somehow responsible for it (see also, mutatis mutandis, Öneryıldız v. Turkey [GC], no. 48939/99, § 105 et seq., ECHR 2004‑...). 98. The Government further indicated that in 2002 municipal decree no. 30 had been annulled, and, at present, the boundary of the sanitary security zone remains undefined. The Federal Program of 1996, which provided for the resettlement of the residents of the zone, is no longer in force. On these grounds on 12 July 2002 the Cherepovets Town Court rejected the first applicant's claims against the steel-plant. However, in the Court's view, it does not mean that the danger for the first and other applicants' health and well-being is no longer there. The de facto abolishment of the sanitary security zone was decided not because the concentrations of toxic substances reached safe levels, but on formal grounds. For almost ten years decree no. 30 was in force and applied by the courts. Its validity has not been called into question either by the steel-plant, or by the municipality itself. Moreover, on many occasions various domestic official bodies confirmed that the applicants lived in the territory of the sanitary security zone where concentrations of certain toxic substances were above acceptable levels and which was therefore unsuitable for human residence. At last, in their observations on admissibility and merits the Government admitted that the applicants' houses were located within the zone (see the decision on admissibility of the present cases of 16 September 2004). Thus, in the eyes of the Court, the annulment of decree no. 30 and ensuing changes in the legal status of the zone has no bearing on the applicants' situation from the standpoint of their complaints under Article 8 of the Convention. 99. The Government finally indicated that the applicants had not obtained appropriate reports from relevant State bodies confirming that the place where they lived was unfit for living and that this matter had not been discussed before the domestic courts. In this respect the Court notes, first of all, that the Government referred to the legislation which had been enacted in 2001 - 2003, which was after the applicant's cases had been examined by the domestic courts. Secondly, the Court reiterates that in the proceedings before it there are no procedural barriers to the admissibility of evidence (see paragraph 89 above). The applicants produced a large number of other documents, official reports, letters of various State authorities, confirming that the concentration of certain pollutants near the applicants' houses was constantly above safe levels, established by the Russian legislation. Moreover, this fact is supported by the data produced by the Government itself (see above, paragraphs 27 et seq.). Finally, at the time when the domestic proceedings took place the existence of interference with the applicants' private sphere was taken for granted at the domestic level, since the law defined the territory where they dwelled as unfit for residence, and presumed that the concentrations of pollutants that they had been exposed to were unsafe. 100. In sum, after having examined all the evidence in the case-file, the Court does not see any reason to depart from its findings in the Fadeyeva judgment. The Court will refrain from making any conclusive findings as to whether or not the industrial pollution was the cause of the applicants' specific diseases. Nevertheless, the Court concludes that the actual detriment to the applicants' health and well-being reached a level sufficient to bring it within the scope of Article 8 of the Convention. 2. Justification under Article 8 § 2 101. As in Fadeyeva, the Court finds that the applicants' complaints in the present cases fall to be analysed in terms of a positive duty on the State to take reasonable and appropriate measures to secure the applicant's rights under Article 8 § 1 of the Convention (for more details see §§ 88 – 92 of the Fadeyeva judgment). Further, the Court considers that the continuing operation of the Severstal steel-plant contributed to the economic system of the Vologda region and, to that extent, served a legitimate aim within the meaning of paragraph 2 of Article 8 of the Convention (see Fadeyeva, §§ 98 – 100). It remains to be determined whether, in pursuing this aim, the authorities have struck a fair balance between the interests of the applicants and those of the community as a whole. (a) Summary of the Court's findings in the Fadeyeva judgment 102. The Court recalls that in Fadeyeva it established that the Severstal steel-plant's operations did not fully comply with the environmental and health standards established in the relevant Russian legislation. The operation of the Severstal plant in conformity with the domestic legislation would be possible only if the zone, separating the enterprise from the residential areas of the town, continued to exist and served its purpose. 103. In that case the Court considered two alternative avenues that could have been employed by the authorities in order to solve the applicant's problem: the resettlement of the applicant outside the zone and the reduction of the toxic emissions. As regards the resettlement, the Court found that little, if nothing, had been done in order to help the applicant moving to a safer area. As to the efforts of the authorities, aimed at reducing the pollution, the Court noted that a certain progress has been made since the 1980-s. However, the governmental programs and privately funded projects did not achieve expected results. Whereas, according to the 1990 Government Programme, the steel-plant was obliged to reduce its toxic emissions to a safe level by 1998, in 2004 the Chief Sanitary Inspector admitted that this had not been done and that the new deadline for bringing the plant's emissions below dangerous levels was henceforth 2015. During the period falling within the Court's competence ratione temporis (since 5 May 1998), the overall improvement of the environmental situation was very slow. 104. The Court accepted that, given the complexity and the scale of the environmental problem around the Severstal steel-plant, this problem could not be resolved in a short period of time. However, it did not mean that the authorities might remain passive. On the contrary, they had to take “reasonable and appropriate measures to secure the applicants' rights under paragraph 1 of Article 8” (Hatton and Others v. the United Kingdom [GC], no. 36022/97, § 98, ECHR 2003‑VIII) in a shortest delay possible. Given the seriousness of the situation, the onus was on the State to show how it coped with the environmental problem. However, in that case the Government failed to do so. They did not show that the effects of the operation of the plant on public health and well-being were regularly monitored and the information obtained was shared with the population concerned. Further, the Government did not explain how the information available influenced their policy vis-à-vis the plant, and what that policy consisted of. Finally, the Government failed to show how the policy (if any) was enforced, which sanctions had been applied and for what kind of breaches. In these circumstances the Court drew adverse inferences and concluded that in regulating the steel-plant's industrial activities the authorities had not given due weight to the interests of the community living in close proximity to the premises of the Severstal steel-plant. (b) The Court's conclusions in the present four cases 105. Turning to the present cases, the Court observes that, as regards possible resettlement, the first, the second and the third applicants were in the same position as Ms Fadeyeva, since none of them has been resettled or received compensation for the resettlement costs. 106. Ms Romashina, the fourth applicant, obtained a flat outside the zone in 2000, free of charge. Therefore, it may be assumed that she had had to endure the adverse effects of pollution for a shorter period of time than the other applicants. Indeed, the resettlement may have solved her problem for the future. However, it did not put right the alleged breach of her rights during the antecedent period and the authorities did not acknowledge the alleged breach of her rights under the Convention, nor expressly neither in substance. Accordingly, this fact does not deprive the fourth applicant of the status required to claim to be a victim of a violation of the Convention within the meaning of Article 34. 107. As regards measures of general character, undertaken by the Government in order to solve the problem of pollution, the Court notes the following. The Government referred to a number of studies carried out in order to assess the environmental situation around the Severstal steel-plant. However, the Government have failed to produce these documents or to explain how they influenced the public policy vis-à-vis the plant. The only relevant report produced to the Court (see paragraph 29 above) was commissioned in 2003 by the plant itself in order to delimit its sanitary security zone. The information contained in that report was definitely useful for defining the extent of the environmental problem and its consequences, but it did not impose any particular obligations on the plant or the State authorities. 108. As regards other documents, produced by the Government, the Court notes that they reflect the company's environmental protection policy and the overall progress made in the recent years. However, this policy was not legally binding on the plant and its realisation to a great extent depended on the good will of the plant. The Court recalls in this respect that the central question of the present cases was how the State protected the applicants' rights under the Convention by regulating private industry. Since the interference with the applicants' rights persisted, it was of little relevance that the plant was willing to stop it and was taking practical steps in that direction. What is central for the present cases is how the State reacted to that situation, what legal mechanisms were employed in order to reduce the pollution to acceptable levels or, at least, to exclude those affected by the pollution from its effects. 109. Pursuing that matter, the Court notes that the Government did not produce the plant's operating permit, licence or other documents which would establish the Government's policy regulating the plant's industrial activities. The Government did not explain how the plant's compliance with the operating conditions of its licence, permit or general environmental standards was monitored and how it was enforced. The Government's argument that the plant functioned in compliance with the domestic and international environmental standards is not convincing. Thus, the fact that the management system of the plant was certified by an international organisation does not mean that the plant's emissions were at acceptable levels. The same concerns the audit by the EBRD experts, referred to by the Government. Nor did the Government provide the Court with a copy of the audit report, neither it explained what had been the purpose of it and its findings and recommendations. 110. Having examined the materials submitted to it, the Court notes that in the present cases the Government did not put forward any new fact or argument capable of persuading it to reach a conclusion different from that of the Fadeyeva case. The Court concludes that, despite the wide margin of appreciation left to the respondent State, the authorities failed to take appropriate measures in order to protect the applicants' right to respect for their homes and private lives against serious environmental nuisances. In particular, the authorities have neither resettled the applicants outside the dangerous zone, nor have they provided for a compensation for those seeking the resettlement. Furthermore, it appears that the authorities failed to develop and implement an efficient public policy which would induce the steel-plant to reduce its emissions to the safe levels within a reasonable time. There has accordingly been a violation of Article 8 of the Convention. II. APPLICATION OF ARTICLE 41 OF THE CONVENTION 111. Article 41 of the Convention provides: “If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.” A. Damage 112. Each of the applicants claimed EUR 10,000 for non-pecuniary damage they had suffered because of the adverse effects of the pollution, they and their families had to endure for up to 40 years. Under the head of pecuniary damage the applicants (except for Ms Romashina) claimed that the Government should be required to (i) offer them new housing comparable to their currents flats, outside the sanitary security zone, or, alternatively, (ii) award them damages equal to the price of a flat located outside the sanitary security zone, comparable with their current flats. The justification of the amounts claimed was based on the average figure of 20,000 Russian roubles for a square meter of a housing. The sums claimed were EUR 25,000 in respect of the first applicant, EUR 30,500 in respect of the second one, and EUR 38,500 in respect of the third applicant. The fourth applicant did not claim any pecuniary damage, as she had moved outside the sanitary security zone and now possesses her own flat. 113. The Government claimed that the applicants' claims for non-pecuniary damages were excessive and unreasonable. If the Court finds a violation of the applicants' rights, it would be by itself a sufficient just satisfaction. Alternatively, the Government claimed that a symbolic amount would be equitable under the head of non-pecuniary damages. As regards the pecuniary damages, the Government submitted that the applicants' claims concerning the provision of the new housing was irrelevant, since it concerned the compensation for the property lost – a complaint which had been declared inadmissible. 114. As regards non-pecuniary damages, the Court is prepared to accept that the applicants' prolonged exposure to industrial pollution caused them much inconvenience, mental distress and even a degree of physical suffering. At the same time the Court recalls that the Convention entered into force in respect of Russia on 5 May 1998; therefore, the Court has no competence ratione temporis to make an award for the period prior to this date. In sum, taking into account various relevant factors, such as age, the applicant's state of health and the duration of the situation complained of, and making an assessment on an equitable basis in accordance with Article 41, the Court awards the applicants under the head of non-pecuniary damages the following amounts: (i) EUR 7,000 to the first applicant, (ii) EUR 8,000 to the second applicant, (iii) EUR 8,000 to the third applicant, (iv) EUR 1,500 to the fourth applicant, plus any tax that may be chargeable on these amounts. 115. As regards pecuniary damages, the Court notes that, like in Fadeyeva, in the present four cases the applicants failed to substantiate any material loss in respect of the period prior to the adoption of the present judgment (see § 140 of the Fadeyeva judgment). 116. As regards future measures to be adopted by the Government in order to comply with the Court's finding of a violation of Article 8 of the Convention, the Court notes the applicants in this respect are in different situations. The fourth applicant has been resettled outside the zone in 2000. Having regard to the information available and the scope of the present case, the Court considers that her individual problem has thus been solved and the Government has no further obligations vis-à-vis this applicant under the Convention, apart from paying her compensation for the past sufferings (see paragraph 114 above). 117. As regards other applicants, the Court notes that they are still residing within the zone. The Court notes that the resettlement of them in an environmentally safer area (a measure sought by the applicants before the domestic instances) would be only one of many possible solutions. The Court is conscious that there are other possible ways of reducing the negative effects of the plant's activities on those who, like the applicants, reside in the vicinity of it. Therefore, given the complexity of the situation, and in line with its approach to the Fadeyeva case, cited above, the Court will not prescribe any particular legal, administrative or other measure to be adopted by the Government. According to Article 41 of the Convention, by finding a violation of Article 8 in the present case, the Court establishes the Government's obligation to take appropriate measures to remedy the applicant's individual situation. Subject to monitoring by the Committee of Ministers, the respondent State remains free to choose the means by which it will discharge its legal obligation under Articles 41 and 46 of the Convention, provided that such means are compatible with the conclusions set out in the present judgment (see Scozzari and Giunta v. Italy [GC], nos. 39221/98 and 41963/98, § 249, ECHR 2000-VIII), in particular, with the two alternative solutions examined by the Court (see paragraph 110 above). B. Costs and expenses 118. Under the head of costs and expenses the applicants claimed EUR 9,000 in respect of their representation before the domestic courts and other authorities by Mr. Yuri Vanzha. Mr. Yuri Vanzha produced a calculation of his fees, based at the rate of EUR 50 per hour, for 180 hours of legal work and travel time. As to the representation by the British and Russian lawyers working with “Memorial” and the “European Human Rights Advocacy Centre”, their services were covered by legal aid and the applicants did not claim any additional amounts in this respect. 119. In reply the Government argued that the applicants' claims in this part were unsubstantiated. They submitted that “no contracts with [Mr Vanzha] or payment receipts have been presented by the applicants to support that the costs are real. The letter of Mr Vanzha could only be considered as a price-list for services or description of services, for which the applicants were supposed to pay”. In any event, the amount of Mr Vanzha's fee was unreasonable and excessive. 120. The Court recalls its findings in the Fadeyeva judgment, where it held that the absence of a written agreement on legal representation did not mean that such an agreement did not exist (§ 146). From the materials of the case and correspondence with the Court it is clear that Mr Vanzha represented the applicants in the domestic proceedings and before the Court at the initial stage of the proceedings. The applicants claimed that they were under an obligation to pay Mr Vanzha certain amounts for his work. Mr Vanzha, in his turn, confirmed this claim by producing the calculation of his fees. Therefore, the Court concludes that the lawyer's fees are real. 121. As to whether the applicants' lawyer's expenses were necessary, a reduction should be applied on account of the fact that some of the applicants' complaints were declared inadmissible. Further, the Court excludes expenses which were not related to the proceedings before the domestic courts and the European court. Finally, the Court considers that since the individual situations of the applicants were quite similar, the preparation of their cases did not require as much time is indicated in the calculation produced by Mr Vanzha. Consequently, making an assessment on a reasonable basis, the Court awards each of the applicant EUR 800 for the costs incurred under this head, or EUR 3,200 for all of them. C. Default interest 122. The Court considers it appropriate that the default interest should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points. FOR THESE REASONS, THE COURT UNANIMOUSLY 1. Holds that there has been a violation of Article 8 of the Convention; 2. Holds: (a) that the respondent State is to pay the applicants, within three months from the date on which the judgment becomes final according to Article 44 § 2 of the Convention, the following amounts in respect of non-pecuniary damage: (i) EUR 7,000 (seven thousand euros) to the first applicant, (ii) EUR 8,000 (eight thousand euros) to the second applicant, (iii) EUR 8,000 (eight thousand euros) to the third applicant, (iv) EUR 1,500 (one thousand five hundred euros) to the fourth applicant, to be converted into Russian roubles at the rate applicable at the date of settlement, plus any tax that may be chargeable on these amounts; (b) that the respondent State is to pay each applicant, within three months from the date on which the judgment becomes final according to Article 44 § 2 of the Convention, EUR 800 (eight hundred euros) in respect of costs and expenses incurred by Mr Vanzha, to be converted into Russian roubles at the rate applicable at the date of settlement, plus any tax that may be chargeable on the above amounts; (c) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points. 3. Dismisses the remainder of the applicants' claim for just satisfaction. Done in English, and notified in writing on 26 October 2006, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. Søren NielsenChristos RozakisRegistrarPresident In accordance with Article 45 § 2 of the Convention and Rule 74 § 2 of the Rules of Court, the concurring opinion of Mr A. Kovler is annexed to this judgment. C.L.R.S.N. CONCURRING OPINION OF JUDGE KOVLER As in the case Fadeyeva v. Russia (55723/00, judgment of 9 June 2005), without casting doubt on the Court's finding of a violation of Article 8, I would prefer to describe the violation as unjustified interference with the applicant's private life without mentioning “right to home” as it was done in the Guerra and Others v. Italy case (judgment of 19 February 1998, 14967/89, Reports 1998-I). [1] Information summarised below is taken form the Government’s submissions on the merits in the Fadeyeva case, as well as from the relevant documents, attached to the Government’s submissions in the present four cases. [2]. This decision concerned the closure by the authorities of a filling station which had no sanitary security zone around its territory.

Tuesday, 26th March 2002 LORD JUSTICE SEDLEY: Before the court is an application for permission to appeal against the refusal by Elias J on 10th September 2001 to give Mrs Chaudhari permission to apply for judicial review. The case, as Elias J said, is a tragic and most unusual one. It arises from the death of Mrs Chaudhari's small child on 26th October 2000 in the King George Hospital at the age of 5 months. The child had been born with a rare and, according to the medical evidence, invariably terminal condition. The family, however, believed that the child was making remarkable progress and not exhibiting the expected signs of deterioration. Her death was therefore, in the family's view, not natural, and they have formed the view that it was a death brought about deliberately by the medical profession for experimental reasons in order to find what it was that had enabled this small child to survive a condition which was expected to prove fatal. The coroner obtained a report of a well qualified paediatric pathologist, Professor Risden, which concluded that death was due to natural causes. The family, which includes the baby's aunt, a pharmacist, took issue with this and concluded, when the coroner did not abandon Professor Risden's report, that the coroner was in a conspiracy with the medical profession to suppress the truth. The coroner in strong terms rejected these accusations in correspondence. At the time of the application to Elias J the inquest, which was to be held with a jury, had been adjourned on a number of occasions but was due to be heard the following day. The result of his refusal of permission was that the inquest went ahead. It returned a verdict of death by natural causes. I am told today that proceedings have been issued in the Divisional Court to quash that verdict, probably upon the same grounds as have been advanced to me today. Before I turn to those grounds I need to say a word about the authorship of the submissions that have been made to me today. Mrs Chaudhari, whom I have heard briefly and who is a fluent and articulate speaker, has nevertheless wanted, for understandable reasons, to be represented. She has sought representation in the form of Dr Adoko. I will not go through Dr Adoko's history as it is known to the court. I will simply say that, while he is a qualified lawyer, he is not qualified to practise as an advocate before courts of this country. He was, however, voluntarily heard in the exercise of his discretion by Elias J. When application was made in writing by him to be heard again before this court, Laws LJ, having considered the papers, refused the application. He wrote: "I do not permit Dr Adoko to represent the applicant at the hearing. The interests of justice in general and of the applicant in particular do not require that to be done." I have no reason on the basis of what I have heard today to dissent from that view. But in deference to Mrs Chaudhari's wishes and to the fact that Elias J heard Dr Adoko I have heard him today on Mrs Chaudhari's behalf. While I agree entirely with Laws LJ that the interests of justice did not in any way require me to do so, nevertheless it seemed to me consistent with them in the very peculiar circumstances of this case to let Dr Adoko speak for Mrs Chaudhari. I do not want this to be taken as any kind of a licence or general indication of the desirability of courts doing so in other cases. Dr Adoko has advanced a series of points in support of the application for permission to appeal. One, and a serious one if it were made out, is that out of all the doctors involved in the child's care the coroner summoned only the one Asian doctor and did not call for evidence from the white doctors who had also been involved. But in the absence of any evidence that the choice was influenced by anything other than their medical involvement, this is a point which simply has no substance. If it were established - though I do not see any evidence to establish it - that doctors who have something to say that is relevant but are white have been unaccountably excluded, the position might be different; but it is not the position on the evidence that I have seen. Secondly, the coroner is criticised for having refused to hear Dr Adoko at the inquest. Her refusal, as I understand it, is the reason why the family boycotted the inquest. Again, the power to hear an unqualified advocate is entirely within the coroner's discretion and I can see no ground for criticising her decision not to exercise it in Dr Adoko's favour. Indeed, having seen the booklet that he has written about the case I can see every reason why she was right to take the attitude she did. Thirdly, it is said that, with the father absent in India looking after his dying mother and with the mother too unwell to attend, only the child's aunt, the pharmacist, was able to give material evidence and to speak on the family's behalf, although the coroner would not hear her. If it were shown that the aunt had relevant factual evidence to give then this might be a valid ground for criticism. But the complaint, as I understand it, is that she was not able to give her opinion about the child's death. That is not an entitlement which any but a qualified expert has and she was not summoned as, and indeed was not, an expert in the relevant matters. Then it is said that Professor Risden, the pathologist used by the coroner, had already decided that the death was by natural causes. That is evidently right, but it was his job to form a view, albeit not a conclusive view. The concluded view had to be arrived at by the inquest having heard his and any other material evidence. It is said that the disclosure of relevant documents to the family was refused by the coroner. Again this has been considered on the papers by Elias J and like him I do not see a basis for saying that it is the case. Next, it is said by Dr Adoko that the conflict between the coroner and the family about the coroner's position put her in a position of bias because she was driven to defend herself in strong terms and must therefore have become prejudiced against the family. To assert this is to assert that a judicial officer is not capable of dealing objectively with people who object to her. If there were evidence of misconduct the court would consider it with great care, but nobody must ever suppose that they can drive a judicial officer out of office by making accusations sufficiently intemperate to provoke a denial. That kind of confrontation will not work, and nothing that has happened in this case comes close, in my judgment, to demonstrating a bias in the coroner against the family, as opposed to a perfectly legitimate defence by the coroner of her own impartiality. Lastly, Dr Adoko has begun to address me on the details of the child's treatment, or, as the family believe it to have been, mistreatment by doctors. All of this was a matter for the inquest, and since the inquest was boycotted I have no evidence that it was not, so far as material and so far as it was addressed by available evidence, dealt with in a proper way. But beyond all these reasons for not disagreeing with Elias J's view that a case for applying for judicial review was not made out, there is now the fact that the issues in relation to the run-up to the inquest are now entirely academic. The inquest has taken place. That is why, as I understand it, a fresh application has been issued to quash the verdict. Since that is so there is no need for me to consider whether the present application should be amended so as to seek a quashing. But I record my clear view that if it had been and Dr Adoko had so applied on Mrs Chaudhari's behalf, and indeed if I had allowed the amendment so as to seek the quashing of the verdict, my decision would have been exactly the same, namely that grounds are not shown for doing so. I conclude, as Elias J did, with my expressions of sympathy for everybody involved in the loss of this small child. It is a desperate tragedy for any family, but it is not helped in this case by the attempt to construct a conspiracy, indeed a conspiracy to murder, out of nothing; because it seems to me that the evidence amounts to nothing in that regard. I am sorry that the matter has been brought this far and that the family have plainly been encouraged to do so when other counsel might have prevailed with them. But so far as the law is concerned there is not, in my judgment, any ground for impugning the inquest. The application is therefore dismissed. (Application dismissed; no order as to costs).

The minutes of our order dated 4-11-1996 extracted below, shall form part of this order During the companyrse of arguments, we have felt the necessity of having the reports of investigation which have been kept submitted to the Bombay High Court from time to time. Mr. Mendonca, Additional Director General of Police, CID Crimes , Pune, who kept an eye on the CID investigation and who submitted those reports in the High Court, is directed to obtain those reports from the High Court in the sealed companydition, as they are lying there, and bring them to us on Friday, the 8th November, 1996 at 12 numbern for which purpose a request for facility be made to the High Court. Those shall be placed before us in that companydition and we will pass appropriate orders thereon after having dealt with them in the manner we think fit. The Registry to take immediate steps to companyveying this order of ours to the High Court as also to Mr. Mendonca, Additional Director General of Police, CID Crimes , Pune. Dusty companyies be given to the parties today. The cases to remain part-heard for 8-11-1996 at 12 numbern. Pursuant thereto, Mr. Mendonca, Additional Director General of Police, has brought those investigation reports, which are 5 in number, under sealed companyer in one packet. We have gone through the companytents of those reports carefully and after having done so, have caused them to be put back in a sealed companyer and those have been handed over to Mr. Mendonca for re-submission to the High Court. The facts speak eloquently in the judgment of the High Court sought to be appealed against. We would scrupulously avoid making mention thereof lest our step in that direction be treated as one of approval or disapproval. Some portions of the High Courts judgment, however, are worth reproduction. These are Having watched progress of the investigation, we have numberreason to doubt either the honesty or the integrity of the officers engaged in the investigation. We, however, find that the investigation has number reached a deadlock. We further find that certain vital facts which emerge in the investigation have still remained unanswered. They are exact cause of death movements of Ramesh Kini between 8.00 a.m. on 23rd July, 1996 when he left to attend a meeting in the office of Samna after he met Advocate Shri Lad at 9.30 a.m. and 10.30 p.m. on the same evening when he was found in Alka Theatre in Pune possibility of death otherwise than by suicide. We find that the present investigating agency has proceeded to investigate the case only on one hypothesis namely suicidal death. No steps are taken to find out whether this is a case of murder. Further the High Court has said The present case, it is to be numbered, has generated immense amount of public interest. There is, in fact, a public outcry. In the circumstances, we cannot totally ignore the aforesaid facts and circumstances arising in the present case. And finally, the High Court has gone on to say Having regard to the lacuna in the investigation, which we have numbered above, we find that a case is made out to order transfer of investigation to the CBI. We have numbericed that investigation has been one-sided and has failed to explore alternate possibilities arising in the investigation. To this extent investigation is found to be faulty. Though numbertrace of external agency is numbericed, possibility of a latent bias on the part of the investigation cannot be totally ruled out. Insofar as the view of the High Court that the crime has generated immense amount of public interest or, in other words, a public outcry and that in a manner a public demand has been made towards transference of the investigation to the CBI, with respect, we do number agree with the High Court. Decisions cannot be made on the verdict of the numbers. A situation of the kind can develop many a time, but companyrts have to maintain their companyl and watch the events with a fair amount of objectivity. And it is number difficult for interested parties sometimes to manipulate mass outcry highly litigious as our companyntry has emerged to be. Disagreement with that portion of the order, however, does number tell on the other parts of the order which, in our view, does number call for any dissent on our part more so, when we have gone through the reports submitted by the CID to the High Court.

2003 1 SCR 1075 The following Order of the Court was delivered In the year 1995 the respondent was elected as Zila Panchayat Adhyaksha in District Sultanpur, State of U.P. Certain companyplaints were received against her where in the State Government directed an inquiry to be made by the District Magistrate who in his turn got the preliminary inquiry companyducted through Additional District Magistrate Establishment . Sultanpur. Acting on the preliminary inquiry report and a supplementary report prepared by the Additional District Magistrate, the State Government instituted a formal inquiry and at the same time directed the respondent to be divested of financial and administrative powers exercised by her in the capacity of Zila Panchayat Adhyaksh. Section 29 of Uttar Pradesh Kshetra Panchayat and Zila Panchayat Adhiniyam 1961 U.P. Act No. 32 of 1961 , hereinafter the Act, for short and Rule 4 of Uttar Pradesh Kshetra Panchayat and Zila Pachayats Removal of Pramukhs, Up-Pramukhs. Adhyakshas and Upadhyakshas Enquiry Rules. 1977 hereinafter Enquiry Rules, for short framed in exercise of the powers companyferred by Section 237 read with Sections 16 arid 29 of the Act provide as under Act Section 29. Removal of Adhyaksha or Upadhyaksha- I If in the opinion of the State Government the Adhyaksha or the Upadhyaksha while acting in place of Adhyaksha. willfully omits or refuses to perform his duties or functions under this Act or abuses the powers vested in him or is found to be guilty of misconduct in the discharge of his duties or becomes physical or mentally incapacitated for performing his duties the State Government, after giving the Adhyaksha or Upadlnaksha. as the case may. be a reasonable opportunity for explanation ma by order remove him from office and such order shall be final and number open to be questioned in a Court of Law. Provided that where in an enquiry held by such person and in such manner as may be prescribed an Adhyaksha or Upadhyaksha is prime facie found to have companymitted financial and other irregularities such Adhyaksha or Upadhyaksha shall cease to exercise and perform the financial and administrative powers and functions, which shall, until he is exonerated of the charges in the final enquiry, be exercised and performed by a companymittee companysisting of three elected members of the Zila Panchayat appointed in this behalf by the State Government. 2 xxx xxx xxx 3 xxx xxx xxx Rules Rule 4. Preliminary enquiry- 1 The State Government May, on the receipt of a companyplaint referred to in Rule 3, or otherwise appoint an officer number below the rank of an Additional District Magistrate in the case of a Pramukh or Up-Pramukh and District Magistrate in the case of an Adhyaksha or Upadhyaksha to companyduct a preliminary enquiry with a view to finding out if there is a prima facie case for a formal enquiry in the matter. The officer appointed under sub-rule I shall companyduct the preliminary enquiry as expeditiously as possible and submit his report to the State Government within a fortnight of his having been so appointed. The impunged order divesting the respondents of her powers was put in issue by the respondent by filing a writ petition in the High Court of U.P. at Allahabad. The principal plea raised on behalf of the respondent was that the companyplaints against her were false and politically motivated as respondent did number belong to the same political party as was ruling the State and that the preliminary inquiry held under Rule 4 was the foundation of the impugned order which inquiry, the respondent being an Adhyaksh. companyld have been held only by District Magistrate and number by an Additional District Magistrate, and therefore, the inquiry was a nullity having been held b an officer number companypetent to hold the same, ami hence, irrelevant to serve as foundation for the impugned order The High Court In its impinged judgement dated 11.9.1998 delivered In a Division Bench directed the impunged order to be quashed holding the preliminary enquiry companyducted by an Additional District Magistrate to be incompetent and vitiated. The submission made on behalf of the State that District Magistrate included an Additional District Magistrate, and therefore an inquiry held b an Additional District Magistrate companyld number be said to be incompetent, was rejected. On 19.11.1998 the State filed this petition seeking special leave to appeal under Article 136 of the Constitution. Subsequently, leave was granted and the petition was companyverted into a Civil Appeal. The respondent was numbericed and has vehemently opposed the appeal. At the hearing it was submitted by the learned companynsel for the State of P. that the appeal has become infructuous in the sense that the term of the respondent as Zila Panchayat Adhyaksh has already companye to an end but the State of Uttar Pradesh was interested in having the legal issue decided as the interpretation placed by the High Court on Rule 4 was causing serious inconvenience to administration as several companyplaints were being received and the District Magistrate companyld number be expected to be entrusted with the burden of inquiring himself into all the companyplaints. We have heard the learned companynsel for the parties it was submitted on behalf of the appellant State that under Clause 14 of Section 2 of the Act the term District Magistrate has been defined to mean the district magistrate appointed under Section 20 of the Code of Criminal Procedure, 1973. Section 20 of the Code of Criminal Procedure. 1973 companytemplates the State Government appointing as many persons as it thinks fit to be Executive Magistrates and one of them being appointed to be the District Magistrate. The State Government may appoint any Executive Magistrate to be an Additional District Magistrate and such Magistrate shall have such of the powers of a District Magistrate under the Code or under any other law for the time being in force as may be directed by the State Government. Section 23 provides that all Executive Magistrates, other than the Additional District Magistrate, shall be subordinate to the District Magistrate. The District Magistrate may. from time to time, make rules or give special orders, companysistent with the Code as to the distribution of business among the Executive Magistrates subordinate to him and as to the allocation of business to an Additional District Magistrate. The learned companynsel for the State submitted that sub-section 1 of Section 23 of Cr.P.C. suggests that an Additional District Magistrate is number subordinate to the District Magistrate, and therefore. is companypetent to hold an inquiry against Adhyaksha or Uphadhyaksh within the meaning of Rule 4. On the other hand, learned companynsel for the respondent submitted that sub-section 2 of Section 23 companytemplates business to an Additional District Magistrate being allocated by the District Magistrate and in a sense he is subordinate to the District Magistrate. Be that as it may, the decision in this appeal has been rendered merely academic as in spite of this Court entering into interpretation of relevant provisions would number pass any companysequential order inasmuch as the term of the respondent as Zila Panchayat Adhyaksh is already over. We are indeed distressed to numberice the tendency on the part of the State Government in filing a special leave petition devoid of merit and certainly avoidable and keeping the same pending in this Court for a period of over four years. Lot of companyfusion and uncertainty must have prevailed in the State of U.P. on account of the legal issue having been entrusted by the State Government for decision by this Court where a minor amendment in the rule would have served the purpose and clarified the law. Instead of putting its own house in order, the State Government has indulged into the luxury of litigation by adding to the number of pendency of cases. It is careless and clumsy drafting of Rule 4 which is responsible for the situation. The draftsman of the rules has clearly used the term District Magistrate as distinct from the term Additional District Magistrate. The definition of District Magistrate in Clause 14 of Section 2 of the Act is number applicable if there be something repugnant in the subject or companytext. The very use of Additional District Magistrate and District Magistrate in the same rule, companysisting of one sentence, clearly suggests that the two terms are used in two different meanings. The High Court appears to be right in holding that an inquiry against a Pramukh or Uppramukh can be held by an officer number below the rank of an Additional District Magistrate while as against Adhyaksh or Upadhyaksh-these two being democratically elective offices, higher in status than that of Pramukh or Uppramukh, the inquiry should be held by the District Magistrate.

MR JUSTICE MITTING: On 15th August 2008 Bryant Homes Oxfordshire Limited submitted a planning application to develop 100 houses on a site to the east of Eynsham in West Oxfordshire. The application was considered by the West Oxfordshire Planning Committee at its meeting on 20th July 2009. It resolved that planning permission should be granted. On 21st October 2009 the formal document granting planning permission was signed by Mr Shaw, a Senior Planning Officer within the council. Brenda Dry, a resident of Eynsham and a member, I think, of the Eynsham Society, on her own behalf and on behalf of a number of other residents of Eynsham, seeks permission to challenge the grant of planning permission. She sought it on paper before Ian Dove QC sitting as a Deputy High Court Judge. He refused permission. The application comes before me as a renewed application. I have, in fact, heard full argument on it as if it were a substantive hearing. I am satisfied that one of the grounds advanced is arguable and I therefore grant permission to argue that ground. In headline form it is the sequential testing point. I do not regard the other two grounds as arguable, for reasons which I will briefly explain at the end of this judgment, and I refuse permission to apply on those two ground. I need to say a little more about the background. In June 2006 a Local Plan for West Oxfordshire was adopted. It included, I am told as a result of an objection made at the inquiry conducted to examine the plan, the following proposal: "Eynsham East. Land to the west of the B449 Eynsham Eastern Bypass as shown on the Eynsham inset map is allocated for housing. Within this area, the following provision will be made: "(a) housing 2.8 hectares which shall include up to 50% affordable housing, taking into account the level of local housing need. (b) structural landscaping and amenity open space 0.9 hectares." There then followed notes of guidance which indicated that the site should accommodate around 100 dwellings and should be the subject of a planning brief before any development was to be permitted. The brief was required to include measures for improving pedestrian and cycle links and to demonstrate sufficient sewerage capacity. Neither the policy nor the guidance referred to flooding on the site. After that Local Plan was adopted two events occurred. In December 2006 Central Government published Planning Policy Statement 25 which dealt with the risk of flooding. It stated that: "The aims of planning policy on development flood risk were to ensure that flood risk was taken into account at all stages in the planning process and to avoid inappropriate development in areas at risk of flooding." To that end, PPS 25 advised that Local Planning Authorities should, when determining planning applications, apply a sequential approach. The advice was that the sequential approach should be applied at two levels. First, when considering whether the site was suitable or more suitable than other sites to develop, and in regard to the risk of flooding; and, secondly, to minimise the risk by the design of the development on the site. This was made explicitly clear in paragraph 16: "LPAs allocating land in LDDs (Local Development Documents) for development shall apply the sequential test to demonstrate that there are no reasonably available sites in areas with a lower probability of flooding that would be appropriate to the type of development or land use proposed." Local Planning Authorities were referred to Annex D of the guidance which reiterated, in paragraph D1 that the risk based sequential test should be applied at all stages of the planning process. To assist Local Planning Authorities to determine the extent to which a site was at risk of flooding, three zones were proposed. First, Zone 1 where there was a low probability of flooding defined as land having a less than 1 in a 1,000 annual probability of river or sea flooding in any year. Secondly, Zone 2, where there was a medium probability of flooding, land assessed as having between a 1 in 100 and a 1 in 1,000 annual probability of river flooding, and between a 1 in 100 and a 1 in 1,000 annual probability of sea flooding. Finally, Zone 3 which was categorised as a high probability risk and was broken down into two. In the second of the two sub-zones the site was identified as a functional flood plain and in the first a site in which developers and Local Authorities should seek opportunities to reduce the overall level of flood risk or to relocate existing development to land in zones with a lower probability of flooding. A tick box was contained in table D3 which suggested that when development of a type categorised as "more vulnerable", including housing development, was considered that development was appropriate in Zones 1 and 2 but that an exception test would be required for Zone 3A and that development was not appropriate at all, unsurprisingly, in zone 3B, a flood plain. Ordinarily, that advice would be considered before a Local Development Plan was adopted. There is, after all, little point in identifying a site for development which would be regarded as inappropriate for development applying PPS 25. That did not, as a matter of timing, occur in this case. As the guidance makes clear, even in such circumstances it was required to be taken into account: it is to be taken into account at all stages in the planning process. The next thing that occurred was a flood, a serious flood, in 2007. The flood was observed and photographed by residents. It was ultimately noted by the Environment Agency, perhaps as a result of having its attention drawn to the flooding by residents. When the planning application was made the developers did not consider that it would be necessary to conduct a sequential test. This prompted an objection from the Environment Agency on 11th September 2008. The basis for the objection was that no evidence had been provided that the flood risk sequential test had been adequately demonstrated; and that their objection would remain until the developers had carried out the sequential test to demonstrate that there are no reasonably available sites in areas with a lower probability of flooding which would be appropriate for the type of development proposed. Eventually the Environment Agency's view prevailed. The developers commissioned a sequential test from professional planning agents; and their report, dated March 2009, concluded that there were no other available more appropriate sites. The methodology adopted was plainly adopted as a result of discussions between the experts, the Environment Agency and the Local Planning Authority. Two features should be noted. First, they confined their search to the area of Eynsham and Woodstock. They did so for reasons which are not challenged in these proceedings and do not appear to have been the subject of comment, let alone criticism, at any stage in the course of the planning process. The reason, in short, that they narrowed their scope to those two centres was that the housing proposed was intended to satisfy local housing need and not, principally at least, housing need for people who might work elsewhere. The second feature that is noteworthy is that the test was conducted on the premise that the whole of the site would be considered as Flood Zone 2. That is to say subject to a risk of between a 1 in 100 and a 1 in 1,000 risk of flooding by river annually. The reason for adopting that approach was explicitly stated in paragraph 5.2 of the report: "The Environment Agency have advised that they wish the site to be considered as Flood Zone 2." That observation is of significance because in the plan produced by the Environment Agency up to that point only the south-east corner of the site was shown as being within Zone 3 and only a slightly larger area as being within Zone 2. The bulk of the site was shown as being within Zone 1. As the flood in 2007 suggested, that plan required revision. The Environment Agency was, ultimately, satisfied by the sequential test and other investigations carried out by the developers. The investigations included a report by hydraulic engineers which suggested mitigation measures to avoid the risk of flooding on the site. In consequence, on 23rd April 2009 the Environment Agency withdrew its objection. The position was clearly stated in the report of the Planning Officers to the Committee, which noted the Environment Agency's comments. It stated in particular, their observation that, during the consultation period: "It was agreed by all parties that the site is affected by flooding which is not identified on our national flood zones map." The principal cause was stated to be the lack of maintenance and limited hydraulic capacity of a culvert flowing under the road. That is a matter of contention between those who propound that view and some, at least, of the residents of Eynsham who consider that the flooding is not wholly or not, perhaps, even mainly thus caused. That is not, of course, an issue which is for me to determine today. In the report of the Officers to the Committee, they noted that one of the main issues was whether the development would be at risk of flooding or would increase the risk of flooding elsewhere. They noted that residents had provided evidence that much of the site had been subjected to frequent flooding, notably in July 2007. They explicitly drew attention to the guidance in PPS 25 and to the need for a sequential test. Basing themselves on the original Environment Agency plan, they noted that no residential development was proposed within the Zone 2 and Zone 3 parts of the site identified on that plan. They summarised the sequential test report briefly. In paragraph 8.7 they put forward a proposition that is at the heart of the claimant's challenge to the decision to grant permission: "Having regard to the fact that no residential development or roads would be within Zone 2 or 3 on the site your Officers are satisfied that the sequential test report demonstrates that there are no reasonably available sites that are preferable in terms of flood risk Zones 1 and 2." Mr Kolinsky, for the claimant, correctly identifies that statement as being the only statement in the written advice of the Planning Officers to the Committee about the reason why the sequential test report demonstrated that there were no reasonably available sites which were preferable in terms of flood risk. If the decision of the Committee had been founded on the premise that only the areas identified on the original Environment Agency plan as being within Zones 3 and 2 were at risk of flooding, such as to require examination of alternatives both within and to the site, then it is possible that a viable challenge could have been mounted to the Committee's decision. But the notes of the meeting demonstrate that that was not, in fact, so. The Area Planning Manager, Mr Shaw, told the Committee about the strong concerns of the Eynsham Society in respect of flooding amongst other matters. He confirmed that the Environment Agency had withdrawn its objections to the development "whilst acknowledging that its flood map was inaccurate". The brief minutes note the concerns of Members of the Committee about flooding on the site. That flooding was a principal, if not the principal, matter of concern to the Committee is demonstrated by the alteration in the reasons given for the grant of permission between those proposed by the Officers and those adopted by the Committee. As proposed by the Officers, all that was said about flooding was: " ... and the development pays proper regard to the need to regard flooding." As ultimately resolved, the Committee gave as its reason: "Furthermore, although the site has a history of flooding a number of mitigation measures are proposed and the Environment Agency has raised no objection on flooding grounds." The mitigation measures proposed included raising part of the level of the land and taking steps to ensure that the culvert which had featured in the hydraulic engineer's report was adequate for the purpose of draining away surface water from the site. That alteration, to my mind, demonstrates, beyond argument, that the Committee had at the forefront of its mind the following. First, the Environment Agency's plan was not the last word on the matter of flooding risk. Secondly, the site had a history of flooding which required mitigation measures to address it. Thirdly, the Environment Agency had raised no objection on flooding grounds. Fourthly, and implicitly in the grant of permission, the risk of flooding on this site was adequately dealt with by those means. The real issue -- would this development, if permitted, be subjected to an unacceptable risk of flooding -- was accordingly addressed by the Committee. It did not make its decision, I am satisfied, on the footing that only the small area on the original Environment Agency plan shown as Zone 3 and Zone 2 might be at risk of flooding. On 23rd September 2009 Mr Shaw e-mailed Julie-Ann Hedel at the Environment Agency acknowledging recent notification that the flood plain boundaries on plans produced by the Environment Agency had been extended. In relation to this site the flood plain boundary was extended to cover virtually the whole of the site. The Zone 3 area was not materially altered but the Zone 2 area covered well over three quarters of the site. As a glance at the plan shows, that would have meant that it would not have been possible to build anything like 100 conventionally designed houses on the site. If it were impermissible to build houses on the site within the Zone 2 area, a radical redesign or reduction in number would have been required. Mr Shaw asked the Environment Agency to confirm: "That the series of ameliorative mitigation measures that the developer put forward as a means to overcome your holding objections on that site are still appropriate for the extended flooding area". She responded on 2nd October and confirmed that the development "is not at risk of flooding during the design flood event and appropriate mitigation measures are included". Thus, at all times once the sequential test report had been produced and considered by the Environment Agency it had no objection on flooding grounds to the proposed development. Mr Shaw did not refer the Environment Agency's new plan to the Committee to invite it to reconsider its decision of 20th July. That forms the fundamental challenge to the grant of the permission mounted by the claimant. It is common ground that the test is that set out by Parker LJ in Kides v South Cambridgeshire District Council (2003) JPL 431 at paragraph 126. In that case a resolution to grant planning permission had been made five years before the permission itself was finally signed. The issue in the case was whether or not the developments which had occurred in between times required that the question be referred back by the Officers to the Committee for them to take the decision afresh. The following advice was given by Parker LJ at paragraph 126: "In practical terms, therefore, where since the passing of the resolution some new factor has arisen of which the delegated officer is aware, and which might rationally be regarded as a 'material consideration' for the purposes of section 70(2), it must be a counsel of prudence for the delegated officer to err on the side of caution and refer the application back to the authority for specific reconsideration in the light of that new factor. In such circumstances the delegated officer can only safely proceed to issue the decision notice if he is satisfied (a) that the authority is aware of the new factor, (b) that it has considered it with the application in mind, and (c) that on a reconsideration the authority would reach (not might reach) the same decision." It is paragraph (c) which is in issue here. Mr Shaw has provided a witness statement, the truth of which is unchallenged for these purposes, in which he emphasises that which is already apparent from the documents, namely that the Committee considered the flood risk on this site not by reference to the Environment Agency's original plan but by reference to a wealth of evidence which established that there was, indeed, a flood risk and which demonstrated that the Environment Agency plan was no longer accurate. As the resolution which I have cited makes clear, the Committee, having addressed the flood risk issue, decided that planning permission should nonetheless be granted. Mr Shaw, when considering whether or not to refer the matter back to the Committee, would inevitably have had in his mind two questions: would the Committee have reached a different decision? Should it have reached a different decision? That decision would, of course, have to be rational and not open to challenge itself. But, subject to that, if Mr Shaw was reasonably satisfied that the Committee would have reached the same decision then he was under no obligation to take the pointless step of referring the matter back to the Committee for further determination. I approach the question on the basis of the two propositions contained within PPS 25. Mr Kolinsky submits that if the new Environment Agency plan had been made available to the Committee, then it might have reviewed the decision of the developer to confine the search for suitable available sites to Eynsham and Woodstock. Or, alternatively, and in addition, it might well also have asked itself whether a redesign within this site was required to avoid the risk of flooding to built houses. As to the first, there is nothing whatever in the documents to which I have been referred to indicate that such a possibility would or should have occurred to anyone within the Local Planning Authority, officer or Committee Member. The reasons for confining the search to Eynsham and Woodstock were those which I have recited and which were set out in the sequential test report, namely that this site was intended to provide local housing. There would have been no purpose in searching outside the two areas to find a site for housing local to Eynsham and Woodstock. It is unsurprising that the possibility of re-opening that aspect of the screening test occurred to nobody except (as a matter of theory) in the submissions of Mr Kolinsky. As to the second, the matter was, in truth, already dealt with by the Committee. It considered the internal layout of the site on a realistic basis in the light of the facts as they subsequently turned out to be, namely that there was a low risk of flooding on substantially the whole of the site. In this context it is to be noted that the Government advice which I have recited accepts and advises Local Planning Authorities to accept that house building on Zone 2 sites is appropriate. I am satisfied that this Committee took its original decision on the basis that the site was or might be substantially a Zone 2 site and that ameliorative measures were required and that it was satisfied that the ameliorative measures proposed by the developer would deal with the problem. Accordingly, although I have granted permission for this ground of challenge in principle because there was no formal change in the advice given by the Officers to the Committee and it is apparently limited in terms to rearrangement of development within the site, in substance, on proper analysis, there is no basis upon which the decision of the Local Planning Authority, viewed as a whole or the decision of its Officers to sign the grant of permission, is properly challengeable. I turn to the two remaining grounds of challenge. The second ground advanced is that inadequate reasons have been given for the Local Planning Authority's decision that no Environmental Impact Assessment was required. It gave no reasons when it made that decision in 2008. It was not required to by law. As the European court as established in Mellor a decision of that kind is only required to be supported by reasons when reasons are asked for. The reasons were sought two years later and were given in a document dated 8th February 2010. The document should be read as a whole. I am not going to read it out. It deals with a number of matters, not just flooding. But about flooding, under the heading, "Location of development" it states: "The absorption capacity of the environment was considered in relation to flooding but the Environment Agency had not objected to the allocation of the site in the Local Plan on flooding grounds." The reference in the second part of the sentence is, apparently, to the lack of objection from the Environment Agency at the time the Local Plan was adopted and at the inquiry which recommended its adoption. The reference in the first part of the sentence to the absorption capacity of the environment is somewhat opaque and might, perhaps, were this challenge to be one of substance, be expanded upon. But it certainly contains no error, nor, indeed does the second part of the sentence. The Environment Agency did not object. What Mr Kolinsky says, however, is that the answer makes no reference to the flood which occurred in July 2007 and should have done; and that, without such a reference, the reasoning is either incomplete or demonstrates an error. I simply do not agree. The reasoning is very short but it is adequate to explain what is called the negative screening decision. Whether or not those reasons suffice to justify a negative screening decision is, essentially, a matter of planning judgment. It is for the Local Planning Authority to take into account or not take into account an event such as the July 2007 flood in determining whether or not an Environmental Impact Assessment was required. It clearly did not. It was entitled to reach that view and the challenge to it on that ground accordingly fails. It fails at the preliminary stage as being unarguable. The third ground of challenge is that what is called a planning brief was not prepared in relation to this site. As I have already noted, the guidance accompanying the policy in the Local Plan suggested that a planning brief would be required before development was permitted. The principal purpose of such a planning brief would have been to identify any problem on the site, mainly, but not exclusively, to inform potential developers about them. Mr Kolinsky says that it would have had with it an element of public participation. No doubt that is right. But the public participated in the deliberations of the Planning Committee not by being able to make oral representations to it but by submitting documents which, as I have indicated, were plainly considered by the Officers and by Members of the Committee. A planning brief is not a creature of statute. It emanates from Central Government and it is the product of guidance and guidance only. Paragraph 2.2 identifies the circumstances in which a planning brief might not be necessary. They include the following circumstances: "Acceptable proposals are anticipated or are already being discussed with developers ..." That was precisely the position here. The developers made a planning application before ever the Local Planning Authority got round to issuing a planning brief. The developer submitted detailed proposals for overcoming the problems which might have been canvassed in the planning brief. There would simply have been no purpose in preparing it, as Mr Brookes, the town planning consultant appointed by the Local Planning Authority to provide professional advice, observes in his witness statement of 4th February 2010. He advised Officers of the District Council that a planning brief would not serve any useful purpose. I conclude that he was obviously right in giving that advice. This challenge too is not arguable. For those reasons, as I have indicated, I have granted permission for one challenge but rejected it and refused permission for two. Are there consequential matters? MR KIMBLIN: My Lord, principally one. During the course of my Lord's judgment there arrived in court copies of the two policies. MR JUSTICE MITTING: Yes. MR KIMBLIN: Perhaps one of those could be handed up, in case there was anything which my Lord would like to incorporate into the judgment. (Handed). MR JUSTICE MITTING: Thank you. MR KIMBLIN: CC2, climate change. Not very much flows from that. MR JUSTICE MITTING: No. MR KIMBLIN: NRM 4 effectively brings into the development plan the provisions of PPS 25, which ground we have already covered. MR JUSTICE MITTING: Yes. That adds nothing to my reasoning and I do not think I need make any further reference to it. MR KIMBLIN: It is my understanding that the claimant in this case benefits from a certificate and is legally aided. In those circumstances, I just ask for the usual order in that regard, my costs but not to be enforced. MR JUSTICE MITTING: I think your costs -- I do not think the wording is not to be enforced anymore. I think it is "only such as are reasonable to be paid in all the circumstances" -- that, I think, is the wording of the relevant rule. MR KIMBLIN: I think that that is right. I am happy to be corrected. The essential upshot is that the council does not get its costs. MR JUSTICE MITTING: Exactly. MR KOLINSKY: My Lord, I am entirely grateful for that essential upshot. I just raise, on costs, the fact that the matter, obviously, was listed for a permission hearing and were it to have been a permission hearing then the position, obviously, in accordance with the established practice and case law, would be that the costs of a renewal would not ordinarily be given to a defendant interested party. MR JUSTICE MITTING: Indeed. MR KOLINSKY: So, my Lord, given that we are actually dealing with, frankly, a fairly hypothetical exercise anyway, and given that there was never -- it was not expected to be a substantive hearing, I would, pursuant to my duty to both the client and, potentially, the Legal Services Commission, urge upon my Lord that you consider no order as to costs in relation to the defendant's costs. MR JUSTICE MITTING: Had you won, you would have made an application for costs and the defendants would have found it difficult to resist, or one of them would at least. MR KOLINSKY: My Lord, yes. In that case the only point is whether you made a general application order subject to the Legal Services Commission or whether it is only in relation to the ground which has got past the permission stage, which may be technically correct. MR JUSTICE MITTING: I make the order for costs of the claim. I am not prepared to break it down into individual bits. The two subsidiary issues were just that, subsidiary issues. Your main ground of challenge was all too clear. MR KOLINSKY: I am grateful, my Lord. May I ask for an order for -- MR JUSTICE MITTING: A public funding assessment? MR KOLINSKY: Indeed, my Lord. I am most grateful. MR JUSTICE MITTING: Yes. MR KOLINSKY: And may I raise ancillary matters. The only matter that I can formally address my Lord on is the matter that got past the permission. MR JUSTICE MITTING: Yes. MR KOLINSKY: In relation to that I say, very briefly, that my Lord's judgment against me, in my respectful submission, indicated that there was, arguably, an error in the analysis in 8.7 of the Officer's report but it was not one that was operative in the minds of the Committee. I respectfully say my Lord is right to say that there was, insofar as my Lord did, an error in 8.7 of the report in the reasons advanced for the sequential test and that the Committee's assessment was dealing with flood risk rather than the central issue of the sequential test. Accordingly, there is, at the very least an arguable -- a real prospect that the Court of Appeal will take that view. My Lord, before my Lord rules upon that, I would just invite my Lord to -- just indicate to my Lord that in respect of the EIA, which I cannot ask my Lord for permission on, the effect of that were we to want to take that point further, and I do say that there is a real possibility that we might because, post Mellor, there is a real lack of clarity as to how one approaches reasons that have been given, in that context the inevitable consequence would be that -- of my Lord's judgment refusing permission in relation to that is that the two points will have to travel separately to the Court of Appeal if we appear on the sequential test and we have to renew the refusal to the Court of Appeal. So, my Lord, that may be -- the dye may be cast on that, but, my Lord, I just mention that as part of my application, because an alternative approach might be to grant permission on the EIA purely for the purpose of allowing the two to travel together in an expeditious manner. But I do not want to do not convention by going behind my Lord's judgment. MR JUSTICE MITTING: Attractively put but I am afraid I do not think there is any realistic prospect of success on the ground on which I did give you permission to apply for judicial review. If therefore follows that I am not going to grant you permission on any of them. MR KOLINSKY: I am grateful, my Lord. MR JUSTICE MITTING: Mr Lockhart-Mummery? MR LOCKHART-MUMMERY: My Lord, I have no application to make. My Lord, can I just make this observation: that when your Lordship reviews a draft of the judgment you will see that in the flooding ground you twice inadvertently referred to a screening test as opposed to sequential. MR JUSTICE MITTING: Rather than sequential. I was aware of that after I had done it. You may say I ought to have been aware of it after the first occasion, but I certainly was after the second. MR LOCKHART-MUMMERY: That is my only comment, my Lord. MR JUSTICE MITTING: Thank you. Thank you very much.

Lord Phillips, MR : This is the judgment of the Court. This is an appeal from the judgment delivered by His Honour Judge Hegarty QC at Liverpool on 6 July 2001 and perfected subsequently. It is brought with the permission of the Judge. It relates to the loss of some unusual goods in the course of international carriage by road. The appellants ('Seagram') owned those goods. The Judge held that three of the defendants who were involved in the carriage were responsible for the loss. In consequence of the loss of the goods, Seagram had to pay 113,324,310 pesetas, equivalent to some £420,000, under a guarantee given to the Spanish tax authorities. This represented almost the entirety of their claim. The Judge held that Seagram was entitled to recover this sum from the first defendants ('TTI'). TTI are, however, insolvent and took no part in the hearing. The Judge held that the second defendants ('BCT') and the third defendants ('Spain-TIR'), while liable to Seagram for loss of the goods, were not liable for this sum. It is against that finding that Seagram appeal. By a cross-appeal Spain-TIR, for their part, deny that they are under any liability at all. The facts of this case raise many and complex issues. In resolving those issues the judgment appealed against ran to 117 pages. Happily, not all those issues are raised before us. Nonetheless this appeal illustrates the problems that arise when parties to international carriage by road depart from the scheme laid down under the relevant international Convention. The facts The following facts are extracted from the judgment of Judge Hegarty. They are not contentious. Seagram is a company incorporated in Spain by the name Sandeman Coprimar S.A. The company trades under the name Seagram Espana. Seagram imports Scotch whisky into Spain. Spain imposes excise duties on spirits, including whisky, which become payable when the liquor is released from a bonded warehouse or some other similar suspensive regime. Accordingly, where whisky is imported into Spain from the United Kingdom, no United Kingdom duty is payable but Spanish duty is payable on importation into Spain or release from bond. When liquor is released onto the Spanish market, each bottle bears a paper seal of a particular design and bearing a serial number. This is in the form of a strip which is affixed to both sides of the neck of the bottle and runs over the cork or the cap. The technical word for this is 'precinta', which can be translated as 'tax seal'. The presence of a tax seal on a bottle indicates that excise duty has been paid. Tax seals are issued by the Spanish authorities to producers or importers. No charge is made for these seals and they have no intrinsic value. If used, illicitly, however, these seals can facilitate the evasion of duty. Those to whom they are issued are required to give a guarantee to the tax authorities to guard against this eventuality. If the seals are not used for their proper purpose, namely the sealing of bottles on which duty has been paid, or alternatively returned within six months, the guarantor is called upon to pay the equivalent of the duty that would have been recovered on the bottles to which the seals should, in the normal course of events, have been attached. At or about the beginning of August 1994 Seagram entered into an oral agreement with TTI that TTI would carry 9 cartons containing a total of 456,000 tax seals from Madrid to the premises of Chivas Brothers Ltd ('Chivas') in Paisley, Scotland. On 4 August TTI entered into a sub-contract with Spain-TIR under which the latter agreed to carry 9 cartons of 'precintas para botellas de licor' ('seals for bottles of spirits') from Madrid to Paisley. TTI arranged for the seals to be collected from Seagram's agents in Madrid and delivered to Spain-TIR's premises for the purposes of on-carriage. Spain-TIR, in their turn, sub-contracted this carriage. They did so in the following manner. Having received the 9 cartons, they consolidated these with other goods bound for the United Kingdom. They then contracted with an English company, B.J. Waters Ltd, to carry the consolidated cargo from their premises in Madrid to the premises of Bradford Cargo Terminal Limited ('BCT') in Bradford. Spain-TIR prepared a consignment note in respect of the consolidated cargo covering carriage from their depot in Madrid to BCT's premises. On this the seals were described as 'precintos botellas'. Spain-TIR instructed agents, a company of freight forwarders called Interserve International Freight Plc ('Interserve') to arrange for the on-carriage to Paisley. Interserve were, at one stage, joined as fourth defendants to the action, but the claim against them was discontinued. Interserve agreed with BCT that the latter would arrange for the on-carriage of the seals from their premises in Bradford to Paisley. They sent an unloading list to BCT prior to the arrival of the cargo, which described the seals as '9 cartons botels'. BCT agreed with Joda Freight ('Joda'), a transportation company based in Keighley, that they would transport the cartons on to Chivas' premises in Paisley. Joda were joined as fifth defendants to the action. The cartons never reached Chivas. It was common ground that they had got as far as BCT. One of the issues that the Judge had to resolve was whether BCT lost the cartons or whether BCT delivered them to Joda, who then lost them. The Judge found that they were never delivered to Joda, but lost by BCT. There is no appeal against that finding. The Judge's findings English law in relation to international carriage by road was significantly altered by the Carriage of Goods by Road Act 1965. That Act gave statutory effect to the Convention on the Contract for the International Carriage of Goods by Road ('the CMR'). The effect of the CMR on the rights and liabilities of the parties lies at the root of this appeal. We have annexed the relevant provisions of the CMR to this judgment. The scheme of the CMR, where successive carriers perform carriage covered by a single contract, is that each successively becomes party to this contract as a result of accepting the goods and the consignment note relating to them – see Article 34 of the CMR. The consignment note sets out the terms of the single contract, and a copy of it travels with the goods. In the present case TTI never made out a consignment note. In these circumstances the Judge held that there was no privity of contract between Seagram and either Spain-TIR or BCT. We turn to explain the basis upon which the Judge found that each of these three companies was under a liability, albeit not the identical liability, to Seagram. The liability of TTI Although TTI never made out the consignment note required by Article 4 of the CMR, the contract between Seagram and TTI was nonetheless subject to the provisions of the CMR. Articles 1 and 4 so provide. The Judge held that it followed that TTI were liable for the loss of the seals in the course of transit to their contractual destination, namely Paisley. No challenge is made to this conclusion. The liability of Spain-TIR The Judge, after a lengthy consideration of the authorities, concluded that Spain-TIR was not brought into contractual relationship with Seagram. Accordingly, they did not rank as a 'successive carrier' under Article 34 of the CMR. They took possession of the goods as sub-contractors under their contract with TTI. That contract was, itself, subject to the CMR, by virtue of Article 1, but Seagram were not party to it. In these circumstances the Judge held that "whether or not TTI was expressly or by implication authorised to create a sub-bailment, Seagram is entitled to treat Spain-TIR as bailee of the seals" The Judge held that Spain-TIR's responsibility as bailee for the care of the seals persisted until Spain-TIR delivered the seals to Paisley, in accordance with Spain TIR's contract with TTI. The transfer of possession of the seals to BCT, under a further sub-contract, did not relieve Spain-TIR of responsibility to Seagram for the care of the seals. The Judge held that it followed that Spain-TIR had the same liability as BCT for the loss of the seals. The liability of BCT The Judge held that: "Like Spain-TIR, BCT voluntarily accepted the custody of the seals for reward and would, therefore, appear to have owed Seagram the duties of a bailee. In my judgment, that analysis would apply even if, as contended on behalf of Seagram, the sub-bailment to BCT was not expressly or by implication authorised by Seagram." The Judge held that the only claim that Seagram was entitled to pursue against Spain-TIR and BCT was in bailment. Negligence on the part of BCT was to be inferred from the loss of the seals, and on this basis BCT was in breach of bailment. Furthermore, the loss of the seals by BCT amounted to a conversion of them, both at common law and by virtue of the provisions of section 2(2) of the Torts (Interference with goods) Act 1977. Spain-TIR was in identical breach of duty. The measure of damage The Judge first considered the measure of damage at common law and then went on to consider the effect of Article 23 of the CMR. Liability at common law The Judge held that the seals had no intrinsic value at all. Insofar as Seagram were entitled to damages, this was in respect of consequential loss. English principles of remoteness applied. To be recoverable, loss had to be of a type that was reasonably foreseeable. Carriage charges thrown away fell into this category. Each of the three defendants was liable in respect of these. They amounted to 42,550 pesetas, the equivalent of less than £200. So far as the liability to the Spanish authorities under the guarantee was concerned, the Judge found that TTI were aware of the nature of the seals and the consequences that would attend their loss, so that TTI were liable to Seagram for this. The same was not true of either Spain-TIR or BCT. On the evidence neither of those companies could reasonably have appreciated either the nature of the goods that were in the cartons nor the financial consequences to Seagram of their loss. Article 23 Article 23 of the CMR lays down the measure of compensation recoverable where a carrier is liable under the Convention for the loss of the goods carried. The starting point under Article 23.1 is that the carrier is liable for the value of the goods at the place and time at which they were accepted for carriage. In addition, under Article 23.4, 'Customs duties and other charges incurred in respect of the carriage of the goods shall be refunded'. The Judge held that the sums payable under the guarantee constituted such charges provided, but only provided, that they satisfied the English law test of remoteness. In the case of TTI they did so. It followed from this finding that TTI had a contractual liability under Article 23 that mirrored the common law liability found by the Judge. So far as Spain-TIR and BCT were concerned, if Article 23.4 were to apply to them, it would impose no liability in respect of sums payable under the guarantee for, in their case, these were too remote. We have used the conditional tense in this last sentence, because the Judge expressed the view that whether or not Article 23 applied was a matter for the election by Spain-TIR and BCT, and it was open to them to exercise that election even after his judgment. This finding was based upon the permissive terms of Article 28.2, which the Judge held applied to each of these defendants. It was up to them whether to invoke the provisions of Article 23. If they did so, they would become subject to all the provisions of that Article. The issues raised on the appeal The following issues arise on this appeal: i) Was the Judge correct to hold that the guarantee payment was too remote to be recovered from Spain-TIR or BCT at common law? Seagram contend that he was not. Spain-TIR and BCT support his finding. ii) If the guarantee payment was not too remote, did it constitute part of the value of the seals? Seagram contends that it did not. Spain-TIR and BCT contend that it did. iii) Was the Judge correct to hold that the guarantee payment fell within the definition of 'other charges' under Article 23.4? Spain-TIR and BCT contend that he was not. Seagram support his finding. iv) Was the Judge correct to hold that 'other charges' under Article 23.4 could only be recovered if not too remote under English law? Seagram contend that he was not. Spain-TIR and BCT support his finding. v) Was the Judge correct to hold that Spain-TIR were liable to Seagram as bailees of the seals? Spain-TIR contend that he was not. Seagram support his finding. vi) Was the Judge correct to hold that BCT were liable to Seagram as bailees of the seals? BCT contend that he was not. Seagram support his finding. vii) Was the Judge correct to indicate that Spain-TIR and BCT could elect whether to rely on Article 23, but that if they did so would be bound by all its provisions? Seagram contend that Spain-TIR and BCT have no right to elect, but are bound by all the provisions of Article 23. Spain-TIR and BCT contend that they enjoy a right to elect to rely on those provisions of Article 23 which limit their liability. Was the Judge correct to hold that the guarantee payment was too remote to be recovered from Spain-TIR and BCT at common law? The Judge cited Overseas Tankship (UK) Limited v Morts Docks and Engineering Co Ltd ('The Wagon Mound') [1961] AC 388 as laying down the following test of remoteness in the law of negligence: "A negligent tortfeasor is not responsible for all the direct consequences of his negligence, but only for such damage as ought reasonably to have been foreseen. There are two relevant qualifications to that general principle. Firstly, the test of reasonable foreseeability in tort is generally more stringent, and less favourable to the wrongdoer, than the similar test in contract. Secondly, so long as the general nature of the damage in question was reasonably foreseeable, it is immaterial that the precise extent of the damage, or the precise manner in which it was caused, may not themselves have been foreseeable." So far as the law of conversion is concerned, the Judge adopted the following passage from the decision of the Court of Appeal in Kuwait Airways Corporation v Iraq Airways Co (Nos 4 and 5) [2002] UKHL 19; [2002] 2AC 883 at paragraph 538: "It appears to us that as the law now stands, in conversion cases a court has to ask whether at the time of the conversion the type of loss that occurred (as opposed to the precise manner in which it occurred) was reasonably foreseeable." On behalf of Seagram, Mr Nolan did not challenge these tests. He submitted, however, that the Judge had misapplied them. He put his case in a number of ways. First he relied upon the fact that BCT had no idea what was in the cartons. This was of the nature of their business. All kinds of goods came into their possession, often imprecisely described. In these circumstances BCT could not be heard to say that any type of loss was unforeseeable. There can be problems in applying a test of foreseeability to carriers who handle consolidated containers of many different varieties of goods. Some would argue that one of the objects of the CMR Convention was to make such an exercise superfluous. There is, however, no such problem on the facts of this case. No carrier without specific knowledge of the nature of 'precintas' and of the guarantee that has to be given to the Spanish authorities in exchange for their release, could envisage that the loss of a number of cartons could give rise to the type of liability experienced by Seagram in this case. Mr Nolan submitted that the loss in this case was of the same type as the loss that occurs when dutiable spirits are stolen and duty has to be paid on them. We shall be dealing with this suggested analogy in a different context later in this judgment. Suffice it to say that we do not accept it. The liability in this case was not analogous to duty payable on the goods carried. Mr Nolan submitted that when a number of items are lost, the owner will foreseeably suffer a financial loss in respect of each item. In this case a payment had to be made under the guarantee in respect of each seal. It followed, argued Mr Nolan, that the loss was of a type foreseeable as the consequence of the loss of goods carried. This contention is unsound. The fact that one kind of damage occurs item by item does not render another kind of damage that also occurs item by item similar in type. Finally, Mr Nolan argued that because the guarantee payment fell within the express definition of 'other charges' in Article 23.4, the payment in question was of a type expressly contemplated by the CMR conditions. BCT contracted on CMR conditions and, therefore, could not be heard to suggest that this type of loss was not readily foreseeable. We have yet to deal with the issue of whether the guarantee payment did fall within the definition of 'other charges'. If the Judge was right that it did, this was only by giving the meaning of that phrase so wide a compass that it embraced liabilities of types that were not reasonably foreseeable. We reject the suggestion that so wide a meaning of 'charges' could embrace a single 'type' of damage when applying the common law test of remoteness. We are in no doubt that the liability to make the guarantee payment was too remote to be recoverable from Spain-TIR or BCT as damages in negligence or conversion. If the guarantee payment was not too remote, did it constitute part of the value of the seals? The argument that the guarantee payment formed part of the value of the seals was advanced by Spain-TIR and BCT by way of alternative to their primary case that the payment was too remote to be recoverable at all. If this alternative case had succeeded, they would have sought to invoke the limit of liability provided by Article 23.3 of the CMR. Having regard to the answer that we have given to the previous question, this issue does not arise. We will, however, deal with it shortly, for the answer further supports our conclusion that the guarantee payment was too remote to be recovered. The guarantee was exacted to guard against the possibility that the seals might be misused so as to deprive the Spanish authorities of excise duty payable on liquor sold in Spain. The evidence was that, if it could be demonstrated that the seals had been destroyed, the guarantee would not be called. Thus it was not inevitable that loss of the seals would result in payment under the guarantee. For instance, if the seals had been destroyed by fire, no payment would have been exacted. This demonstrates that the liability under the guarantee formed no part of the value of the seals. It arose as a consequence of their loss by reason (i) of the undertaking given under the guarantee and (ii) of the circumstances in which the loss occurred. Was the Judge correct to hold that the guarantee payment fell within the definition of 'other charges' under Article 23.4? In making his finding the Judge held that he was bound to follow the decision of the House of Lords in Buchanan & Co. v Babco Ltd. [1978] AC 141. Mr Coburn, on behalf of Spain-TIR challenged that conclusion, arguing that the Judge felt himself unduly constrained by that decision. Buchanan v Babco concerned the theft of a consignment of whisky that was being carried under CMR terms, from the plaintiffs' bonded warehouse in Glasgow to Teheran. Its value, in bond, was £7,000. Had it been exported from the United Kingdom no excise duty would have been payable. It was, however, stolen from a lorry park in London, while in the course of transit. In these circumstances the plaintiffs became liable under section 85 of the Customs and Excise Act 1952 to pay excise duty on the whisky in the sum of some £30,000. The plaintiffs contended that the value of the whisky included the £30,000 duty, so that it could be recovered under Article 23.2 of the CMR. This contention was rejected by both the Court of Appeal and the House of Lords, a result which underpins our conclusion in paragraph 32 above, were underpinning needed. For present purposes, the crucial issue was that raised by the plaintiffs as an alternative argument. Was the liability to duty recoverable as falling within 'the carriage charges, Customs duties and other charges incurred in respect of the carriage of the goods' under Article 23.4? In the absence of authority, we would have answered this question in the negative. It seems to us that one object of the CMR is to make a clear apportionment of risk arising in the course of international carriage by road, so as to facilitate insurance and avoid double insurance. A natural reading of Article 23 would seem to us to impose liability on the carrier for the value of the goods when the carriage begins, subject to the Article 23.3 limit, together with charges incidental to the carriage of the goods, including Customs duties. Such charges, typically, are foreseeable and form an increment to the value of the goods. Article 23.6 refers to entitlement to higher compensation under Articles 24 and 26. Article 26 would seem designed to enable a consignor to impose liability on the carrier for a value exceeding the Article 23.3 limit and for possible consequential loss – a liability compensated for by a surcharge and which, by virtue of being declared, can be insured against by the carrier. The minority in the House of Lords resolved the issue as we would have done. The majority, however, did not. They upheld the judgment of the Court of Appeal, though not that court's reasoning, in concluding that the liability to excise duty constituted 'other charges' under Article 23.4. Their reasoning can be derived from the following passages. Lord Wilberforce at p.154: "I find that the judgment of Master Jacob carries conviction. The duty, he says, became chargeable having regard to the way in which the goods were carried by the defendants. "In respect of" is wide enough to include the way in which the goods were carried, miscarried or lost. I think this is right – and I do not consider that it is answered by saying that the charge would not have arisen if the thieves had exported the goods or if the whisky had flowed away. No doubt this is true but the fact that an exemption might have arisen does not prevent the charge which did arise from being "in respect of the carriage". The carriers' duty was to carry the whisky to the port of embarkation – their failure to do so might, or might not, bring a charge into existence. But if it did, I think it right to say that the charge was in respect of the carriage." Lord Dilhorne at p.158: "If "in respect of" is given the broad interpretation of "in consequence of", content can be given to the words in question. They will clearly cover a far wider ambit than carriage charges. While it would not be right to seek to import common law doctrines into the Convention, it cannot be right, in my opinion, to construe "in respect of" as meaning "for" with the result that the article would read "carriage charges….and other charges for carriage". They must be given a wider meaning than that and in my opinion the right meaning to give them is that in the context in which they appear they mean "in consequence of" or "arising out of"." Lord Salmon at pp.160 and 161: "Were the charges for excise duty which the respondents have been obliged to pay incurred "in respect of the carriage of the goods"? No doubt these words are flexible and somewhat imprecise, but, especially as they appear in an international convention relating to commercial affairs, they should not be construed pedantically or rigidly but sensibly and broadly. So construed, I agree with the view expressed by Master Jacob in his judgment that they are wide enough to include "in consequence of the way in which the goods were carried by the appellants". They were certainly carried in such a way as caused the respondents to be charged with £30,000 in respect of excise duty. …. My Lords, in my view, the language of article 23 is capable of bearing and does bear the meaning attached to it by Master Jacob. This meaning accords with both reason and justice. An excise duty of £30,000 has become chargeable against the respondent exporters solely because of the result of the appellant carriers' servant for which the carriers are vicariously liable. Reason and justice seem to demand that the burden of paying the £30,000 should rest on the shoulders of the carriers rather than on those of the innocent exporters." Each of the majority proceeded on the basis that Article 23 was the only route by which liability for excise tax could be recovered. None made any reference to Article 26. Their speeches extend the meaning of the words 'in respect of the carriage' to embrace 'in consequence of the miscarriage' The decision in Buchanan v Babco is critically discussed in the third edition of Professor Clarke's book on International Carriage of Goods by Road: CMR at paragraph 98 and in the 3rd Edition of Hill & Messent on CMR: Contracts of the International Carriage of Goods by Road at paragraphs 9.25 to 9.34. Each suggests that the approach of the majority of the House of Lords must be subject to some restriction. We shall refer to some of the observations of the authors of these works when we come to address the next issue. Nor is the decision one which lies happily with the approach to the ambit of Article 23 of the courts of most of the other signatories to the Convention, France being an exception. For our part we do not consider that the decision should be applied any more widely by the courts of this country than respect for the doctrine of precedent requires. The Judge held that: "I find it impossible to make any rational distinction between the statutory liability for duty which was the subject matter of that case and the liability under the guarantee in the present case." We do not agree. In Buchanan v Babco the excise duty payable was a charge on the goods carried. It was, as a matter of English law, an automatic consequence of the loss of the goods within the jurisdiction. It could be said to be similar in kind to the Customs duty payable upon importation of the goods into another country. The liability under the guarantee in this case is not a duty payable in respect of the goods carried. It is a liability arising under a guarantee that arose as a result of the inability of Seagram to account for the seals. Not only is the liability a more remote consequence of the loss of the seals than is excise duty payable on whisky that is stolen, as to which see the next issue, but it does not in our view fall within the meaning of a 'charge incurred in respect of the carriage of the goods'. For this reason we hold that payment under the guarantee is not recoverable under Article 23.4 Was the Judge correct to hold that 'other charges' under Article 23.4 could only be recovered if not too remote under English law? The Judge adopted and applied the following passage from Professor Clarke's work at p.371: "The trouble with the broad view is that it makes it difficult for the carrier to estimate exposure to liability. Whereas there is a monetary limit on the amount of liability for loss, damage or delay to the goods, there is no limit in the CMR on the amount of compensation that can be awarded for "other charges". Inevitably, some kind of rule is required to identify those charges which are "in consequence of" the carriage and those which are not. In the CMR the question was not anticipated and has not been answered. An answer must be found in national law, and found, it appears, in rules of causation and remoteness. In terms of causation, charges will be recoverable under English law if they were incurred as part of a reasonable response to the threat posed by the carrier's breach of the contract of carriage. In terms of remoteness, charges will be recoverable if they are losses of a type which the carrier should reasonably have contemplated would be incurred in the event of his breach of the contract of carriage." Hill & Messent at paragraph 9.31 make a similar suggestion that the 'width of expression' used by the House of Lords should only be applied to expenses that were within the actual or constructive knowledge of the carrier 'so they could be held liable without offending the normal rules of remoteness'. Because we have distinguished Buchanan v Babco it is not necessary for us to rule whether these expressions of view are correct and we shall not do so. We sympathise with the perceived need to restrict the scope of Buchanan v Babco. At the same time we think it unfortunate if that decision imports the application of English principles of remoteness. This does not seem appropriate, for the scheme of the CMR contemplates an identical liability imposed on a succession of carriers. On the facts of the present case, the Judge found that TTI were liable in respect of the guarantee payment, but that Spain-TIR and BCT were not. Had they all been linked to a single CMR contract this would have led to problems when Article 38 fell to be applied. Was the Judge correct to hold that Spain-TIR were liable to Seagram as bailees of the seals? This issue arises on a cross-appeal by Spain-TIR. Only the liability for the carriage charges now turns on the issue, and that is a liability which seems likely ultimately to fall on BCT. The issue is, however, an important one because, together with the seventh issue, it calls for consideration of the legal nature of a sub-bailment on terms. This takes us into deep waters. The starting point is to review the circumstances in which Spain-TIR became involved with the carriage of the seals. This requires some elaboration of the facts that we set out at the beginning of this judgment. The head contract of carriage was between Seagram and TTI and it was, by operation of law, subject to the CMR. Spain-TIR agreed with TTI to carry the seals from Madrid to Paisley. This contract also was subject to the CMR by operation of law. TTI gave Spain-TIR written instructions which identified the sender as Seagram and the consignee as Chivas. Spain-TIR issued a CMR consignment note which named the sender as Spain-TIR and the consignee as BCT. Spain-TIR sub-contracted to BJ Waters the carriage from their depot to BCT's premises in Bradford. This contract, also, was subject to the CMR by operation of law. Interserve, as Spain-TIR's agents agreed with BCT that BCT would carry the seals to their destination at Paisley. This agreement was on CMR terms, both because the contract between Interserve and BCT so provided and because BCT received the seals with and on the terms of the consignment note prepared by Spain-TIR. The Judge recorded the concession by Mr Nolan on behalf of Seagram that Spain-TIR were entitled to invoke Article 28 of the CMR and avail themselves of those provisions of the CMR which fixed or limited the compensation due. The Judge held that, in the light of this concession, it was not necessary for him to decide whether Spain-TIR would have been entitled to rely upon those provisions under the doctrine of 'bailment on terms'. Findings made by the Judge in relation to BCT bear, however, on that question. The Judge found that TTI must be regarded as having, at least by implication, authorised Spain-TIR to sub-contract to BCT performance of the last leg of the journey. Mr Nolan conceded that BCT also were entitled to invoke Article 28 of the CMR. The Judge went on to hold: "I would not have been prepared to hold that Seagram had expressly forbidden any sub-bailment of the seals. In those circumstances, given the likelihood of consolidation and deconsolidation and the very widespread practice of sub-contracting all or part of contracts for the international carriage of goods by road, I would have been prepared, if the matter had not been resolved by concession, to hold that Seagram had impliedly consented to a sub-bailment of the seals. It would, I think, almost inexorably have followed that its consent would have extended to a sub-bailment on the terms of the CMR, given the international nature of the carriage." It necessarily follows from this that the Judge would have been prepared to hold that Seagram had impliedly consented to a sub-bailment by TTI to Spain-TIR on terms of the CMR. In our judgment the Judge was justified for the reasons that he gave in concluding that both Spain-TIR and BCT had taken possession of the goods as bailees on terms of the CMR. It remains to consider the implications of this. Mr Coburn submitted that it was not open to Seagram to sue Spain-TIR for breach of bailment for two reasons. He submitted that, under principles of common law Spain-TIR were not liable for breach of bailment because they were not in possession of the seals at the time of their loss. He further submitted that because both the contract between Seagram and TTI and the contract between TTI and Spain-TIR were governed by the CMR, the CMR applied generally to regulate the rights and liabilities of these three parties. In these circumstances Article 36 applied and Spain-TIR could not be sued by Seagram because they were not the first carrier, the last carrier or the carrier performing that portion of the carriage during which the event causing the loss occurred. Turning to the position in common law, Mr Coburn submitted that where a contractual bailee of goods sub-bails them to A, who in turn sub-sub-bails them to B, who loses them, the bailee will be liable to the owner for breach of a non-delegable duty of care, but A will have no liability, being neither in possession of the goods at the time of their loss nor party to the contract under which they were bailed. The basis upon which the Judge found Spain-TIR liable as bailees was that, having voluntarily accepted possession of the goods for onward carriage to Paisley, and entrusted to BCT part of the responsibilities that they had assumed they were liable for the loss of the goods caused by the default of BCT. We have difficulty with the Judge's analysis, having regard to his finding that Seagram authorised Spain-TIR to sub-contract to BCT. The basis of this finding was that Seagram consented to a chain of sub-contracts that was a typical feature of CMR carriage. Why in these circumstances should a greater liability be imposed upon Spain-TIR than that incidental to being a link in the chain of successive carriers under a single CMR contract? Why should Spain-TIR not be entitled to rely on Article 36? This question requires consideration of the manner in which a sub-bailment on terms operates. The doctrine was first clearly stated by Lord Denning MR in Morris v Martin [1966] 1 QB 717. That case involved the sub-bailment to the defendants, with the consent of the owner, the plaintiff, of a fur stole that had been delivered to the bailee for cleaning. The fur stole was converted by a servant of the sub-bailee. The contract between the bailee and the sub-bailee contained exempting conditions. The Court of Appeal held that the defendants, as sub-bailees for reward, owed the plaintiff the same duty to take reasonable care of the fur that was owed by the bailee. They were liable for the default of their servant. The exempting conditions did not, on their true construction, exempt from liability for the loss. In these circumstances it was unnecessary to decide whether they applied as between the plaintiff and the defendants. Lord Denning expressed the view that in such circumstances the owner was bound by the conditions as if he had expressly or impliedly consented to the bailee making a sub-bailment containing those conditions, but not otherwise. This doctrine was approved and applied by Steyn J. in Singer Co. (UK) Ltd v Tees and Hartlepool Port Authority [1988] 2 Lloyd's Rep. 164. It also received approval by members of the Court of Appeal in The Kapetan Marcos NL (No 2) [1987] 2 Lloyd's Rep 321 and The Captain Gregos (No 2) [1990] 2 Lloyd's Rep. 395. In Johnson Matthey & Co. Ltd v Constantine Terminals [1976] 2 Lloyd's Rep. 215, Donaldson J. adopted a different approach to the entitlement of a sub-bailee to rely, as against the bailor, upon the terms upon which the bailee had sub-bailed the goods to him. The sub-bailees in that case sought to rely upon their standard conditions to provide a defence in respect of their loss of a consignment of silver belonging to the plaintiffs. Donaldson J. first observed that it was probably possible to hold, following the approach of Lord Denning in Morris v Martin, that there had been a bailment on terms with the consent of the plaintiffs. He went on to hold, however, that such consent was unnecessary. He explained the basis of this at p.222: "But the plaintiffs cannot prove the bailment upon which, in my judgment, they must rely, without referring to terms upon which the silver was received by Constantine Terminals from International Express. These terms establish (a) that Constantine Terminals were bailees for reward, but also (b) that the implied duties of such a bailee were qualified by exceptions. And, despite Mr Wadsworth's vigorous argument to the contrary, I really do not see how the plaintiffs can rely upon one part of the contract while ignoring the other. Consent seems to me to be relevant only between the bailor and head bailee. If the sub-bailment is on terms to which the bailor consented, he has no cause of action against the head bailee. If it was not, the sub-bailee is still protected, but if the bailor is damnified by the terms of the sub-bailment he has a cause of action against the head bailee." Morris v Martin and Johnson Matthey v Constantine Terminals received detailed analysis in the decision of the Privy Council, delivered by Lord Goff The Pioneer Container [1994] 2 AC 324. In that case the plaintiffs engaged carriers to ship goods by sea under bills of lading which gave the carriers authority to sub-contract 'on any terms'. The carriers sub-contracted to the defendant ship owners on terms which included a Taiwanese exclusive jurisdiction clause. The issue was whether this clause was binding as between the plaintiffs and the defendants. Lord Goff first considered the relationship between the plaintiffs and the sub-bailee. On this he found authoritative guidance in the decision of the Privy Council in Gilchrist Watt and Sanderson Pty. Ltd. v York Products Ltd [1970] 1 WLR 1262. There the defendants were stevedores who had lost two cases of clocks that they had received as sub-bailees of the shipowners, who owed a duty to deliver them to the plaintiffs under the bills of lading. The Privy Council held that the defendants were liable to the plaintiffs, in that, as Lord Pearson observed at p.1267, they: "took upon themselves an obligation to the plaintiffs to exercise due care for the safety of the goods, although there was no contractual relation or attornment between the defendants and the plaintiffs." Following this decision, Lord Goff held that there was a 'collateral bailment' between the plaintiffs and the defendant shipowners. He then turned to consider the terms of this bailment. He approved the doctrine formulated by Lord Denning in Morris v Martin, adding at p.339 this comment on the relevance of 'consent': "It must be assumed that, on the facts of the case, no direct contractual relationship has been created between the owner and the sub-bailee, the only contract created by the sub-bailment being that between the bailee and the sub-bailee. Even so, if the effect of the sub-bailment is that the sub-bailee voluntarily receives into his custody the goods of the owner and so assumes towards the owner the responsibility of a bailee, then to the extent that the terms of the sub-bailment are consented to by the owner, it can properly be said that the owner has authorised the bailee so to regulate the duties of the sub-bailee in respect of the goods entrusted to him, not only towards the bailee but also towards the owner." Lord Goff went on to state that this doctrine did not turn on estoppel, nor on contract: "Such a conclusion, finding its origin in the law of bailment rather than the law of contract, does not depend for its efficacy either on the doctrine of privity of contract, or on the doctrine of consideration. That this may be so appears from the decision of the House of Lords in Elder, Dempster & Co Ltd v Paterson, Zochonis & Co Ltd [1924] A.C. 522. In that case, shippers of cargo on a chartered ship brought an action against the shipowners for damage caused to the cargo by bad stowage, for which the shipowners were responsible. It is crucial to observe that the cargo was shipped under charterers' bills of lading, so that the contract of carriage contained in or evidenced by the bills of lading was between the shippers and the charterers. The shipowners nevertheless sought to rely, as against the shippers, upon an exception in the bill of lading which protected the charterers from liability for damage due to bad stowage. It was held that the shipowners were entitled to do so, the preferred reason upon which the House so held (see Midland Silicones Ltd v Scruttons Ltd [1962] AC 446, 470 per Viscount Simonds, following the opinion of Fullagar J. in Wilson v Darling Island Stevedoring and Lighterage Co. Ltd [1956] 1 Lloyds's Rep. 346, 364; 95 C.L.R. 43, 789) being found in the speech of Lord Summer [1924] A.C. 522, 564: 'in the circumstances of this case the obligations to be inferred from the reception of the cargo for carriage to the United Kingdom amount to a bailment upon terms, which include the exceptions and limitations of liability stipulated in the known and contemplated form of bill of lading.' Of course, there was in that case a bailment by the shippers direct to the shipowners, so that it was not necessary to have recourse to the concept of sub-bailment. Even so notwithstanding the absence of any contract between the shippers and the shipowners, the shipowners' obligations as bailees were effectively subject to the terms upon which the shipowners implicitly received the goods into their possession. Their Lordships do not imagine that a different conclusion would have been reached in the Elder, Dempster case if the shippers had delivered the goods, not directly to the ship, but into the possession of agents of the charterers who had, in their turn, loaded the goods on board; because in such circumstances, by parity of reasoning, the shippers may be held to have impliedly consented that the sub-bailment to the shipowners should be on terms which included the exemption from liability for bad storage." Lord Goff then turned to the decision in Johnson Matthey v Constantine Terminals. He held that the analysis of Donaldson J. was unsound, being contrary to Morris v Martin and the Gilchrist Watt case. The exposition of the law that followed merits citation in full: "In addition, the conclusion of Donaldson J. that consent is relevant only between the owner and the bailee is inconsistent with the reasoning of Lord Denning M.R. in Morris v C.W. Martin & Sons Ltd. when he expressed the opinion, at p.729, that the bailor is bound by the terms of the sub-bailment to which he has consented but not otherwise. Their Lordships have already expressed their agreement with the approach of Lord Denning on this point. Indeed, as they see it, once it is recognised that the sub-bailee, by voluntarily taking the owner's goods into his custody, ipso facto becomes the bailee of those goods vis-à-vis the owner, it must follow that the owner's rights against the sub-bailee will only be subject to terms of the sub-bailment if he has consented to them, i.e., if he has authorised the bailee to entrust the goods to the sub-bailee on those terms. Such consent may, as Lord Denning pointed out, be express or implied; and in this context the sub-bailee may also be able to invoke, where appropriate, the principle of ostensible authority. In truth, at the root of this question lies a doctrinal dispute of a fundamental nature, which is epitomised in the question: is it a prerequisite of a bailment that the bailor should have consented to the bailee's possession of the goods? An affirmative answer to this question (which is the answer given by Bell, Modern Law of Personal Property in England and Ireland, at pp.88-89) leads to the conclusion that, if the owner seeks to hold a sub-bailee responsible to him as bailee, he has to accept all the terms of the sub-bailment, warts and all; for either he will have consented to the sub-bailment on those terms or, if not, he will (by holding the sub-bailee liable to him as bailee) be held to have ratified all the terms of the sub-bailment. A negative answer to the question is however supported by other writers, notably by Palmer, Bailment, at pp.31 et seq., where Professor Palmer cites a number of examples of bailment without the consent of the owner, and by Professor Tay in her article 'The Essence of Bailment: Contract, Agreement or Possession?' (1966) 5 Sydney Law Review 239. On this approach, a person who voluntarily takes another person's goods into his custody holds them as bailee of that person (the owner); and he can only invoke, for example, terms of a sub-bailment under which he received the goods from an intermediate bailee as qualifying or otherwise affecting his responsibility to the owner if the owner consented to them. It is the latter approach which, as their Lordships have explained, has been adopted by English law and, with English law, the law of Hong Kong. Their Lordships wish to add that this conclusion, which flows from the decisions in Morris v C.W. Martin & Sons Ltd [1966] 1 Q.B. 716 and the Gilchrist Watt case [1970] 1 WLR 1262, produces a result which in their opinion is both principled and just. They incline to the opinion that a sub-bailee can only be said for these purposes to have voluntarily taken into his possession the goods of another if he has sufficient notice that a person other than the bailee is interested in the goods so that it can properly be said that (in addition to his duties to the bailee) he has, by taking the goods into his custody, assumed towards that other person the responsibility for the goods which is characteristic of a bailee. This they believe to be the underlying principle. Moreover, their Lordships do not consider this principle to impose obligations on the sub-bailee which are onerous or unfair, once it is recognised that he can invoke against the owner terms of the sub-bailment which the owner has actually (expressly or impliedly) or even ostensibly authorised. In the last resort the sub-bailee may, if necessary and appropriate, be able to invoke against the bailee the principle of warranty of authority." Thus far the cases that we have considered have been those in which the sub-bailee has sought to rely upon conditions which reduced his liability or, in the Pioneer Container, were beneficial to him. What if some of the terms agreed between the bailee and the sub-bailee increase the liability of the sub-bailee beyond that arising under the common law? Can the bailor enforce such conditions against the sub-bailee? Professor Palmer addresses this question at p.1329 of the second edition of his work on Bailment: "Occasionally, the terms of the sub-bailment will cast upon the sub-bailee a greater responsibility for the safety of the goods than would exist at common law. These terms are clearly enforceable by the intermediate party since he will enjoy a contractual relationship with the sub-bailee. Even if the sub-bailment is gratuitous the sub-bailee will apparently be bound by his promise to the intermediary, because a gratuitous bailee seems capable of enlarging his duty at common law. The more immediate question is whether such additional duties are directly enforceable by the owner against the sub-bailee. In certain circumstances such enforcement should be possible. If the terms of a sub-bailment can be invoked to reduce the common law duties that are owed by the sub-bailee to the owner, they should be relevant to establish a responsibility that is greater. The criterion would be whether such additional duties were an integral part of the owner-sub-bailee relationship, and essential to its efficacy, or were merely incidental. The sub-bailee should therefore be liable to the owner for the non-performance of any duty which represents one of the central terms or understandings upon which he was allowed to assume possession." This is one possible solution to the problem, but not the only one. We draw attention to the observations of Lord Goff in the passage cited above that, were it correct that consent of the bailor was a prerequisite of a bailment, any resulting bailment would be subject to 'all the terms of the sub-bailment, warts and all'. It seems to us that it must follow from this, and indeed that it should logically be the case, that where a bailor consents to and thereby authorises a sub-bailment on terms, all the terms agreed between the bailee and the sub-bailee, insofar as these are applicable to the relationship of the bailor and the sub-bailee, apply as between the bailor and the sub-bailee. It seems to us that this result also follows from the application of the principles of the law of contract. Lord Goff's authoritative analysis in the Pioneer Container traces the origin of 'bailment on terms' to principles of the law of bailment that do not turn on contract, but this does not exclude the possibility that the law of contract may have a role to play in this area. The principles of the law of bailment have always overlapped with those of the law of contract, for bailment and contract often go hand in hand. Where a bailee has the consent, and thus the authority, of the bailor to enter into a sub-bailment on particular terms and does so, and where those terms purport to govern the relationship not merely between the sub-bailee and the bailee, but between the sub-bailee and the bailor, it seems to us that all the elements of a collateral contract binding the sub-bailee and the bailor will be present, for there will be privity, via the agency of the bailee, and no difficulty in identifying consideration, at least if the terms are capable of resulting in benefit to each of the parties. It is easier to identify a contract in such circumstances than in the circumstances which led the Privy Council to identify one in The Eurymedon [1975] AC 154. These considerations are very relevant in the present case. The Judge has found that Seagram implicitly authorised the conclusion of a chain of contracts on CMR terms. The CMR conditions, which applied as between Seagram and TTI required that, if there was such a contractual chain, all links in it should be welded to a single contract by transfer of the goods and the consignment note. TTI produced no consignment note but, as each link in the chain was formed, there was agreement between the immediate parties that the contract should be on CMR terms. It seems to us that in these circumstances the sub-bailment of each party in the chain was on terms of all the CMR conditions, whether by application of the doctrine of bailment on terms or under principles of the law of contract. Thus we consider that the Judge was correct to rule that Spain-TIR and BCT could not rely upon those of the CMR conditions which limited or fixed their liability without being bound by other relevant CMR conditions. On our analysis, however, no right to elect was open to them. The CMR conditions were applicable as a consequence of the seals being bailed to them on the terms of those conditions. On this basis, we find that Mr Coburn was correct to submit that Article 36 applied. It was not open to Seagram to sue Spain-TIR in that Spain-TIR was not the first carrier, the last carrier or the carrier performing that portion of the carriage during which the loss occurred. They came into possession of the goods in circumstances where they were authorised to sub-bail them on CMR terms. Seagram cannot, in these circumstances, contend that Spain-TIR remains susceptible to suit in relation to loss of the seals after they had been transferred to a successive carrier. Was the Judge correct to hold that BCT were liable to Seagram as bailees of the seals? BCT did not challenge the finding that they were liable for the carriage costs of the cartons containing the seals. By their Respondents' Notice they contended, however, that, if liability for the guarantee payment was imposed by virtue of Article 23.4, they were not liable for this because they were not bailees of the seals themselves. This argument was based upon the proposition that a person who comes into possession of goods will not be constituted bailee of them if, unknown to him, they have properties which give them an unforeseeably elevated value – see the discussion in Palmer at p.436 and following. As we have held that BCT is under no liability in respect of the guarantee payment, either under the terms of the CMR or at common law, this issue does not arise. We would add that the terms of Article 23 do not seem to us to give any scope for the application of the doctrine in question. Was the Judge correct to indicate that Spain-TIR and BCT could elect whether to rely on Article 23, but that if they did so they would be bound by all its provisions? We have already answered this question in paragraph 65 above. The Judge approached the question on the premise that Spain-TIR and BCT fell into the category of persons for whom Article 28.2 makes provision. On our analysis, any liability falling on Spain-TIR or BCT was not 'extra-contractual' within the meaning of that term in Article 28.2, but arose because they were subject, whether by contract or the law of bailment, to those provisions of the CMR which both impose and restrict liability. For the reasons that we have given, Seagram's appeal will be dismissed and Spain-TIR's cross-appeal will be allowed. Order: 1. Appeal Dismissed 2. Cross-appeal allowed 3. Judge's order to be set aside as per counsel's draft order 4. claimants to pay second defendants 90 per cent of their costs of appeal 5. Claimants pay 3rd Defendants their costs of appeal and cross-appeal 6. All costs to be subject to detailed assessment if not agreed. (Order does not form part of the approved judgment)   ANNEX CMR CHAPTER I SCOPE OF APPLICATION Article 1 1. This Convention shall apply to every contract for the carriage of goods by road in vehicles for reward, when the place of taking over of the goods and the place designated for delivery, as specified in the contract, are situated in two different countries, of which at least one is a contracting country, irrespective of the place of residence and the nationality of the parties. CHAPTER II PERSONS FOR WHOM THE CARRIER IS RESPONSIBLE Article 3 For the purpose of this Convention the carrier shall be responsible for the acts and omissions of his agents and servants and of any other persons of whose service he makes use for the performance of the carriage, when such agents, servants or other persons are acting within the scope of their employment, as if such acts or omissions were his own. CHAPTER III CONCLUSION AND PERFORMANCE OF THE CONTRACT OF CARRIAGE Article 4 The contract of carriage shall be confirmed by the making out of a consignment note. The absence, irregularity or loss of the consignment note shall not affect the existence or the validity of the contract of carriage which shall remain subject to the provisions of this Convention. Article 5 1. The consignment note shall be made out in three original copies signed by the sender and by the carrier. These signatures may be printed or replaced by the stamps of the sender and the carrier if the law of the country in which the consignment note has been made out so permits. The first copy shall be handed to the sender, the second shall accompany the goods and the third shall be retained by the carrier. Article 6 1. The consignment note shall contain the following particulars: (a) the date of the consignment note and the place at which it is made out; (b) the name and address of the sender; (c) the name and address of the carrier; (d) the place and the date of taking over of the goods and the place designated for delivery; (e) the name and address of the consignee; (f) the description in common use of the nature of the goods and the method of packing, and in the case of dangerous goods, their generally recognised description; (g) the number of packages and their special marks and numbers; (h) the gross weight of the goods or their quantity otherwise expressed; (i) charges relating to the carriage (carriage charges, supplementary charges, customs duties and other charges incurred from the making of the contract to the time of delivery); (j) the requisite instructions for Customs and other formalities; (k) a statement that the carriage is subject, notwithstanding any clause to the contrary, to the provisions of this Convention. CHAPTER IV LIABILITY OF THE CARRIER Article 17 1. The carrier shall be liable for the total or partial loss of the goods and for damage thereto occurring between the time when he takes over the goods and the time of delivery, as well as for any delay in delivery. Article 23 1. When, under the provisions of this convention, a carrier is liable for compensation in respect of total or partial loss of goods, such compensation shall be calculated by reference to the value of the goods at the place and time at which they were accepted for carriage. 2. The value of the goods shall be fixed according to the commodity exchange price, or if there is no such price, according to the current market price or, if there is no commodity exchange price or current market price, by reference to the normal value of goods of the same kind and quality. [3. Compensation shall not, however, exceed 8.33 units of account [SDRs] per kilogram of gross weight short.] 4. In addition, the carriage charges, Customs duties and other charges incurred in respect of the carriage of the goods shall be refunded in full in case of total loss and in proportion to the loss sustained in case of partial loss, but no further damage shall be payable. …. 6. Higher compensation may only be claimed where the value of the goods or a special interest in delivery has been declared in accordance with articles 24 and 26. [7. The unit of account mentioned in this Convention is the Special Drawing Right as defined by the International Monetary Fund. The amount mentioned in paragraph 3 of this article shall be converted into the national currency of the State of the Court seised of the case on the basis of the value of that currency on the date of the judgment or the date agreed upon by the Parties.] Article 26 1. The sender may, against payment of a surcharge to be agreed upon, fix the amount of a special interest in delivery in the case of loss or damage or of the agreed time-limit being exceeded, by entering such amount in the consignment note. 2. If a declaration of a special interest in delivery has been made, compensation for the additional loss or damage proved may be claimed, up to the total amount of the interest declared, independently of the compensation provided for in article 23, 24 and 25 Article 28 1. In cases where, under the law applicable, loss, damage or delay arising out of carriage under this Convention gives rise to an extra-contractual claim, the carrier may avail himself of the provisions of this Convention which exclude his liability or which fix or limit the compensation due. 2. In cases, where the extra-contractual liability for loss, damage or delay of one of the persons for whom the carrier is responsible under the terms of article 3 is in issue, such person may also avail himself of the provisions of this Convention which exclude the liability of the carrier or which fix or limit the compensation due. CHAPTER VI PROVISIONS RELATING TO CARRIAGE PERFORMED BY SUCCESSIVE CARRIERS Article 34 If carriage governed by a single contract is performed by successive road carriers, each of them shall be responsible for the performance of the whole operation, the second carrier and each succeeding carrier becoming a party to the contract of carriage, under the terms of the consignment note, by reason of his acceptance of the goods and the consignment note. Article 35 1. A carrier accepting the goods from a previous carrier shall give the latter a dated and signed receipt. He shall enter his name and address on the second copy of the consignment note. Where applicable, he shall enter on the second copy of the consignment note and on the receipt reservations of the kind provided for in article 8, paragraph 2. Article 36 Except in the case of a counter-claim or a set-off raised in an action concerning a claim based on the same contract of carriage, legal proceedings in respect of liability for loss, damage or delay may only be brought against the first carrier, the last carrier or the carrier who was performing that portion of the carriage during which the event causing the loss, damage or delay occurred, an action may be brought at the same time against several of these carriers. Article 38 If one of the carriers is insolvent, the share of the compensation due from him and unpaid by him shall be divided among the other carriers in proportion to the share of the payment for the carriage due to them.

Lord Justice Longmore: Introduction These two appeals result from the distortion or manipulation of the London Inter-Bank Offered Rate ("LIBOR") frequently used as a reference rate in the calculation of interest in loan agreements or swap agreements. In both the current appeals banks are endeavouring to recover sums due under such agreements and the borrowers (or their guarantors) have sought permission to amend their pleadings to allege (inter alia) that the banks made implied representations as to the efficiency of or the non-manipulation of LIBOR. In the Graiseley v Barclays case Flaux J on 29th October 2012 gave permission for such amendments to be made. In the two Deutsche Bank cases Cooke J on 28th February 2013 declined to follow Flaux J and refused permission to make amendments in the two cases but gave permission to appeal. In the light of that decision of Cooke J Barclays, despite the fact that their case had proceeded to disclosure of documents, sought an extension of time in which to seek permission to appeal Flaux J's decision and Moore-Bick LJ on 22nd April 2013 granted permission to appeal; he encouraged the listing of both such appeals at the same time. We heard argument first in the Deutsche Bank cases but in this judgment we will consider Graiseley v Barclays first since it is that case which is the most advanced and indeed has a trial date in April 2014. LIBOR is defined by the British Bankers' Association as:- "The rate at which an individual contributor panel bank could borrow funds were it to do so by asking for and then accepting interbank offers in reasonable market size just prior to 11.00 a.m. London time." There is a number of panel banks for each currency of which Barclays is one. Each bank submits a rate and an average of rates is then calculated after omitting a number of the highest and the lowest rates. The recent report of the Treasury Select Committee quotes the finding of the Financial Services Authority ("FSA") as to the significance of LIBOR and the related Euro rate of EURIBOR, describing them as:- "Benchmark reference rates that indicate the interest rate that banks charge when lending to each other. They are fundamental to the operation of both UK and international financial markets, including markets in interest rate derivatives contracts." The Graiseley Action The Graiseley case concerns, in effect, two such derivatives contracts which the claimants (who are largely owners and/or managers of care homes in the Midlands) were obliged to enter into as a condition of Barclays granting the relevant loan facilities. One of these contracts was a conventional swap; the other with somewhat different characteristics has been called "the collar". Part of the case of the Graiseley claimants is that these contracts were unsuitable contracts for them to have made, a fact that relevant Barclays personnel knew full well at the time the contracts were made. These allegations will have to be tried in any event. In its Final Notice dated 27th June 2012, the FSA identified two distinct phases of wrongdoing on the part of Barclays. The first concerned submissions from Barclays to the British Bankers' Association ("BBA") from 2005 to 2008, which took into account requests by interest rate derivatives traders to the submitters (who were responsible for submitting the LIBOR rates to the BBA) which the FSA found were motivated by profit. Secondly, the FSA found that during the financial crisis from about September 2007 until about May 2009, on instructions from senior management of Barclays, the submitters lowered their LIBOR submissions to the BBA, in response to negative media comments about the bank, a process which is described throughout the evidence before the Treasury Select Committee as "low-balling". This court received, without objection, a considerable amount of further evidence in relation to Barclays and LIBOR which may arguably show knowledge of what was happening at a high level within Barclays. The specific implied representations relied upon by the Graiseley claimants and objected to by Barclays are set out in the draft amended pleading at paragraph 9 and they are as follows:- "(1) On any given date up to and including the date of the Swap and the date of the Collar, LIBOR represented the interest rate as defined by the BBA, being the average rate at which an individual contributor panel bank could borrow funds by asking for and accepting interbank offers in reasonable market size just prior to 11.00 a.m. on that date. (2) Barclays had no reason to believe that on any given date, LIBOR had represented, or might in the future represent, anything other than the interest rate defined by the BBA, being the average rate at which an individual contributor panel bank could borrow funds by asking for and accepting interbank offers in reasonable market size just prior to 11.00 a.m. on that date. (3) Barclays had not on any given date, up to and including the date of the Swap and the Collar: (a) made false or misleading LIBOR submissions to the BBA and/or (b) engaged in the practice of attempting to manipulate LIBOR, such that it represented a different rate from that defined by the BBA, (viz a rate measured at least in part by reference to choices made by panel banks as to the rate that would best suit them in their dealings with third parties); and (4) Barclays did not intend in the future to (a) make false or misleading LIBOR submissions to the BBA and/or (b) engage in the practice of attempting to manipulate LIBOR, such that it represented a different rate from that defined by the BBA. (viz a rate measured at least in part by reference to choices made by panel banks as to the rate that would best suit them in their dealings with third parties)." The pleading goes on to refer to a rate that was being measured in part by the bank's own personal interest. The pleading then sets out how the representations were made by the agents of the bank, that is to say, for present purposes, those managers and staff in the local branches in the Black Country with whom the claimants dealt, in documents (including drafts of the various agreements which referred on a number of occasions to LIBOR and to the setting of the so-called screen rate), a series of emails passing between the bank and the claimants, and meetings. Then the pleading sets out in detail at paragraph 12 the respects in which the representations are said to be false and those track in large measure the detailed findings made by the regulatory authorities. There is then a plea in paragraph 12A setting out why those representations are alleged to be fraudulent; what is pleaded is relevant knowledge and/or recklessness in that Barclays was proposing to potential customers that they enter into financial transactions containing obligations measured by reference to LIBOR such that the LIBOR representations were being made, or might be made, to the said customers, and that those representations were or might be false. Then the claimants say that, prior to disclosure, the best particulars they can give of whose knowledge it was, or which individuals had the relevant knowledge, is a number of categories of managers and others within the bank, which again tracks the conclusions reached by the regulatory authorities, specifically the findings made by the regulatory authorities about the involvement of senior management of the bank together with the involvement of derivatives traders who made requests to the submitters and also the involvement of the compliance department. There is then a specific plea that the claimants relied on the representations through their chief executive officer, Mr Hartland, and also that the bank intended the claimants to rely upon the representations and was well aware that the claimants or a class of persons which included the claimants would rely upon the representations. Flaux J dealt with three objections raised by the bank to the granting of permission to amend. First, whether there was any basis for implication at all; secondly, whether or not it could be said that it must have been obvious to the people in Barclays who are alleged to have had the relevant knowledge that the representations were being made and were false; and thirdly, whether any representations were made with Barclays' authority. No issues arise in relation to the second and third objections any longer at this stage in the proceedings. In relation to the first objection the judge held that, if Barclays were to oppose the applications successfully, it had to show that there was no prospect of success. He then went on to hold that Barclays could not show it had "an unanswerable case that the implied representations were not made". The judge also gave permission to the claimants to rely on an implied term to the effect that Barclays would not, during the currency of the contracts, manipulate or make false returns in respect of LIBOR. Breach of such a term would, of course, only result in a claim for damages, not rescission. The Deutsche Bank actions The first Deutsche Bank action has been called "the Lenders' action". In it Deutsche Bank ("the Bank") and eight other lenders claim under a credit facility agreement made with Unitech Global Ltd ("UGL") on 24th September 2007 as amended by a term sheet dated 22nd October 2010 and against Unitech Ltd ("Unitech") as UGL's parent company guarantor. US$150 million was advanced and, as a result of various failures to pay instalments due, or other events of default, repayment was accelerated so that the total is allegedly due to the lenders. The second to ninth claimants (together with the Bank "the lenders") are said to have acceded to the credit facility agreement by virtue of an assignment or transfer of rights or novation pursuant to clause 29 of that agreement. In the second action which has been called "the Swap action" the Bank claims $11 million, approximately, from Unitech under the same guarantee of UGL's obligations in respect of an interest rate swap agreement, which incorporated the terms of an ISDA 2002 Master Agreement. The defendant's case is that this swap agreement was proposed by the Bank as a hedge for UGL against interest rate fluctuations and that the credit facility agreement and the swap agreement were part of a single package deal. Unitech and UGL contend (as do the claimants in the Graiseley action) that the swap agreement was represented and recommended as suitable for UGL when it was not, particularly by reference to the terms of the credit facility agreement itself. It is alleged that the misrepresentations induced the two agreements and were made in breach of a duty of care owed by the Bank. The credit facility agreement provided for payment of interest by reference to LIBOR, which was defined in the definitions section by reference to the applicable screen rate as displayed for the relevant currency and term, or overdue amount, on the appropriate page of the screens of Reuters or Telerate. Under the interest rate swap confirmation, the obligations related to six month US dollar LIBOR, as set out in the annex to the ISDA 2002 Master Agreement:- "The rate for a Reset Date will be the rate for deposits in US Dollars for a period of the Designated Maturity, which appears on the Telerate, Page 3750, as of 11.00 a.m., London time on the day that is two London Banking Days preceding that Reset Date. If such rate does not appear on the Telerate Page 3750, the rate for that Reset Date will be determined as if the parties had specified US LIBOR Reference Banks as the applicable Floating Rate Option." It is (or may be) relevant to know that there are currently LIBOR reference rates for ten different currencies. For each currency there is a rate for each of 15 different maturity periods (or "tenors") ranging from overnight to one year. There are, therefore, 150 different LIBOR rates in total. Prior to February 2011, the USD LIBOR panel consisted of 16 contributor banks (of whom the Bank was one) and the USD LIBOR rates were calculated in the following manner:- "(1) Each contributor bank would submit its USD LIBOR submissions to Thomson Reuters based on the following question: "at what rate could you borrow funds, were you to do so by asking for and then accepting inter-bank offers in a reasonable market size just prior to 11 a.m." (2) Upon receiving submissions from the contributor banks, Thomson Reuters would exclude the four highest and the four lowest rates. The remaining (eight) rates were, arithmetically averaged to produce the USD LIBOR rates. (3) Accordingly, high and low "outlying" submissions were excluded from the published LIBOR rates." In both Deutsche Bank actions, the borrowers wanted to plead implied representations as set out in paragraph 5GC of a proposed amended pleading in the lenders' action and paragraph 36C of a proposed amended pleading in the swap action, which were for convenience of the argument labelled (A) – (D), albeit numbered (1) – (4) in the pleading itself. They were that:- "(A) LIBOR was a genuine average of the estimated rate at which members of the Panel could borrow from each other in a reasonable market size just prior to 11.00 a.m. London time on any given day, as set out in the last sentence of paragraph 5GA above. (B) The LIBOR rate itself was a rate based on the respective Panel member banks' submissions to Thomson Reuters which were good faith accurate estimates of the rate at which they could actually borrow from each in a reasonable market size just prior to 11.00 a.m. London time on any given day, as set out in the last sentence of paragraph 5GA above. (C) The first claimant had not itself acted, was not acting, and had no intention of acting, in a way which would, or would be likely to, undermine the integrity of LIBOR. (D) The first claimant was not aware of any conduct (either its own, or of other banks on the Panel) which would, or would be likely to, undermine the integrity of LIBOR." Cooke J referred to a test for the making of representations formulated by Toulson J in IFE Fund v Goldman Sachs International [2007] EWCA Civ 811:- "In determining whether there has been an express representation, and to what effect, the court has to consider what a reasonable person would have understood from the words used in the context in which they were used. In determining what, if any, implied representation has been made, the court has to perform a similar task, except that it has to consider what a reasonable person would have inferred was being implicitly represented by the representor's words and conduct in their context." Cooke J then said that pleas (A) and (B) sought to place in the mouth of one bank a statement about the overall integrity of the LIBOR system or of an individual bank's contributions to it which was unrealistic and did not meet Toulson J's test. He accepted that pleas (C) and (D) were "a little more promising at first blush" but said that in the context of the credit and the swap agreements no representation was being made in relation to the means by which the LIBOR figure was compiled. He was prepared to allow a plea of an implied term that the bank would do nothing during the existence of the contracts to jeopardise the ordinary and proper assessment of the relevant LIBOR rate to which the transactions were linked but not the plea of an implied representation based merely on the fact that the bank was a panel bank and offered or made a financial transaction linked to LIBOR. To imply such a representation would, he said, amount to a duty to disclose any information which the bank had which might undermine the integrity of LIBOR. He said that pleas (C) and (D) had, therefore, no prospect of success. He was aware of Flaux J's decision but said he got no assistance from it because every case, in which an implied representation was allegedly applicable, would turn on its own facts and on the facts before him:- "one cannot look at what the banks knew and what the banks did in order to spell out what a reasonable person in the position of the defendants would have inferred was being implicitly represented as existing fact by [the Bank] when contracting by reference to a LIBOR rate." He also refused permission to allege a negligence or breach of warranty claim. Cooke J then referred to the fact in the Lenders' action that there were 9 claimants other than Deutsche Bank which had acceded to the credit facility agreement, the third and seventh claimant having done so by way of novation. He pointed out that the effect of novation is to extinguish the existing agreement and create a new contract. Any right to rescind in relation to the credit facility agreement was therefore lost when that agreement was extinguished and replaced by the new novated agreements. Although this part of the decision was expressed briefly in para 50 of the judgment, it has assumed considerable importance in this litigation because, armed with this conclusion about novation in their favour, Deutsche Bank and the other lender claimants proceeded to apply for summary judgment in respect of the availability of rescission in relation to the existing pleas of misrepresentation regarding the unsuitability of the swap transaction. This was granted by Teare J on 20th September who held that the decision about novation operated as an issue estoppel between the parties. He permitted the defendants to allege an implied term of the contracts in the following terms:- "5GA. It was an implied term or contractual warranty in both the Credit Agreement and the Swap (the LIBOR implied term) that the first claimant would not, either on its own or in conjunction with another Panel member, seek to manipulate the setting of the relevant LIBOR rate by which interest rates in the agreements were set, whether by making false submissions as to the estimated rate at which it could borrow from other Panel members in that currency and tenor in reasonable market size just prior to 11.00 a.m. London time on any given day to Thomson Reuters or otherwise. Such a term is to be implied on the basis that its existence would be obvious and in order to give commercial efficacy to the relevant agreements." But any damages ensuing from such breach could only operate as a counterclaim which was not to prevent immediate judgment for the sums now due (or most of them) in both the lenders' action and the swap action. Cooke J's decision on novation has thus proved disastrous for the Unitech defendants and it was the focus of much more detailed argument before us than before Cooke J from both Mr Brisby QC for the Unitech appellants and Mr Handyside QC for Deutsche Bank and the other lender respondents. Submissions It fell to Mr Hapgood QC for Deutsche Bank and Mr Dicker QC for Barclays to submit that the proposed amendments should not be allowed. Mr Hapgood sought to defend Cooke J's judgment while Mr Dicker sought to attack Flaux J's judgment. Their submissions had a considerable degree of overlap and may be considered together. They were to the following effect:- i) the amendments did not satisfy the test for implied representations set out by Toulson J in the IFE Fund case; ii) the fact that there had been a proposal by the banks that the loan agreement and the swap agreements should refer to LIBOR for the purpose of calculating interest rates did not mean that any representation about LIBOR or a particular bank's participation in LIBOR was being impliedly made; iii) that was all the more the case when one read the detail of the agreements and saw that they included entire agreement clauses and disclaimers of any intention to make any representations; iv) such clauses or disclaimers could not be defeated by a plea of fraud because the clauses prevented any assertion that any representation was made; and v) the most that any allegation of fraud amounted to was an allegation of fraudulent non-disclosure, a cause of action unknown to English law. Mr Stephen Auld QC for the Graiseley claimants in the Graiseley action and Mr Brisby for the Unitech defendants in the Deutsche Bank actions submitted the proposed amendments were all arguable and should be permitted. On the novation aspect of the Deutsche Bank actions, Mr Brisby submitted i) the novation point was not open to the Lenders on the pleadings; ii) on the proper construction of both the original credit agreement and the agreements by which the other claimants (including the 3rd and 7th claimants ("BBK and BMI")) had acceded to the credit agreement, the accession was by way of assignment, not of novation; since assignees took subject to equities, the claim for rescission was not barred; and iii) in any event, the credit agreement, if novated at all, was only partially novated in the case of BBK and BMI so that the right of rescission remained against all the other claimants. Mr Handyside submitted:- i) the Lenders' pleadings needed no amendment and, in any event, the novation point would more naturally be made in reply; ii) the documents by which BBK and BMI came to participate into the loan were expressed to be novations; "novation" was a term of legal art which meant that the original credit agreement was extinguished and a new agreement came into existence in its place; and iii) if English law had any concept of partial novation, it could not apply in this case. Proposed pleas of implied representations I have concluded, with great respect to Cooke J, that the proposed pleas of implied representation in both cases are arguable. In those circumstances it is probably as well to say as little as possible because I would not want to inhibit in any way the approach or decisions of the trial judge. Put very shortly, I consider that any case of implied representation is fact specific and it is dangerous to dismiss summarily an allegation of implied representation in a factual vacuum. If the LIBOR scandal had occurred before these cases were begun and what are now the proposed pleas had been incorporated in original pleadings, they would not, in my view, be amenable to a strike out application and it is not surprising that Barclays did not, at first, seek to appeal Flaux J's decision. We received sustained submissions about the true ratios of Ward v Hobbs (1878) 4 App. Cas 13 and Bell v Lever Bros [1932] AC 161 to the effect that there is no obligation to disclose one's own dishonesty or breach of statutory duty; such submissions would be inappropriate on a strike out application and, in my view, equally inappropriate to an application for permission to amend. That may be the law where nothing is said and there is no duty to speak, but even that is not wholly free from doubt see: ING Bank N.V. v Ros Roca S.A. [2011] EWCA Civ 353 and [2012] 1 WLR 472 paras 90-96 per my Lord, Rix LJ (as he then was). In the present case, however, the banks did propose the use of LIBOR and it must be arguable that, at the very least, they were representing that their own participation in the setting of the rate was an honest one. It is, to my mind, surprising that the banks do not appear to be prepared to accept that even that limited proposition is arguable. It was also submitted that doing nothing cannot amount to an implied representation. But it is (arguably) the case that the banks did not do nothing in that they proposed transactions which were to be governed by LIBOR. That is conduct just as much as a customer's conduct in sitting down in a restaurant amounts to a representation that he is able to pay for his meal, see DPP v Ray [1974] AC 370, 379D per Lord Reid. The banks' reliance on the disclaimer and entire agreement clauses is arguably misplaced when the allegation is that the contracts were fraudulently induced, as Cooke J (para 19) appeared to accept. At least, the point cannot be decided in the banks' favour on a summary basis. It must be said, however, that Unitech defendants' pleading on fraud is not formulated very precisely at the moment and should be formulated with greater precision after disclosure. The banks' submissions boiled down to saying that they were prepared to accept that they would do nothing dishonest or manipulative during the term of the contract and that should be enough for any counterparty. I can only say that, in my view, it is arguably not enough. If the day after the contracts had been made, the banks had told their counterparties that they had been manipulating LIBOR in the past and intended to do so in the future, but would be happy to pay any loss that their borrowers could prove, the borrower would (arguably) be sufficiently horrified so as to think he would be entitled to rescind the deal. The law should strive to uphold the reasonable expectations of honest men and women. If in the end it cannot do so, that should only be after a proper trial. The banks are, no doubt, on much stronger ground in relation to the first alleged representation in the Graiseley case and representations (A) and (B) in the Deutsche Bank case. They can say with considerable force that the proposed representations amount to statements about the conduct of banks other than themselves and no one could expect any statement to that effect to be made by one bank proposing LIBOR. But I do not consider it the function of this court at this stage of the proceedings to be too selective about the precise representations which the parties wish to advance. The trial judge should be able to discern and, if necessary, judge between the various alleged representations once he has a full picture of the disputes between the parties. For the same reasons I would not refuse the subsidiary amendments relating to negligent misrepresentation and breach of warranty. Novation That leaves the novation point in the Deutsche Bank case, which has assumed an importance it did not appear to have in front of Cooke J as a result of the Bank's successful application for summary judgment to Teare J. It is, of course, common form for one bank to make a loan and then seek to encourage participation in the loan from other lenders. No doubt any accession by a new lender could be done by novation in the strict legal sense of that term by extinguishing any previous contract (including any contract already acceded to by previous new lenders) and creating a new contract each time there is a new accession. One may wonder what the commercial point of such an elaborate arrangement would be, unless it was the deliberate intention of the parties to defeat any equities (such as the right to rescind) which might apply to the original contract. But strict legal novation is obviously a conceptual possibility. The question is whether that is what was contemplated and did occur in the present case. Naturally enough the credit agreement made express provision for what it called "Changes to the Parties":- "29.1 Assignments and transfers by Obligors Neither Obligor may assign or transfer any of its rights and obligations under the Finance Documents without the prior consent of all the Lenders. 29.2 Assignments and transfers by Lenders Subject to the following provisions of this Clause, a Lender (the Existing Lender) may at any time; (a) assign any of its rights; or (b) transfer either by way of novation or by way of assignment, assumption and release any of its rights or obligations under this Agreement, to any other person (the New Lender). 29.3 Conditions to assignment or transfer (a) Unless the Company and the Facility Agent (acting on the instructions of the Majority Lenders) otherwise agree, a transfer of part of a Commitment or part of its rights and obligations under this Agreement by the Existing Lender must be in a minimum amount of US$1,000,000. (b) The Facility Agent is not obliged to enter into a Transfer Certificate or otherwise give effect to an assignment or transfer until it has completed all know your customer requirements to its satisfaction. The Facility Agent must as soon as reasonably practicable notify the Existing Lender and the New Lender if there are any such requirements. (c) If the consent of the Company is required for any assignment or transfer (irrespective of whether it may be unreasonably withheld or not), the Facility Agent is not obliged to enter into a Transfer Certificate if the Company withholds its consent. (d) Unless the Facility Agent otherwise agrees, the New Lender must pay to the Facility Agent for its own account, on or before the date any assignment or transfer occurs, a fee of US$2,000. (e) Any reference in this Agreement to a Lender includes a New Lender but excludes a Lender if no amount is or may be owed to or by it under this Agreement. 29.4 Procedure for assignment of rights An assignment of rights will only be effective on receipt by the Facility Agent of written confirmation from the New Lender (in form and substance satisfactory to the Facility Agent) that the New Lender will, in relation to the assigned rights, assume obligations to the other Finance Parties equivalent to those it would have been under if it had been an Original Lender. 29.5 Procedure for transfer using a Transfer Certificate (a) In this Sub-clause: Transfer Date means, in relation to a transfer, the later of: i) the proposed Transfer Date specified in that Transfer Certificate; and ii) the date on which the Facility Agent executes that Transfer Certificate. (b) A transfer of rights or obligations using a Transfer Certificate will be effective if: i) the Existing Lender and the New Lender deliver to the Facility Agent a duly completed Transfer Certificate; and ii) the Facility Agent executes it. (c) Where a transfer is to be effected using a novation on the Transfer Date: i) The New Lender will assume the rights and obligations of the Existing Lender expressed to be the subject of the novation in the Transfer Certificate in substitution for the Existing Lender; ii) the Existing Lender will be released from those obligations and cease to have those rights; and iii) the New Lender will become a Lender under this Agreement and be bound by the terms of this Agreement as Lender. (d) Where a transfer is to be effected by an assignment, assumption and release, on the Transfer Date: i) the Existing Lender will assign absolutely to the New Lender the Existing Lender's rights expressed to be the subject of the assignment in the Transfer Certificate; ii) the New Lender will assume obligations equivalent to those obligations of the Existing Lender expressed to be the subject of the assumption in the Transfer Certificate; iii) to the extent the obligations referred to in subparagraph (ii) above are effectively assumed by the New Lender, the Existing Lender will be released from its obligations referred to in the Transfer Certificate; and iv) the New Lender will become a Lender under this Agreement and will be bound by the terms of this Agreement as a Lender. (e) The Facility Agent must execute a Transfer Certificate delivered to it and which appears on its face to be in order as soon as reasonably practicable and, as soon as reasonably practicable after it has executed a Transfer Certificate, send a copy of that Transfer Certificate to the Company. (f) Each Party (other than the Existing Lender and the New Lender) irrevocably authorises the Facility Agent to enter into and deliver any duly completed Transfer Certificate on its behalf." This is an elaborate provision which undoubtedly draws a distinction between "assignment" on the one hand and "transfer either by way of novation or by way of assignment, assumption and release of any of [the Existing lender's] rights or obligations under this Agreement" on the other hand. Moreover the procedure for transfer using a Transfer Certificate (which was how each new lender in the present case became bound) itself differentiates between a transfer to be effected by using a novation and a transfer to be effected by an assignment, assumption and release. But when we see that in each case the new lender is to become "a Lender under this Agreement and will be bound by the terms of this Agreement as a Lender" (clauses 29.5 (c)(iii) and 29.5 (d)(iv) respectively), one wonders whether the term "novation" is indeed being used in its strict legal sense. If it were, the parties would be making a new agreement and not agreeing to be bound by the terms of the old agreement at all. When one sees that, although the relevant two new lenders (BBK and BMI) became bound on execution of Transfer Certificates with "novation" in their headings, all the other new lenders became bound on execution of Transfer Certificates with "assignment, assumption and release" in their headings or otherwise almost identical terms, it begins to look as if it is a matter of indifference (at any rate to Deutsche Bank) which kind of transfer is being used. We were told that a leading textbook writer about credit agreements thinks that clause 29 is drafted in the way it is because English law recognises a term "novation" whereas New York law does not. Be that as it may, it is difficult to see why the Credit Agreement (recognised as such and, apparently continuing, under clause 29) should be completely discharged merely because BBK or BMI as the case may be signs a document with novation in its heading when other new lenders accede to the agreement without any need for it to be discharged. In these circumstances it seems to me to be arguable, despite Mr Handyside's reliance on the definitions of (inter alia) the words "Finance Document" and "amendment" in clauses 1.1 and 1.2 of the Credit Agreement, that novation is not being used in its strict legal sense of the old contract being discharged. If, however, it is being used in this strict legal sense, there must at least be an argument that, on the facts of the present case, there is only a partial novation so that BBK and BMI became parties to a new contract freed of the equity of rescission whereas the other parties (whether the original or the other new lenders) remain bound under "this Agreement" and will be affected by any such equity. That is by no means to say that the concept of partial novation is free from difficulty but an application for permission to amend is not the right time at which all these problems should be addressed. Conclusion For these reasons, I would allow the proposed amendments, allow the appeal from Cooke J and dismiss the appeal from Flaux J. Lord Justice Underhill: I agree. Sir Bernard Rix: I agree also.

SECOND SECTION CASE OF LÁSZLÓ NÉMETH v. HUNGARY (Application no. 30211/05) JUDGMENT STRASBOURG 9 December 2008 FINAL 09/03/2009 This judgment may be subject to editorial revision. In the case of László Németh v. Hungary, The European Court of Human Rights (Second Section), sitting as a Chamber composed of: Françoise Tulkens, President,Ireneu Cabral Barreto,Vladimiro Zagrebelsky,Danutė Jočienė,Dragoljub Popović,András Sajó,Nona Tsotsoria, judges,and Sally Dollé, Section Registrar, Having deliberated in private on 18 November 2008, Delivers the following judgment, which was adopted on that date: PROCEDURE 1. The case originated in an application (no. 30211/05) against the Republic of Hungary lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Hungarian national, Mr László Németh (“the applicant”), on 11 August 2005. 2. The applicant was represented by Mr I. Barbalics, a lawyer practising in Budapest. The Hungarian Government (“the Government”) were represented by Mr L. Höltzl, Agent, Ministry of Justice and Law Enforcement. 3. On 13 February 2008 the President of the Second Section decided to give notice of the application to the Government. It was also decided to rule on the admissibility and merits of the application at the same time (Article 29 § 3). THE FACTS THE CIRCUMSTANCES OF THE CASE 4. The applicant was born in 1961 and lives in Szomód. 5. In the context of a real estate dispute, on 13 August 1993 the applicant brought an action claiming partial ownership of a house. 6. After having held several hearings and obtained the opinions of two experts, on 27 August 1998 the applicant was granted one fifth of the property in question. 7. On appeal, on 17 March 1999 the Komárom-Esztergom County Regional Court quashed this decision. 8. In the resumed proceedings, the Tata District Court held several hearings and obtained the opinion of an expert. On 12 June 2003 it gave judgment, granting the applicant partial ownership. Simultaneously, it dissolved the common ownership thus created, gave the part allocated to the applicant to the respondent, and ordered the latter to compensate the former. 9. On appeal, on 4 February 2004 the Regional Court amended this decision and gave a final judgment. 10. The applicant filed a petition for review with the Supreme Court. 11. On 31 January 2005 the Supreme Court dismissed the petition in preliminary proceedings. In a reasoned decision, it held that the applicant’s petition was inadmissible because it did not disclose a breach of the relevant law, in particular the rules concerning the termination of common ownership. The Supreme Court’s order was served on him on 17 February 2005. THE LAW I. ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE CONVENTION 12. The applicant complained that the length of the proceedings had been incompatible with the “reasonable time” requirement of Article 6 § 1 of the Convention, which reads as follows: “In the determination of his civil rights and obligations ..., everyone is entitled to a ... hearing within a reasonable time by [a] ... tribunal...” 13. The Government contested that argument. A. Admissibility 14. The Government submitted that final domestic decision in the case had been given by the Regional Court on 4 February 2004 and that the application had been introduced only on 11 August 2005, i.e. outside the six-month time-limit prescribed in Article 35 § 1 of the Convention. The applicant’s petition for review, rejected by the Supreme Court in the admissibility phase, could not be regarded as an effective remedy and did not, in their view, influence the running of the time-limit. The applicant contested that view. 15. The Court observes that, for the purpose of its examination of the reasonableness of the length of proceedings, it must take into account all instances which could have had an influence on the outcome of the case (see Maria de Lurdes Rosa Marques and Others v. Portugal (dec.), no. 48187/99, 7 June 2001). In this connection, it finds that the decision of the Supreme Court, served on the applicant on 17 February 2005, and which dealt with the merits of the applicant’s petition for review and adopted a reasoned decision in the matter, constituted the final domestic decision in the present application. The Government’s objection must therefore be rejected. Moreover, the Court considers that this complaint is not manifestly ill-founded within the meaning of Article 35 § 3 of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible. B. Merits 16. The period to be taken into consideration began on 13 August 1993 and ended on 17 February 2005. It thus lasted eleven and a half years, for three levels of jurisdiction. 17. The Court reiterates that the reasonableness of the length of proceedings must be assessed in the light of the circumstances of the case and with reference to the following criteria: the complexity of the case, the conduct of the applicant and the relevant authorities and what was at stake for the applicant in the dispute (see, among many other authorities, Frydlender v. France [GC], no. 30979/96, § 43, ECHR 2000-VII). 18. The Court has frequently found violations of Article 6 § 1 of the Convention in cases raising issues similar to the one in the present application (see Frydlender, cited above). 19. Having examined all the material submitted to it, the Court considers that the Government have not put forward any fact or convincing argument capable of persuading it to reach a different conclusion in the present circumstances. Having regard to its case-law on the subject, the Court finds that the length of the proceedings was excessive and failed to meet the “reasonable time” requirement. There has accordingly been a breach of Article 6 § 1. II. OTHER ALLEGED VIOLATIONS OF THE CONVENTION 20. The applicant also complained under Article 1 of Protocol No. 1 that the domestic courts had awarded him only money rather than actual partial ownership. 21. The Court observes that the domestic courts adjudicated a civil-law dispute between private parties and that no deprivation of property by a State body took place. In the absence of any appearance of arbitrariness, the Court considers that the applicant’s submissions do not disclose any indication of a violation of his rights under Article 1 of Protocol No. 1. It follows that this complaint is manifestly ill-founded within the meaning of Article 35 § 3 and must be rejected, pursuant to Article 35 § 4 of the Convention. III. APPLICATION OF ARTICLE 41 OF THE CONVENTION 22. Article 41 of the Convention provides: “If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.” A. Damage 23. The applicant claimed 25,373 euros (EUR) in respect of pecuniary damage and EUR 12,000 in respect of non-pecuniary damage. 24. The Government contested these claims. 25. The Court does not discern any causal link between the violation found and the pecuniary damage alleged; it therefore rejects this claim. However, it considers that the applicant must have sustained some non-pecuniary damage. Ruling on an equitable basis, it awards him EUR 8,000 under that head. B. Costs and expenses 26. The applicant also claimed EUR 13,350 for the costs and expenses incurred before the domestic courts and EUR 1,650 for the costs and expenses incurred before the Court. 27. The Government contested these claims. 28. According to the Court’s case-law, an applicant is entitled to the reimbursement of costs and expenses only in so far as it has been shown that these have been actually and necessarily incurred and were reasonable as to quantum. In the present case, regard being had to the information in its possession and the above criteria, the Court rejects the claim for costs and expenses in the domestic proceedings and considers it reasonable to award the entirety of the sum claimed in respect of the proceedings before the Court. C. Default interest 29. The Court considers it appropriate that the default interest should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points. FOR THESE REASONS, THE COURT UNANIMOUSLY 1. Declares the complaint concerning the excessive length of the proceedings admissible and the remainder of the application inadmissible; 2. Holds that there has been a violation of Article 6 § 1 of the Convention; 3. Holds (a) that the respondent State is to pay the applicant, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, the following amounts, to be converted into Hungarian forints at the rate applicable at the date of settlement: (i) EUR 8,000 (eight thousand euros), plus any tax that may be chargeable, in respect of non-pecuniary damage, (ii) EUR 1,650 (one thousand six hundred and fifty euros), plus any tax that may be chargeable to the applicant, in respect of costs and expenses; (b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points; 4. Dismisses the remainder of the applicant’s claim for just satisfaction. Done in English, and notified in writing on 9 December 2008, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. Sally DolléFrançoise TulkensRegistrarPresident

MR JUSTICE SCOTT BAKER: On 11th December of last year this applicant (as he now is) was made the subject of a hospital order under section 37 of the Mental Health Act of 1983. He appealed against his sentence by leave of the single judge. Mr Whitley, for the Crown, at the commencement of the hearing, drew the court's attention to sections 9 and 10 of the Criminal Appeal Act 1968, submitting that the court had no jurisdiction to hear the appeal. The point arises in this way. Section 9 gives the Court of Appeal (Criminal Division) power to hear appeals against sentence following a conviction on indictment. That is not this case and one, therefore, turns to section 10. Section 10 deals with appeals against sentence from the Crown Court in other cases. Section 10(2)(a) reads as follows: "The proceedings from which an appeal against sentence lies under this section are those where an offender convicted of an offence by a magistrates' court: (a) is committed by the court to be dealt with for his offence before the Crown Court..." It is unnecessary to read subsection (2)(b) and (c). Subsection (3) provides for an appeal in specified cases. It provides: "An offender dealt with for an offence before the Crown Court in a proceeding to which subsection (2) of this section applies may appeal to the Court of Appeal against sentence in any of the following cases: (a) where either for that offence alone or for that offence and other offences for which sentence is passed in the same proceeding, he is sentenced to imprisonment or to a sentence of detention in a young offender institution for a term of six months or more [that is not this case]; or (b) where the sentence is one which the court convicting him had not power to pass..." That is not this case either, because the Magistrates' Court did have power to pass a section 37 order and, in fact, they committed the appellant to the Crown Court for sentence because they thought that it was a case where a restriction order under section 41 of the same Act might be appropriate. The remaining provisions of subsection (3) are not relevant. Miss McIntosh sought to argue that this case does fall within section 10(3)(a) because, as she put it, a hospital order under section 37 is tantamount to a sentence of six months or more. But she did not argue the point with any great vigour. It seems to us plain that Mr Whitley's submission is correct that the court does indeed not have jurisdiction. This question was not drawn to the attention of the court at any time before the commencement of the hearing at 10:30 this morning. There has been no opportunity to research whether there is any other provision that gives the court jurisdiction of which we are presently unaware. But, it seems to us, on the face of it, that Mr Whitley's submission must be right. In fairness to Mr Whitley, he made it clear that he was not taking the point in order to prevent the case being heard but simply because, as a jurisdiction point, he felt obliged to draw it to the court's attention. It was entirely proper, in my judgment, that he should have done so. Both sides, the Crown and the defence, are clear that the real issue in this case has to be resolved and that it has to be resolved today. Four psychiatrists have come to court to give evidence. The issues in the case ultimately depend on the view that the court takes of the evidence of each of them. In these circumstances, it seemed to the court that the appropriate way in which to proceed was for the court to reconstitute itself as a Divisional Court of the Administrative Court and to consider the issue by way of a deemed application for judicial review of the decision of the Crown Court. It is in those circumstances that my Lord and I will now proceed to judgment in the case. Returning for a moment to the background. On 23rd March of last year in the Hendon Magistrates' Court, the applicant pleaded guilty to assault occasioning actual bodily harm. He was later committed for sentence under the Powers of Criminal Courts (Sentencing) Act 2000 and section 43 of the Mental Health Act 1983, with a direction that he be detained at the Dennis Scott Unit of the Edgware Community Hospital until disposal of the case. The facts of the offence can be shortly stated and are as follows. The victim, R.K., and the applicant had known each other for many years. On Thursday, 21st March of last year, Mr K. attended the applicant's home in Goldsmith Road, N11. The applicant had requested his attendance in order to speak to him about an ongoing argument involving Mr K.'s family. The applicant's home had been burgled a few days previously. The applicant suspected that Mr K.'s family were responsible. During the conversation, the applicant apparently became threatening and stated that he felt like kneecapping Mr K.. That is a fact that is denied by the applicant but has never been resolved, and it is unnecessary for it to be resolved. At about five minutes to nine, Mr K. decided to leave because he was concerned about the applicant's attitude towards him. As he was walking down Goldsmith Road he felt a thud from behind on his left leg. When he turned round, he saw the applicant with a hammer in his hand. The applicant then proceeded to hit him on the head and body with the hammer. When he fell to the ground he also kicked him on the head and body. He then walked away. An ambulance was called. Mr K. was taken to the Barnet General Hospital, where he was treated for a small scalp wound requiring six stitches and some cuts and grazes to his left shin. It perhaps goes without saying that the injuries could very well have been significantly more serious. In the early hours of the following morning, the police forced entry into the applicant's home, but he was not there. That same day, at about quarter to one in the afternoon, he went to Whetstone police station and handed himself in. The officer asked what injuries the victim had, and the applicant replied: "I hit him with a hammer multiple times all over the body." He was arrested. When he was interviewed he made a full admission, repeating that he had hit the victim about ten times to the head and body. There are, in my judgment, a number of disturbing features about this case. The first is that it is over a year since the offence was committed. The applicant has been detained in a mental hospital since, I think, 23rd July of last year. The second disturbing feature about the case is the dramatically different view between the psychiatrists who have given evidence before this court today and gave evidence to the Crown Court judge. Dr Annear says that the applicant is suffering from mental illness of a nature or degree that makes it appropriate for him to be detained in hospital for medical treatment. That has consistently been his view. That has also consistently been the view of Dr Naguib. On the other hand, Dr Barrett can find no signs or symptoms of any mental illness. Dr McClintock says, bluntly, that the applicant is not mentally ill and never has been. He has expressed his disquiet about the manner in which the applicant has been treated by the psychiatric services. One of those concerns, and this is also a concern of Dr Barrett, is that the applicant is being required to take what those two doctors describe as exceedingly high doses of anti-psychotic medication against his will when it is unnecessary for him to do so. Dr Heather McKee saw the applicant on 12th September 2002. She found no evidence of a mental disorder of the nature or degree to warrant him being further detained in a psychiatric hospital. She felt that the applicant's notes displayed no evidence of psychosis, and that a diagnosis of persistent delusional disorder, which had been made by Dr Naguib, was not substantiated. Psychiatric examination came about because the probation officer expressed her concern about disturbance in the applicant's thought process. There is no criticism to be made, in my judgment, of the probation officer for taking that view. There were features of the applicant's background that did call for some further investigation. The learned judge heard evidence from Dr Annear, Dr Naguib, Dr McClintock and Dr Barrett, all consultant psychiatrists, although Dr McClintock is the only one of the four who is a consultant forensic psychiatrist, albeit each of the other three has a considerable degree of experience and interest in that field. The judge also had the report in written form from Dr McKee. When he came to pass sentence, the judge said that he had listened to the evidence and read the reports, especially from Dr Naguib and Dr Annear who, as he put it, had been on the applicant's case from the start. He noted that Dr Annear had seen the applicant only the previous day. He went on to say that all the doctors were agreed that the applicant suffered from a mental illness. He was plainly wrong about that because two of them did not think that he was mentally ill at all, three indeed if one counts Dr McKee, who did not give evidence, but who had produced a written report. The judge went on: "What Dr Naguib and Dr Annear say is that it is one [that is the illness] of a nature and a degree, which makes it appropriate for you, necessary for you to be detained or kept in hospital for medical treatment. That there is a bed available, we know and such treatment is likely to alleviate and prevent a deterioration of your condition. It is [to] stop you getting worse and maybe get you better; that is always the hope and if it cannot get you better immediately, at least to give you some treatment so that when you come out in the community, you will take that treatment, if you are sensible to stop yourself getting ill again." He continued: "It is also in my view desirable that you are detained in hospital for your own safety and the protection of others and that is why I have been persuaded now on all that I have heard including that of those psychiatrists called on your behalf by Miss McIntosh because let us not forget, we do not take sides and the Doctors are not taking sides. They do [not] represent the prosecution or defence. They represent the state and the patient's interests and they take all these matters into account just as I do. Sometimes they differ in their opinion but then I sit in the middle and try to find the proper way." He went on to say that the only alternative to a section 37 order would have been a custodial sentence. He concluded that section 37 of the Mental Health Act was the best route for the applicant's improvement and for the protection of others. He went on finally to say that he had to think long and hard, and that what had taken up most of his time was whether or not to impose a section 41 restriction order, which, in the event, he decided not to do. In my judgment, the judge fell into error in the manner in which he approached the medical evidence. What he had here was two doctors whose evidence supported an order, under section 37 of the Mental Health Act 1983, and three doctors (two orally and one in writing) whose evidence did not. There were dramatic differences in the evidence of the four doctors whom he heard. In my judgment, it was incumbent upon the judge to explain in the course of his sentencing remarks why he accepted the evidence of Dr Naguib and Dr Annear and why, therefore, he rejected the evidence of Dr McClintock and Dr Barrett. But he simply did not deal with that question at all. In these circumstances, it seems to this court that the only appropriate way for the matter to be dealt with is for the medical evidence to be considered afresh. When the matter came before the Court of Appeal (Criminal Division) earlier this month, the court adjourned the application so that the four doctors who had given evidence in the Crown Court could attend to give evidence again. We have had the advantage of hearing the evidence of four skilled and experienced professional men. Each of them, I am entirely satisfied, has being doing his honest best to give this court the assistance of his expertise in how to approach this difficult case. Dr Naguib has 23 years experience, but is not, as I have already mentioned, a forensic psychiatrist, although he has a special interest in this subject. He spent an hour talking to the victim last Tuesday, which conversation he told us fortified his belief about the applicant's paranoid behaviour. He has not, however, had an opportunity to take up with the applicant what the victim told him in this hour long conversation. He last saw the applicant some two weeks ago. In his opinion, the applicant does not have schizophrenia as such, although he somewhat qualified this later in his evidence. He said that in his view the applicant has a persistent delusional disorder which can be classified, as it were, as a subheading of a broad description of schizophrenia. He accepted that he had taken into account hearsay sources of information when diagnosing mental illness. If I may digress at this stage to say this. Both Dr Naguib and Dr Annear have made contact with the victim to hear, as it were, his side of the story. Both Dr Naguib and Dr Annear have regarded what he told them as a significant factor in reaching their diagnosis. There has also I think been some contact with the probation officer, who, of course, had some direct knowledge of the applicant and also with the applicant's mother, who is able to give some account of events as seen through her eyes in the past. Her position has, however, changed because although she initially felt that some psychiatric input was necessary for her son, she has subsequently backed off that view. Both Dr Barrett and Dr McClintock expressed extremely strong views that psychiatrists in these circumstances should not approach the victim. As it was put by Dr McClintock, a doctor cannot act as an investigator as this blurs the boundaries: "I would not have made contact with the victim. He is not a diagnostician." The plain implication from the evidence of both Dr McClintock and Dr Barrett was that the practice followed by Dr Naguib and by Dr Annear in the present case was highly undesirable. For my part, I would endorse their view. I cannot see any reason in ordinary circumstances why it would be appropriate for a doctor in such circumstances to begin making his own investigations by contacting the victim, or someone else in a similar situation, for his own account of events, especially if, as happened in this case, it was not possible for the applicant to give him the other side of the story. Returning to Dr Naguib. He accepted that the sources of information on which he relied were hearsay information. It was put to him, and he accepted, that there was really a hierarchy of sources from which a psychiatrist in these circumstances ought to look to decide whether the applicant was suffering from mental illness. This included, first of all, the interview; secondly, the inpatient assessment, the notes and discussions with the staff who were looking after him in the hospital; and, thirdly, other sources. He accepted that in the circumstances of this case one really obtained very little, if any, assistance from the first two sources, and that one was really down to the third source in finding any useful information at all. It is generally accepted that in diagnosing mental illness, which is not an easy task in borderline cases, the usual route to overcome uncertainty is to have the patient assessed as an inpatient in a mental hospital. That is what happened in this case. But, in my judgment, the doctors are, in reality, no wiser after the applicant has spent many months in hospital then they were before he was admitted. The plain fact is that on any objective assessment he has not displayed any signs of mental illness whilst in hospital. The problem with other sources, as illustrated in this case, is to assess the reliability of what the doctors are being told. It is not only a question of the reliability of the facts that they are being told but also their interpretation of those facts. In my judgment, it is perfectly clear that doctors in these circumstances are not bound by rules of evidence, so that they can only accept material that would be admissible in the courts; certainly, not. They are entitled to look at the whole picture and, indeed, they should look at the whole picture. But they have to exercise judgment over material which is of first, second or even third hand hearsay as to the weight that can be attached to it. In my judgment the problem in this case has really come about because Dr Naguib and, more particularly, Dr Annear, who has really been the main doctor in respect of treatment of the applicant, has given far too much weight to material that is of an extremely dubious nature. This late in the day, it is undesirable for me to go in great detail into all the matters about which I have particular concern. But one example is to be found in a statement in Dr Annear's most recent report of 28th February of this year, when he says: "When [the applicant] first came into hospital, he had stated the tap water was poisoned." If, in truth, the applicant said that, that would be important evidence as to delusional belief. However, no one has been able to draw attention to any contemporaneous record in the medical notes to that effect. I would have thought that a matter of that importance would inevitably have been recorded contemporaneously in the very full notes that are before the court. When one goes back to one of Dr Annear's earlier reports, namely that of 9th October, there is another reference, on a slightly different subject, to checking that drinks were not contaminated, but that was in the context of the applicant being required to take medication that he did not believe he ought to made to have. It is perfectly plain, it seems to me, that checking of the drinks that he was being provided with by the applicant were entirely in that context. Another matter arises from Mr Naguib's evidence, when he said this in his report of the 31st October: "Another source of evidence brought to my attention this week was when one of my female patients at [the hospital] who had a brief encounter with Mr K. about twelve years ago. She told me that Mr K. has kept her photo with him until the present time despite the fact that she had told him at the beginning of their encounter (twelve years ago) that she was 'not interested'. She added that on one occasion he 'jumped on me' trying to kiss her and when she declined, he ended up smashing up a glass window. She stated that after she stopped seeing him (after that incident), as she was frightened of him, Mr K. started to stalk a mutual friend who was married and has a child. My female patient added that Mr K. was constantly harassing that other woman and on one occasion he had broken into her house. That lady had to get an injunction against Mr K. to protect herself. This is [said Dr Naguib] a very important new piece of information, which sheds light on another yet unknown aspect of Mr K.'s potential for violence and threatening behaviour. It could also be carrying other supporting evidence of mental illness and needs further exploration. The fact that Mr K. has kept my patient's photo with him for twelve years and that he brought it with him to the hospital not knowing that this patient is presently admitted, could raise several questions and deserves further exploration." It is true that the applicant did have a photograph of the this woman amongst his belongings, including a number of other photographs. On the other hand, what is being spoken about here is second and third hand hearsay about events that occurred a very long time ago and which the applicant denies. In my judgment, they are quite irrelevant to the very serious issue that the doctors had to decide, namely whether it was appropriate to detain him under the Mental Health Act. The difficulty in this case, as it seems to me, arose at least in part out of the use by the applicant of expressions such as "paranoid" and "mind games". It appears that he has been using these expressions not in any medical sense, but in the way that they might be used by the man in the street. Furthermore, he has used these expressions in such a way that Dr Annear, in particular, has concluded amounts to evidence of delusional beliefs. But the conclusions of Dr Annear on this matter are to a very large extent dependent upon accepting accounts that he has been given by the victim rather than accepting what he has been told by the applicant. There has been a serious issue about the medication given to the applicant. This is covered in Dr Annear's report of 9th October. He said: "[The applicant] refused to accept medication as authorised and prescribed, and so on 16th September 2002 arrangements were made to administer anti- psychotic zuclopenthixol acetate medium-acting injection in the anticipation he would thereafter accept oral sulpiride. Instead he accepted sulpiride but in the form of tablets. There was some indication of initial compliance, though he refused two further requests for interview by me to at least explain the medication and its effects. It was considered likely that he was covertly non-compliant with medication and so the prescription was increased to sulpiride 600mg then 800mg x2 daily and in syrup form, together with [another drug] for unwanted [side] effects." The evidence called by the applicant is to the effect that, first of all, it was inappropriate for the applicant to be given drugs at all; and secondly, that if he was given any drugs, oral sulpiride is an old-fashioned drug and that there are newer drugs which can more accurately be targeted at the problem which, in any event, the defence doctors did not think the applicant had; an atypical neuroleptic would have been a much better solution. Furthermore, there was, in the view of the doctors called by the defence, no justifiable reason for increasing the dosage from 400mgs to 600mgs and then to 800mgs twice daily. I am bound to say that, for my part, I am not convinced by Dr Annear's explanation as to why the dosage should have remained ever since last September at 800mgs twice daily. There is a dispute between the medical experts on both sides as to whether this is a wholly inappropriately high dosage, or one that falls within the ordinary ambit of what doctors might consider appropriate. It does not seem to me that this court is in a position to resolve that issue. On the face of it, the dosage of 800mgs does seem higher than one would have expected. In my judgment, the evidence of Dr McClintock and Dr Barrett, and I found Dr McClintock a particularly convincing and measured witness, was more impressive than the evidence of Dr Annear and Dr Naguib. It really was Dr Annear rather than Dr Naguib who was, as it were, in the driving seat for the Crown's evidence. Dr Naguib's involvement in the case has been of a rather lesser nature. Dr McClintock was of the opinion that the applicant has never been mentally ill. He has expressed considerable disquiet as to the manner in which his case has been handled. It appears to be common ground that in considering the applicant's illness, if he has one, one can divide the symptoms that one looks for into two broad general categories: positive symptoms and negative symptoms. Dr Annear put his case as follows. His conclusion was that there was an accumulation of evidence and inferences from several sources and reports that the applicant has a mental illness either continuous paranoid schizophrenia with prominent and negative symptoms or alternatively, continuous residual schizophrenia with episodic paranoid exacerbation or schizophrenic spectrum disorder. Dr Naguib accepted that there were no negative symptoms. Dr Annear in his evidence said that there were negative symptoms but he did not regard them as prominent. Negative symptoms can broadly be categorised as social withdrawal, blunting and restriction of effect, rigidity of ideation, amotivation, anergy and a past decline in work records. But Dr Annear, although saying that the negative symptoms were not prominent, really rested his case on the positive symptoms: delusions of persecution and reference and inferred delusions of control, other thought interferences of delusional mood and auditory hallucinations. The psychiatrists called by the defence made, in my judgment, extremely forcible points, that although reading carefully through the medical notes, no evidence could be found of anything to support the kind of positive symptoms that Dr Annear suggests the patient had. He is of the view that the applicant's condition has lasted over a number of years and that it has manifested itself from time to time. But really in order to support his conclusion, he has to draw inferences on the basis that what he has been told, in particular by the victim. In my judgment, it simply is not justifiable to do that in this case. Dr Barrett said: "I think there are considerable problems with the diagnosis of paranoid schizophrenia which Mr K. has attracted. It seems to have been based upon almost no signs and symptoms which I would myself accept, or which I would expect my peers to accept. Many of the decisions regarding hallucinations and delusions seem to have been 'inferred'..." Our attention has been drawn to a letter of 28th January of last year from Dr Sous, which was just a couple of months before the applicant's offence. There were circumstances then which led to the Barnet Psychiatric Unit being called in as a result of a complaint by the applicant's mother. Apparently, there was an argument between the applicant and his mother. He chased her with a hammer after she had asked him to leave the house. In my judgment one has to view with a considerable degree of caution anything arising out of a dispute in this case between a mother and grown-up son, living in the same household, obviously in circumstances of some stress. Although the applicant's mother was, in the earlier part of January 2002 and, indeed, subsequently, concerned that the psychiatric services should have some input into her son, she has since backed off from that position. But of some significance, in my judgment, is what Dr Sous had to say: "A 34 year old single man, being unco-operative, presenting with threatening behaviour towards his mother. Other reported oddities of behaviour. 'Arranging things in a peculiar fashion.' Previous contact with our services. Currently no clear cut psychotic or depressive symptoms. [Then these important words:] Not detainable under the Mental Health Act." So in addition to three doctors who think that there is nothing wrong with the applicant's mental health, there was also another, Dr Sous, who took the same view in January 2002, albeit probably on pretty limited information. Our attention has also been drawn to a letter written by Dr Annear on 10th January 2000, indicating that by the end of February of this year, that is a month ago, that Mr K., the applicant, would be in the position of bedblocking; the purpose of the letter being to try and persuade the Homeless Persons Unit of Barnet to provide the applicant with some accommodation. The doctor's response when asked about that letter was that one has to anticipate the situation somewhat to make any progress at all with housing with the local authority. He said he did not really mean that Mr K. would be bedblocking by the end of February, but if he had not written that kind of letter there was no prospect of Barnet finding accommodation. That seems to me to be a sorry state of affairs. If doctors do not tell local authorities the truth it will not be long before local authorities disbelieve them when it really matters. So, drawing the threads together, where does that leave the evidence? In my judgment, Dr McClintock is right when he says there is no evidence of negative symptoms, a view supported by Dr Barrett and, indeed, by Dr Naguib (one of the doctors called by the other side). I also accept Dr McClintock's evidence that such evidence as there is of positive symptoms is flimsy in the extreme. In my judgment, Dr McClintock and Dr Barrett are right. There simply was not sufficient evidence here to justify making an order under section 37 of the Mental Health Act 1983. The evidence was not there, in my judgment, before the learned judge who heard this case, and the evidence is not there today from the doctors from whom we have heard. I regret to say that I have come to the conclusion that Dr Annear, in particular, has built up a picture in his own mind that there is much more here than meets the eye from the psychiatric view point. I, for my part, have no hesitation in preferring the evidence of Dr McClintock and Dr Barrett. In these circumstances, I would quash the section 37 order. Since this court is acting by way of judicial review, we have no power to impose any separate penalty, but had we such power I would be strongly inclined to impose a conditional discharge for two years. I would do so for these reasons. It seems to me that this was an offence for which a sentence of immediate imprisonment was inevitable, had it been dealt with other than under the Mental Health Act. But, bearing in mind, first of all, the period in custody in Wormwood Scrubs that the applicant served before he went to hospital under the Mental Health Act, and the very substantial period that he has been in hospital and detained there, it would be quite inappropriate to make any other order now that deprived him of his liberty. It is not ultimately a matter for this court what penalty is imposed, but I hope that the Crown Court judge to whom, in my judgment, this case should be remitted, will bear in mind the views of this court, which has heard all the evidence today. One of the advantages of a conditional discharge is that for the period that it lasts, which in my view should be two years, it will hang over the applicant and will remind him that if he transgresses again he is liable to be brought back and dealt with in a rather less agreeable way in the future. MR JUSTICE ASTILL: This was not a case of the judge choosing between opposing experts. He did not assess their evidence accurately. He based his decision on an interpretation of the total medical evidence that was not possible given the differing views that they expressed. For the reasons given by my Lord, I agree with his conclusions. (Bail granted with a condition of residence)

Judgment of the General Court (Eighth Chamber) of 7 April 2011 – Gruber v OHIM (Run the globe) (Case T-12/09) Community trade mark – Application for Community word mark Run the globe – Absolute ground for refusal – Lack of distinctive character – Article 7(1)(b) of Regulation (EC) No 40/94 (now Article 7(1)(b) of Regulation (EC) No 207/2009) Community trade mark – Definition and acquisition of the Community trade mark – Absolute grounds for refusal – Marks devoid of distinctive character (Council Regulation No 40/94, Art. 7(1)(b)) (see paras 20, 24-27) Re: ACTION brought against the decision of the First Board of Appeal of OHIM of 6 November 2008 (Case R 1779/2007-1) concerning a request for registration of the word sign Run the globe as a Community trade mark. Information relating to the case Applicant for the Community trade mark: Alexander Gruber Community trade mark sought: Word mark Run the globe for services in Class 41 – Application No 5154521 Decision of the examiner: Registration refused Decision of the Board of Appeal: Appeal dismissed Operative part The Court: 1. Dismisses the action; 2. Orders Mr Alexander Gruber to pay the costs.

WARNING The President of the panel hearing this appeal directs that the following should be attached to the file: An order restricting publication in this proceeding under ss. 486.4(1), (2), (3) or (4) or 486.6(1) or (2) of the Criminal Code shall continue.  These sections of the Criminal Code provide: 486.4(1)       Subject to subsection (2), the presiding judge or justice may make an order directing that any information that could identify the complainant or a witness shall not be published in any document or broadcast or transmitted in any way, in proceedings in respect of (a)     any of the following offences; (i)      an offence under section 151, 152, 153, 153.1, 155, 159, 160, 162, 163.1, 170, 171, 172, 172.1, 173, 210, 211, 212, 213, 271, 272, 273, 279.01, 279.02, 279.03, 346 or 347, (ii)      an offence under section 144 (rape), 145 (attempt to commit rape), 149 (indecent assault on female), 156 (indecent assault on male) or 245 (common assault) or subsection 246(1) (assault with intent) of the Criminal Code , chapter C-34 of the Revised Statutes of Canada, 1970, as it read immediately before January 4, 1983, or (iii)     an offence under subsection 146(1) (sexual intercourse with a female under 14) or (2) (sexual intercourse with a female between 14 and 16) or section 151 (seduction of a female between 16 and 18), 153 (sexual intercourse with step-daughter), 155 (buggery or bestiality), 157 (gross indecency), 166 (parent or guardian procuring defilement) or 167 (householder permitting defilement) of the Criminal Code , chapter C-34 of the Revised Statutes of Canada, 1970, as it read immediately before January 1, 1988; or (b)     two or more offences being dealt with in the same proceeding, at least one of which is an offence referred to in any of subparagraphs (a)(i) to (iii). (2)     In proceedings in respect of the offences referred to in paragraph (1)(a) or (b), the presiding judge or justice shall (a)     at the first reasonable opportunity, inform any witness under the age of eighteen years and the complainant of the right to make an application for the order; and (b)     on application made by the complainant, the prosecutor or any such witness, make the order. (3)     In proceedings in respect of an offence under section 163.1, a judge or justice shall make an order directing that any information that could identify a witness who is under the age of eighteen years, or any person who is the subject of a representation, written material or a recording that constitutes child pornography within the meaning of that section, shall not be published in any document or broadcast or transmitted in any way. (4)     An order made under this section does not apply in respect of the disclosure of information in the course of the administration of justice when it is not the purpose of the disclosure to make the information known in the community. 2005, c. 32, s. 15; 2005, c. 43, s. 8(3)(b). 486.6(1)       Every person who fails to comply with an order made under subsection 486.4(1), (2) or (3) or 486.5(1) or (2) is guilty of an offence punishable on summary conviction. (2)     For greater certainty, an order referred to in subsection (1) applies to prohibit, in relation to proceedings taken against any person who fails to comply with the order, the publication in any document or the broadcasting or transmission in any way of information that could identify a victim, witness or justice system participant whose identity is protected by the order. 2005, c. 32, s. 15. COURT OF APPEAL FOR ONTARIO CITATION: R. v. Stewart, 2013 ONCA 579 DATE: 20130926 DOCKET: C55686 C55956 Hoy A.C.J.O., Rosenberg and Sharpe JJ.A. BETWEEN Her Majesty the Queen Respondent and Blair Stewart Appellant Blair Stewart, in person for the conviction appeal Joseph Di Luca, for the appellant on the sentence appeal Michael Bernstein, for the respondent Heard: September 11, 2013 On appeal from the conviction entered on May 2, 2012 and the sentence imposed on June 20, 2012 by Justice L.M. Baldwin of the Ontario Court of Justice, sitting without a jury. By the Court: [1] The appellant appeals from his conviction and sentence on charges of threatening death, assault, sexual assault and breach of probation. Baldwin J. sentenced the appellant to a total of 6 years imprisonment in addition to 15.5 months pre-sentence custody. At the conclusion of oral argument the court dismissed the conviction appeal but allowed the sentence appeal and reduced the effective global sentence to three years and 8.5 months, with reasons to follow. [2] As to the conviction appeal, the case turned on the assessment of credibility. The appellant and the complainant had known each other for many years and had an intimate relationship at various times. On the date of the offences, however, the complainant had made it clear that she did not want the appellant at her home. The essential dispute was whether, after an initial dispute, the complainant consented to sexual activity with the appellant. The appellant argues that the trial judge did not properly analyze credibility because she made the assessment solely on the basis of the assessment of the character of the appellant and the complainant and failed to consider the evidence of additional witnesses, such as the parties’ son and his girlfriend. [3] We are satisfied that the trial judge did not err in her assessment of credibility and provided adequate reasons for her findings. There was physical evidence in the form of injuries to the complainant that confirmed her testimony. The trial judge was entitled to consider the history of the relationship between the parties in making her assessment of credibility. That history was directly relevant since it explained the behaviour of both parties and informed the credibility assessment. This was not merely an exercise in reasoning from character. The trial judge made brief reference to the evidence of the other witnesses. In the circumstances that is all that was required, since there was little dispute that the central issue, the nature of the alleged sexual assault, depended almost entirely on the evidence of the appellant and the complainant. Accordingly, the appeal from conviction is dismissed. [4] As to sentence, in our view, the trial judge made several errors in principle. She exceeded the sentence sought by the Crown by a substantial amount, over two years, without giving the parties an opportunity to make submissions as to why the range suggested by counsel was inappropriate and failed to provide reasons for such a significant departure from the suggested range. Further, the sentence was manifestly excessive. [5] At trial, defence counsel sought a sentence of thirty months imprisonment less credit for pre-sentence custody of 15.5 months. Crown counsel sought a sentence of 5 years less credit for pre-sentence custody. Both counsel relied upon this court’s decision in R. v. B.R. (2006), 81 O.R. (3d) 641, where the court upheld a sentence of 30 months imprisonment for a sexual assault arising out of a domestic relationship. Crown counsel sought a higher sentence in the appellant’s case because of his record for offences of domestic violence involving this same complainant. Another helpful case in fixing the range for these types of offences is R. v. Smith (2011), 274 C.C.C. (3d) 34 (Ont. C.A.), which suggests a range of 21 months to four years for cases of forced sexual intercourse with a former spouse. [6] We agree with the submissions of Crown counsel at trial that a global sentence in the range of five years less credit for pre-sentence custody was appropriate. A sentence greater than those imposed in B.R. and Smith was required given the history of abuse in this relationship, even though the earlier offences were less serious and involved much shorter periods of imprisonment. On the other hand, there was also reason to give some emphasis to rehabilitation. After many years of drug and alcohol addiction, the appellant had discontinued the use of illicit drugs and had substantially reduced his consumption of alcohol. The appellant was a skilled mechanic and had developed a plan to remove himself from any contact with the complainant by obtaining employment in Fort McMurray. [7] Finally, we agree with Mr. Di Luca that the trial judge’s offer to provide further written reasons should her decision be reviewed did not comply with her obligation to provide reasons for imposing a sentence substantially outside the range suggested by counsel. It would have been inappropriate to ask the trial judge for further reasons once her judgment was under appeal. [8] Accordingly, leave to appeal sentence is granted, the appeal allowed and the sentence on count 4 is reduced to 2 years and 8.5 months imprisonment consecutive and the sentences on counts 5 and 6 are made concurrent to the other sentences imposed. The sentences imposed on the other counts will remain. In the result the appellant is serving a total sentence of 3 years and 8.5 months imprisonment. [9] We wish to thank Mr. Di Luca, who was retained only on the sentence appeal, for his assistance with the conviction appeal. Released: “AH” September 30, 2013 “A. Hoy A.C.J.O.” “M. Rosenberg J.A.” “R.J. Sharpe J.A.”

Judgment of the Court (First Chamber) of 16 February 1984. - Usines Gustave Boël and Fabrique de fer de Maubeuge v Commission of the European Communities. - Market for steel - Production quotas - Fines. - Case 76/83. European Court reports 1984 Page 00859 Summary Parties Subject of the case Grounds Decision on costs Operative part Keywords 1 . OBJECTION OF ILLEGALITY - MEASURES THE ILLEGALITY OF WHICH MAY BE PLEADED - INDIVIDUAL DECISIONS - EXCLUSION ( ECSC TREATY , ART . 36 , THIRD PARA .) 2.ECSC - PRODUCTION - STEEL PRODUCTION QUOTA SYSTEM - REQUEST FOR ADJUSTMENT OF QUOTAS - SILENCE OF THE COMMISSION - EFFECTS - TACIT CONSENT - NO ( ECSC TREATY , ART . 58 ; GENERAL DECISION NO 1831/81 , ART . 14 ) Summary 1 . AN APPLICANT MAY NOT , IN AN APPLICATION FOR A DECLARATION THAT AN INDIVIDUAL DECISION IS VOID , RAISE AN OBJECTION OF ILLEGALITY RELATING TO ANOTHER INDIVIDUAL DECISION ADDRESSED TO HIM WHICH HAS BECOME FINAL . 2 . THE SYSTEM OF RESTRICTIONS ON THE PRODUCTION OF STEEL UNDERTAKINGS ALLOWS OF ADJUSTMENTS TO INDIVIDUAL QUOTAS ALLOCATED TO PARTICULAR UNDERTAKINGS ONLY IN EXCEPTIONAL CASES , AND FOR SUCH AN ADJUSTMENT A POSITIVE DECISION GRANTING SUPPLEMENTARY QUOTAS IS INDISPENSABLE . THE COMMISSION ' S FAILURE TO REPLY TO A REQUEST FOR ADJUSTMENT CAN THEREFORE BE TREATED ONLY AS AN IMPLIED DECISION OF REFUSAL AND NOT AS TACIT CONSENT TO AN ADJUSTMENT . Parties IN CASE 76/83 USINES GUSTAVE BOEL , A LIMITED LIABILITY COMPANY INCORPORATED UNDER BELGIAN LAW , HAVING ITS REGISTERED OFFICE IN BRUSSELS , AND , IN SO FAR AS IS NECESSARY , FABRIQUE DE FER DE MAUBEUGE , A LIMITED LIABILITY COMPANY INCORPORATED UNDER FRENCH LAW , HAVING ITS REGISTERED OFFICE IN LOUVROIL ( NORD ), FRANCE , BOTH REPRESENTED BY ETIENNE GUTT , OF THE BRUSSELS BAR , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE CHAMBERS OF JACQUES LOESCH , 2 RUE GOETHE , APPLICANTS , V COMMISSION OF THE EUROPEAN COMMUNITIES , REPRESENTED BY ITS LEGAL ADVISER , ETIENNE LASNET , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICE OF ORESTE MONTALTO , A MEMBER OF ITS LEGAL DEPARTMENT , JEAN MONNET BUILDING , KIRCHBERG , DEFENDANT , Subject of the case APPLICATION FOR A DECLARATION THAT THE COMMISSION DECISION OF 24 MARCH 1983 , NOTIFIED BY LETTER OF 30 MARCH 1983 , CONCERNING A FINE IMPOSED PURSUANT TO ARTICLE 58 OF THE ECSC TREATY ON THE UNDERTAKING USINES GUSTAVE BOEL AT LA LOUVIERE , IS VOID , Grounds 1 BY AN APPLICATION LODGED AT THE COURT REGISTRY ON 29 APRIL 1983 , USINES GUSTAVE BOEL , A LIMITED LIABILITY COMPANY INCORPORATED UNDER BELGIAN LAW , AND FABRIQUE DE FER DE MAUBEUGE , A LIMITED LIABILITY COMPANY INCORPORATED UNDER FRENCH LAW , BROUGHT AN ACTION PURSUANT TO THE SECOND PARAGRAPH OF ARTICLE 33 AND THE SECOND PARAGRAPH OF ARTICLE 36 OF THE ECSC TREATY FOR A DECLARATION THAT THE COMMISSION DECISION OF 24 MARCH 1983 , NOTIFIED ON 30 MARCH 1983 TO THE UNDERTAKING USINES GUSTAVE BOEL SA , LA LOUVIERE , BELGIUM , IMPOSING A FINE OF 111 024 570 BELGIAN FRANCS ON THAT UNDERTAKING PURSUANT TO ARTICLE 58 OF THE ECSC TREATY WAS VOID , AND IN THE ALTERNATIVE , FOR THE REDUCTION OF THE AMOUNT OF THE FINE . 2 ARTICLE 1 OF THE CONTESTED DECISION STATES THAT ' ' THE BOEL UNDERTAKING ' ' HAS INFRINGED THE QUOTA SYSTEM ESTABLISHED BY COMMISSION DECISION NO 1831/81/ECSC OF 24 JUNE 1981 ( OFFICIAL JOURNAL , L 180 , P . 1 ) BY EXCEEDING THE PRODUCTION QUOTA FOR CATEGORY IC PRODUCTS BY 1 007 TONNES AND EXCEEDING THE PART OF THAT QUOTA WHICH MAY BE DELIVERED ON THE COMMON MARKET BY 3 878 TONNES IN THE THIRD QUARTER 1981 , AND BY EXCEEDING THE PRODUCTION QUOTA FOR CATEGORY IC PRODUCTS BY 12 943 TONNES AND EXCEEDING THE PARTS OF THE QUOTAS FOR CATEGORY IA AND IC PRODUCTS WHICH MAY BE DELIVERED ON THE COMMON MARKET BY 161 AND 14 921 TONNES RESPECTIVELY IN THE FOURTH QUARTER OF 1981 . 3 IN THEIR FIRST , THIRD , FOURTH , FIFTH , SIXTH AND SEVENTH SUBMISSIONS THE APPLICANTS CONTEST THE COMMISSION DECISIONS WHEREBY THEIR QUOTAS WERE FIXED OR ADJUSTMENTS TO THE QUOTAS WERE REFUSED , AND CHALLENGE THE LEGALITY OF THE GENERAL DECISIONS ON WHICH THE INDIVIDUAL DECISIONS WERE BASED . IN THE FIRST SUBMISSION THE APPLICANTS OBJECT THAT THE COMMISSION DEALT WITH FABRIQUE DE FER DE MAUBEUGE SA AND USINES GUSTAVE BOEL SA TOGETHER , ALTHOUGH THE TWO COMPANIES ARE DISTINCT . IN THE THIRD SUBMISSION THE APPLICANTS CHALLENGE THE EXTENSION OF THE QUOTA SYSTEM , AS PREVIOUSLY STRUCTURED , TO CATEGORY IC PRODUCTS AND IN THEIR FOURTH SUBMISSION THEY CONTEST THE CRITERION USED BY THE COMMISSION IN ASCERTAINING REFERENCE PRODUCTIONS . IN THE FIFTH AND SIXTH SUBMISSIONS THEY OBJECT THAT THE QUOTA SYSTEM IMPOSED BY THE COMMISSION DOES NOT INCLUDE A GENERAL EQUITABLE CLAUSE AND THAT IT APPLIES TO PRODUCTION FOR EXPORT AND TO DELIVERIES . IN THE SEVENTH SUBMISSION THE APPLICANTS CALL IN QUESTION THE COMMISSION ' S IMPLIED REFUSAL TO ADJUST THE REFERENCE PRODUCTIONS IN ACCORDANCE WITH ARTICLE 14 OF DECISION NO 1831/81/ECSC . 4 IN THE ABOVE-MENTIONED SUBMISSIONS THE APPLICANTS DO NOT DENY THAT THE QUOTAS WERE IN FACT EXCEEDED , BUT SIMPLY CHALLENGE THE LEGALITY OF INDIVIDUAL COMMISSION DECISIONS WHICH BECAME FINAL WHEN THEY WERE NOT CONTESTED WITHIN THE PERIOD PRESCRIBED BY THE TREATY . IT IS WELL-ESTABLISHED CASE-LAW THAT AN APPLICANT MAY NOT , IN AN APPLICATION FOR A DECLARATION THAT AN INDIVIDUAL DECISION IS VOID , RAISE AN OBJECTION OF ILLEGALITY RELATING TO ANOTHER INDIVIDUAL DECISION ADDRESSED TO HIM WHICH HAS BECOME FINAL . THAT BEING SO , THE APPLICANTS MAY NOT EFFECTIVELY RELY ON THE ILLEGALITY OF THE INDIVIDUAL DECISIONS WHICH FIXED THEIR QUOTAS OR PARTS OF QUOTAS FOR THE THIRD AND FOURTH QUARTERS OF 1981 , OR REFUSED TO ADJUST THEM , AND TO THAT EXTENT THE SUBMISSIONS MENTIONED ABOVE MUST BE REJECTED . 5 MOREOVER , THE APPLICANTS MAY NOT PLEAD THE ILLEGALITY OF THE PROVISIONS OF A GENERAL DECISION UNLESS THE CONTESTED INDIVIDUAL DECISION IS BASED ON THOSE PROVISIONS ( JUDGMENT OF 28 . 10 . 1981 , CASES 275/80 AND 24/81 KRUPP ( 1981 ) ECR 2489 ). THE PROVISIONS OF DECISION NO 1831/81/ECSC WHICH THE APPLICANTS ALLEGE ARE ILLEGAL DEAL NOT WITH THE IMPOSITION OF A FINE BUT SOLELY WITH THE FIXING AND ADJUSTMENT OF QUOTAS . 6 THE APPLICANTS MAY NOT RELY ON THE ARGUMENT THAT THEY HAD ALREADY EXCEEDED THE QUOTAS ALLOCATED TO THEM , IN ORDER TO JUSTIFY THE FACT THAT , LACKING A LEGAL INTEREST , THEY DID NOT WITHIN THE PRESCRIBED PERIOD CONTEST THE INDIVIDUAL DECISIONS FIXING THEIR QUOTAS OR REFUSING TO ADJUST THEM . THE APPLICANTS WERE IN NO WAY AUTHORIZED UNILATERALLY TO EXCEED THE PRODUCTION QUOTAS IMPOSED ON THEM BY THE COMMISSION . 7 FINALLY , THE COURT NOTES THAT IT HAS ALREADY HELD IN ITS JUDGMENT OF 31 MARCH 1965 ( CASE 21/64 MACCHIORLATI DALMAS ( 1965 ) ECR 175 ) THAT THE STRICT TIME-LIMIT FOR INSTITUTING PROCEEDINGS FOR A DECLARATION THAT A PROVISION IS VOID IS IN KEEPING WITH THE NECESSITY TO PREVENT THE LEGALITY OF ADMINISTRATIVE DECISIONS BEING CALLED IN QUESTION INDEFINITELY . HAVING REGARD TO THOSE CONSIDERATIONS , THE SUBMISSIONS REFERRED TO MUST BE DECLARED INADMISSIBLE IN THEIR ENTIRETY . 8 FOR THE SAME REASONS THE SECOND SUBMISSION IS INADMISSIBLE IN SO FAR AS IT ALLEGES THAT THE COMMISSION FAILED TO REPLY TO CERTAIN ASPECTS OF THE REQUESTS FOR ADJUSTMENT OF THE APPLICANTS ' QUOTAS FOR THE THIRD AND FOURTH QUARTERS OF 1981 AND FAILED TO STATE ADEQUATE REASONS FOR ITS DECISION ADJUSTING THE QUOTAS FOR THE THIRD QUARTER OF 1981 . IT IS , HOWEVER , ADMISSIBLE IN SO FAR AS IT IS BASED ON THE INADEQUACY OF THE STATEMENT OF REASONS FOR THE DECISION OF 24 MARCH 1983 CONTESTED IN THIS ACTION . 9 IT MUST , HOWEVER , BE POINTED OUT THAT THE GREAT MAJORITY OF THE ARGUMENTS TO WHICH THE APPLICANTS CLAIM THE COMMISSION DID NOT REPLY CONCERNED THE FIXING OF THE QUOTAS AND NOT THE IMPOSITION OF THE FINE . NO COMPLAINT MAY BE MADE AGAINST THE COMMISSION FOR FAILING TO REPLY TO POINTS EXTRANEOUS TO THE DECISION IN QUESTION . IN REGARD TO THE OTHER ARGUMENTS , THE COURT CONSIDERS THAT THE COMMISSION STATED IN ITS DECISION THE MAIN REASONS WHICH LED IT TO IMPOSE A FINE ON THE BOEL GROUP FOR EXCEEDING ITS QUOTAS AND THE SECOND SUBMISSION MUST THEREFORE ALSO BE REJECTED . 10 IN THEIR EIGHTH SUBMISSION THE APPLICANTS COMPLAIN THAT THE COMMISSION FAILED TO REPLY TO THE LETTER OF 28 OCTOBER 1981 IN WHICH THE USINES GUSTAVE BOEL SA REQUESTED THE ADJUSTMENT OF ITS PRODUCTION QUOTAS AND FINISHED BY SAYING THAT , UNLESS THE COMMISSION INDICATED OTHERWISE , IT WOULD CONSIDER THE COMMISSION TO BE IN AGREEMENT WITH THE PRODUCTION QUOTAS IT PROPOSED . THE APPLICANTS CLAIM THAT SINCE THE COMMISSION REMAINED SILENT THEY WERE JUSTIFIED IN CONCLUDING THAT THE COMMISSION HAD APPROVED THE PROPOSED QUOTAS . 11 IT SHOULD BE NOTED IN THIS REGARD THAT THE SYSTEM OF RESTRICTIONS ON THE PRODUCTION OF STEEL UNDERTAKINGS ALLOWS OF ADJUSTMENTS TO INDIVIDUAL QUOTAS ALLOCATED TO PARTICULAR UNDERTAKINGS ONLY IN EXCEPTIONAL CASES , AND FOR SUCH AN ADJUSTMENT A POSITIVE DECISION GRANTING SUPPLEMENTARY QUOTAS IS INDISPENSABLE . THE COMMISSION ' S SILENCE , REGRETTABLE THOUGH IT MAY BE , CAN THEREFORE BE TREATED ONLY AS AN IMPLIED DECISION OF REFUSAL AND NOT AS TACIT CONSENT TO AN ADJUSTMENT . THE EIGHTH SUBMISSION MUST THEREFORE ALSO BE REJECTED . 12 IN THEIR NINTH SUBMISSION THE APPLICANTS COMPLAIN THAT WITHOUT CONSULTING THE CONSULTATIVE COMMITTEE OR THE COUNCIL THE COMMISSION LAID DOWN EX POST FACTO ADDITIONAL RULES FOR THE FIXING OF FINES WHICH DO NOT APPEAR IN ARTICLE 12 OF THE GENERAL DECISION AND WHICH ARE BASED ON THE FACT THAT THE UNDERTAKING OPERATES AT A PROFIT . FURTHERMORE , THE APPLICANTS CLAIM THAT FABRIQUE DE FER DU MAUBEUGE SA MADE A LOSS AND THE COMMISSION FAILED TO TAKE ACCOUNT OF THAT FACT . 13 IT SHOULD BE OBSERVED THAT THE COURT HAS ALREADY CONSIDERED THAT IT IS JUSTIFIED TO ADJUST THE FINE ACCORDING TO THE UNDERTAKING ' S FINANCIAL SITUATION ( JUDGMENT OF 10 . 3 . 1980 , JOINED CASES 154 , 205 , 206 , 226 TO 228 , 263 AND 264/78 , 39 , 31 , 83 AND 85/79 FERRIERA VALSABBIA SPA ( 1980 ) ECR 1026 ). MOREOVER , CONTRARY TO THE APPLICANTS ' CONTENTION , THE CONSULTATIVE COMMITTEE AND THE COUNCIL NEED NOT BE CONSULTED WHERE IT IS MERELY A MATTER OF IMPLEMENTING DETAILED RULES FOR THE APPLICATION OF ARTICLE 12 OF DECISION NO 1831/81/ECSC IN THE EXERCISE OF THE DISCRETION WHICH THAT ARTICLE LEAVES TO THE COMMISSION . FINALLY , THE COMMISSION WAS NOT OBLIGED TO TAKE ACCOUNT OF THE FINANCIAL SITUATION OF BOEL ' S SUBSIDIARIES TAKEN INDIVIDUALLY SINCE ACCORDING TO ARTICLE 2 ( 4 ) OF DECISION NO 1831/81/ECSC A GROUP OF UNDERTAKINGS WHICH ARE CONCENTRATED WITHIN THE MEANING OF ARTICLE 66 OF THE TREATY IS TO BE CONSIDERED AS A SINGLE UNDERTAKING , EVEN IF THE UNDERTAKINGS ARE LOCATED IN DIFFERENT MEMBER STATES . 14 THE ACTION MUST THEREFORE BE DISMISSED IN ITS ENTIRETY . Decision on costs COSTS 15 UNDER ARTICLE 69 ( 2 ) OF THE RULES OF PROCEDURE , THE UNSUCCESSFUL PARTY IS TO BE ORDERED TO PAY THE COSTS . SINCE THE APPLICANTS HAVE FAILED IN THEIR SUBMISSION THEY MUST BE ORDERED TO PAY THE COSTS . Operative part ON THOSE GROUNDS , THE COURT ( FIRST CHAMBER ) HEREBY : 1 . DISMISSES THE APPLICATION ; 2 . ORDERS THE APPLICANTS TO PAY THE COSTS .

ALTAMAS KABIR,J. This Special Leave Petition and four other Special Leave Petitions have been filed against the judgment and order of the Madhya Pradesh High Court dated 11th September, 2006, whereby the order of the Sessions Judge, Bhopal, framing charges against the accused under Section 304 Part II I.P.C. in Sessions Trial No. 212 of 2005 was set aside and directions were given to frame charge only under Section 323/34 I.P.C. As all the Special Leave Petitions arise out of the companymon judgment of the High Court, the same are being heard together. Leave is accordingly granted in all the five Special Leave Petitions Crl. Nos. 6010 and 5473 of 2006, filed by Mrs. Indu Jain, No. 2132 of 2007 filed by the State of Madhya Pradesh, No. 2584 and 2588 of 2007 filed by the accused. In order to appreciate the different stands taken by the different appellants in the matter, some relevant facts are reproduced hereinbelow which will have a bearing on the final decision in these appeals. On 14th July, 2004, officers of the Special Police Establishment Lokayukta , Bhopal, headed by Shri B.P. Singh and Shri Mokham Singh Nain, who are the appellants in the appeals arising out of S.L.P. Crl No. 2584 and 2588 of 2007 and accused in the companyplaint filed by Ms. Indu Jain, the appellant in the appeals arising out of S.L.P. Crl. Nos. 6010 of 5473 of 2006, set a trap for one Shri R.K. Jain, Deputy Commissioner, Commercial Tax, Bhopal, and arrested him for taking a bribe of Rs.2,000/- from one of Mr. Chhajed, Tax Consultant, at 5.30 p.m. On 15th July, 2004, prior to 9 a.m. Shri Jain was found unconscious in the bathroom of the office of the Lokayukta, Bhopal, and was taken to Hamidiya Hospital, Bhopal, for treatment. The records of the hospital show that when Shri Jain was brought to the hospital at 9 a.m. on 15th July, 2004, his body had neither any pulse number respiration and recordable blood pressure and even heart sounds were absent. Though resuscitation measures were undertaken, including cardiac pulmonary resuscitation C.P.R. , there was little response and Shri Jain was declared dead at 1.30 p.m. on the same day. The Post Mortem examination of the deceased, which was companyducted on 15th July, 2004, itself, at about 4 p.m. revealed certain injuries on the body, which included broken ribs, but the cause of death was shown to be on account of asphyxia within six hours of the post mortem examination. On companypletion of investigation, the investigating agency filed a charge-sheet before the trial companyrt on 12th May, 2004, and on 15th July, 2005, the learned Sessions Judge framed charges against the five accused persons, namely, B.P. Singh, Mokham Singh Nain, Badri Nihale, Ramashish and Silvanus Tirki under Section 304 Part-II I.P.C., but dropped the charge under Section 330 I.P.C. Aggrieved by the framing of charge under Section 304 Part II I.P.C., accused Mokham Singh Nain filed Criminal Revision No. 1203 of 2005, while the other four accused filed Criminal Revision No. 1204 of 2005, before the Madhya Pradesh High Court at Jabalpur. On the other hand, on account of the dropping of charges under Section 330 I.P.C. Mrs. Indu Jain, widow of the deceased, filed Criminal Revision No. 1114 of 2005. All the revisional applications were heard together by the High Court which by its order dated 11th September, 2006, set aside the charge framed by the learned Sessions Judge and directed that charge companyld only be framed under Section 323/34 P.C. As mentioned hereinbefore, these five appeals have been filed against the said judgment and order of the High Court. Appearing in these appeals on behalf of Mrs. Indu Jain, the widow of the deceased, Mr. P.S. Patwalia, learned Senior companynsel submitted that the order of the Madhya Pradesh High Court impugned in these appeals, was quite clearly against the Police Report submitted under Section 173 2 of the Code of Criminal Procedure. It was submitted that from the arrest memo of the deceased in companynection with Crime No. 97 of 2004 it would be very clear that accused B.P. Singh while arresting the deceased recovered two inhalers from his person, but allowed the deceased to retain them as he was suffering from Asthma. However, during his overnight custody in the office of the Lokayukta, Bhopal, he was kept in a room, which was wholly unsuitable to a person suffering from asthma. Over the companydition of the deceased while in the custody of the Special Police Establishment Lokayukta who had arrested and detained him in the office of the Lokayukta on 14th July, 2004, and his discovery in an unconscious companydition in the morning of 15th July, 2004, a report was lodged by the Station House Officer of Kohefiza Police Station on the basis whereof a First Information Report under Section 330 P.C. was registered. In addition to the above, a written report was also made by Shri Akhilesh Jain, brother of the deceased to Kohefiza Police Station in which it was alleged that the accused persons had arrested the deceased and had taken him to an unknown destination from where he was brought to Hamidiya Hospital in a serious companydition, and, ultimately, succumbed to his injuries. It was alleged that the accused persons had tortured the deceased on account of which he had died. Mr. Patwalia submitted that once R.K. Jain was declared to be dead, as part of the investigation into the offence companyplained of, Shri O.P. Dixit, the Senior Scientist of the mobile unit of the District Police Force, made a physical inspection of the room in the office of the Lokayukta where the accused had kept the deceased in custody before his death and submitted a report of his inspection. In his report Shri Dixit categorically mentioned the fact that the companydition of the room was number at all suitable for detaining a person suffering from a respiratory disease such as asthma, in custody. He plainly indicated that the room in question was companypletely unsuitable for such a patient as it was filled with dust and companywebs and the deceased was treated unhumanly and against the principles of ethical human companyduct. Shri Dixit also observed from the report of the Forensic Science Laboratory, that it is evident that the companyduct of the accused was one of gross negligence and misdemeanor. It was further observed that for a person who was suffering from asthma, the deceased ought number to have been left alone inside the unhygienic room and at least someone, such as a family member or a friend, should have been allowed to remain present with him. Shri Dixit recommended appropriate action to be taken against the accused for dereliction of duty, which was duly supported by the report of the Forensic Science Laboratory. Mr. Patwalia submitted that having regard to the fact that the accused persons were police officers belonging to the Special Establishment of the Lokayukta and also having regard to the nature of the offence, the investigation of the case was handed over from the local police to the Criminal Investigation Department CID and upon companypletion of the investigation a chargesheet was submitted before the trial companyrt on 12th May, 2005, and, as mentioned hereinbefore, on perusal of the material on record, the learned Sessions Judge on 15h July, 2005, framed charges against all the five accused under Section 304 Part II IPC but dropped the charge under Section 330 IPC. Mr. Patwalia submitted that when the materials on record clearly indicated that R.K. Jain had died because of deliberate ill-treatment and negligence at the hands of the appellants, while in their custody, the High Court had erred in companying to the companyclusion that the said materials did number disclose an offence under Section 330 IPC. Mr. Patwalia submitted that apart from the evidence of physical torture of the deceased, which would be supported by the post-mortem report, the opinion of Dr. Satpathi, who companyducted the post-mortem examination is that R.K. Jains death was on account of asphyxia, namely, oxygen hunger on account of choking. According to Mr. Patwalia the cause of death fitted in with the report submitted by Mr. Dixit on the basis of which the First Information Report came to be recorded. Mr. Patwalia urged that in spite of the evidence available at the stage of framing charge, the High Court turned a blind eye to the physical companydition of the deceased and the indifferent manner in which he was treated and kept in custody in the office of the Lokayukta in companyditions which triggered the asthmatic attack which ultimately led to the death of K. Jain in custody. Mr. Patwalia urged that although sufficient material was available before the High Court for framing charge under Section 304 Part II IPC, along with the charge under Section 330 IPC, the High Court quite erroneously dropped the charge under Section 304 Part II and also Section 330 IPC and observed that only a charge under Section 323/34 IPC had been established under the aforesaid report. Mr. Patwalia submitted that the order of the High companyrt impugned in the appeal was liable to be set aside with a direction to the trial companyrt to companysider afresh the framing of charges under Sections 304 Part II and 330 IPC, along with the charge under Section 323/34 IPC. As far as the other appeal filed by Ms. Indu Jain is companycerned, the arguments made in this appeal will also companyer the points raised in the said appeal. In the appeal filed by the State of Madhya Pradesh, Ms. Vibha Dutta Makhija, learned companynsel, companytended that this was number only a case for framing of charge under Sections 323 with Section 34 thereof, but this is fit a case where charges ought to have been framed against the accused under Sections 302 and 330 IPC as well. Repeating the manner in which the deceased R.K. Jain had been arrested and thereafter kept in custody of the Special Police Establishment attached to the Lokayukta office, Ms. Makhija reiterated the findings of Mr. Dixit which pointed to the direct involvement of all the accused persons in the companymission of the offence. According to Ms. Makhija the bare facts of the incident which occurred with the arrest of R.K. Jain on 14th July, 2004, establish the fact that Shri Jain died while in the custody of the Special Police Establishment and it was yet to be proved on evidence as to how R.K. Jain died on account of asphyxia when he was detained in the office of the Lokayukta. Ms. Makhija also pointed out that when the deceased had been brought to the Hamidiya Hospital in Bhopal at 9 a.m. on 15th July, 2004, his body did number record any pulse or respiration or blood pressure and there was numberheart sound either. Ms. Makhija submitted that although he remained in such companydition till he was declared to be dead at 1.30 p.m., there was almost numberresponse from R.K. Jain even after being administered cardiac pulmonary resuscitation. He companytinued to remain in such companydition till he was formally declared to be dead. Ms. Makhija submitted that by keeping the deceased, who suffered from respiratory problems, in a closed room without windows which was clearly uninhabited for a long time on account of the dust and companywebs companylected therein which triggered an asthmatic attack which led to R.K. Jains death, a clear case of an offence under Sections 302 and 330 IPC had been made out against the appellants. Counsels submissions were fully supported by the report, which showed six injuries on the person of the deceased. Injury No.1 was a companytusion on the scalp. Injury Nos. 2 and 3 were lacerations on the lip and mouth. Injury Nos. 4 and 5 were broken ribs, while injury No.6 was a laceration on the neck of the deceased. Ms. Makhija companytended that this being a clear case of custodial death on account of the treatment meted out to the deceased by detaining him in wholly unhygienic companyditions companypletely unfit for a patient of asthma, both the trial companyrt as well as the High Court erred in number framing charge against the appellant and the other accused persons under Section 330 IPC. The matter was further companyfounded by the order of the High Court quashing the charge against the accused persons under Section 304 Part II IPC. On legal submissions, Ms. Makhija submitted that the opinion of the doctor at the time of framing charges cannot be companyclusive and the same would have to be companysidered at its face value during the trial itself. Ms. Makhija submitted that at the stage of framing charge, the Court is number required to go into a detailed examination of the material filed by the Investigating agency under Section 173 Cr.P.C. At the said stage, the Court, on perusal of the materials before it, is only required to find out whether a prima-facie case is made out to proceed against the accused. Ms. Makhija submitted that it is settled law that the High Court should number ordinarily interfere with the framing of charges by the trial companyrt, unless some glaring injustice is numbericed. Ms. Makhija referred to the decision of this Court in Om Wati Smt. and Anr. Vs. State, 2001 4 SCC 333 in support of her aforesaid submissions. She also referred to the decision of this Court in State of Maharashtra vs. Salman Salim Khan, 2004 1 SCC 525 wherein this Court cautioned the trial companyrt as well as the High Court regarding arriving at a decision as to the sufficiency or otherwise of the material to frame charge, as the prosecution case gets pre-empted to that extent since during the companyrse of trial, even if the Magistrate companyes to a different companyclusion, it may number be possible for him to pass orders accordingly. The learned Judges observed that there was limitation to the inherent power of the High Court under Section 482 Cr.P.C. and though it is open to the High Court to quash charges framed by the trial Court the same companyld number be done by weighing the companyrectness or sufficiency of the evidence. It was further observed by this Court that it is only at the stage of trial that the truthfulness, sufficiency and acceptability of the evidence, can be adjudged. Ms. Makhija lastly referred to the three-Judge Bench decision of this Court in State of Orissa vs. Debendra Nath Padhi, 2005 1 SCC 568 in which the question decided differently in the case of Satish Mehra vs. Delhi Administration, 1996 9 SCC 766 was referred to. In Satish Mehras case, a two Judge Bench of this Court had decided that at the stage of framing of charge, the trial Judge was companypetent to look into the material produced on behalf of defence at the time of framing of charge in order to companye to a decision as to whether it was at all necessary to frame charges on the material produced on behalf of the prosecution as well as the defence. Answering the reference in the negative, the three-Judge Bench overruled the view expressed in Satish Mehras case and held that at the said stage of framing charge, the Court was only required to look into the material produced on behalf of the prosecution in deciding whether a particular case was fit to go to trial. Ms. Makhija, while questioning the decision of the learned Sessions Judge to drop charges against the accused persons under Section 330 IPC, submitted that neither the Sessions Court number the High Court even thought of framing charge under Section 302 IPC against the accused persons. Appearing for the accused in the appeal filed by Indu Jain, who are also the appellants in the appeals arising out of SLP C No. 2584 and 2588 of 2007, Mr. K.T.S. Tulsi, learned senior companynsel, submitted that the order of the High Court did number call for any interference since the charge-sheet does number disclose the ingredients of the charge framed against the accused persons under Section 323/34 IPC. Mr. Tulsi submitted that there is numberdirect evidence that the accused persons had ever assaulted the deceased and the First Information Report shows that R.K. Jain died due to asphyxia. Referring to the statement of Dr. Satpathi who had examined the deceased, and was also one of the doctors who companyducted the Post Mortem examination Mr. Tulsi submitted that the broken ribs and the laceration marks on both sides of the lower lips were the result of attempts made in the Hospital to resuscitate the deceased. It was submitted that the opinion of the Medical Experts and the Post- Mortem Report established that R.K. Jain died on account of asphyxia and that he had obstructive lung disease which block the airways and his death was, therefore, natural and number on account of any violence while in custody. Mr. Tulsi submitted that apart from the above, Dr. V.K. Sharma, Professor and Head of the Department of Medicine, Gandhi Medical College, Bhopal, whose opinion was sought for by the CID, Police Head Quarters, Bhopal had indicated that the fracture of the ribs companyld have been caused while external cardiac massage or CPR was being administered to R.K. Jain in an attempt to revive him. Dr. Sharma also stated that the fracture of ribs can also be caused while external cardiac massage, with artificial respiration and chest companypression, was being undertaken. He also opined in his Report that a severe attack of asthma companyld result in the companydition in which R.K.Jain was found and such attack companyld have been triggered by heavy mental tension, dust, companywebs companyd weather or the presence of allergens in the atmosphere and pollution. Mr. Tulsi submitted that in view of the circumstances in which R.K. Jain was arrested and thereafter kept detained in the office of the Lokayukta, the companystable who formed part of the raiding party had been suspended for dereliction of duty but was ultimately reinstated, as in the preliminary inquiry the charge of negligence and dereliction of duty was held number to have been proved. Mr. Tulsi referred to the Judgment and order passed by the learned Sessions Judge on 28h July, 2005, while deciding the question as to whether there was sufficient ground for framing charge against them under Section 330, 323/34 and 304 Indian Penal Code. Referring to paragraph 14 of the order, Mr. Tulsi pointed out that the learned Sessions Judge had himself held that it companyld number be definitely said that numbercause of death had been indicated in the Post-mortem Report. In fact, on behalf of the Investigating Authorities, a letter was written on 16th July, 2004 to the Director, Gandhi Medical College, Bhopal, asking for information as to whether nature of the injuries on deceased R.K.Jain were simple or grievous in nature or whether in ordinary circumstances, the death of the deceased companyld have been on account of injuries found on the deceased. The most pertinent question that was asked was as to what was the cause of death. In the reply sent by Dr. Satpathi, Director of the Medical Legal Unit of the Hospital, it was mentioned that the injuries found on the body of the deceased were simple in nature which were number sufficient to cause death. It was stated that death was due to asphyxia. In fact, in the said letter, Dr. Satpathi by way of a footnote indicated that injury Nos. 2,3,4 and 5 on the lips and ribs on both sides of the body had been caused in the Hospital during treatment and it had numberrelation with the death of R.K. Jain. In support of his aforesaid submission, Mr. Tulsi referred to the well-known Bhopal Gas Tragedy case, namely, Keshub Mahindra vs. State of M.P., 1996 6 SCC 129, in which while companysidering the provisions of Section 299 and 304 Part II IPC, it was observed that the accused must have done an act which caused the death of a person with the knowledge that by such act he would likely to cause death. While companysidering the width of the powers that companyld be exercised by the High Court under Section 482 Cr.P.C. in relation to Sections 227 and 228 thereof, it was held that at the stage of framing of charge the Court had numberjurisdiction to go into the merits of the allegations, which companyld be gone into at the time of the trial, but at the same time before any charge companyld be framed under Section 304 Part II, the materials on record must at least prima-facie show that the accused is guilty of culpable homicide and that the act which had caused the death of the victim had been caused at least with the knowledge that such act was likely to cause death. Mr. Tulsi submitted that though there was numberdefinite companyclusion as to the manner in which K. Jain had died, at least it was established that he died due to asphyxia which is the companysequence of respiratory breathing problems which the deceased suffered from and had numberhing to do with an offence under Section 323 IPC under which provision charge had been framed against the accused persons. Mr. S.K. Gambhir, learned senior advocate appearing for the respondent Nos. 5 and 6, while adopting the submissions made by Mr. Tulsi, added that from the sheet of Progress and Treatment given by the Hospital it will be revealed that R.K. Jain was brought to the Hospital at 9 a.m. in a companyatose companydition and that cardio respiratory resuscitation was started immediately and cardiac activity was regained after 15 or 20 minutes. It was pointed out that the Progress and Treatment Given sheet also indicated that as part of the resuscitation attempts an endotracheal intubation was done, after which the deceased was placed on a mechanical ventilator at about 10.15 a.m. However, inspite of the attempts made to revive R.K.Jain, he ultimately died because of choking of breath caused by respiratory breathing failure. Mr. Gambhir submitted that there was numbermaterial on record to indicate that R.K. Jain died a homicidal death so as to attract the provisions of Section 304 IPC. In short, Mr. Gambhir submitted that there was numbermaterial before the learned Trial Judge for framing charge under Section 323/34 IPC against the respondent number. 4, 5 and 6. Relying on the decision of this Court in the case of Kewal Krishan vs. Suraj Bhan Anr., AIR 1980 SC 1780 Mr. Gambhir claimed that Section 227 of the Code was meant to prevent prolonged harassment to an accused and if the Judge was number companyvinced that there was sufficient ground to proceed against the accused, he was required to discharge the accused and to record his reasons for doing so. In the said decision it was observed that at the stage of framing of charge, the Magistrate was number required to weigh the evidence as if he was the trial companyrt. He was only required to see whether the companyplaint made out a prima facie case triable by the Court of Session, which would be sufficient for issuing process to the accused and companymitting them for trial to the Court of Session. Mr. Gambhir companycluded his submissions by urging that in the absence of any reliable material regarding the involvement of the respondent Nos. 4, 5 and 6 in respect of the charge under Section 323/34 IPC, the charge framed against the respondents was liable to be quashed. We have carefully companysidered the submissions made on behalf of the respective parties, having particular regard to the fact that K.Jain had died while in the custody of the Officers of the Special Police Establishment Lokayakuta , Bhopal, in the office of the Lokayukta, Bhopal. It has been sufficiently established that the deceased was a patient of asthma which companyld cause asphyxia which was ultimately said to be the cause of R.K. Jains death. It is also clear that numberwithstanding his serious respiratory problem, the deceased was kept in a windowless room which was full of dust and companywebs which are known allergens for triggering an asthma attack, which can be fatal, as in this case. The injuries found on the body of the deceased may have been caused during attempts at resuscitation, but all the said circumstances can only be companysidered during a proper trial and number on the basis of surmises at the time of framing charge where on the strength of the charge sheet only a prima facie satisfaction about the companymission of an offence has to be arrived at by the trial companyrt. Therefore, while rejecting the submissions made by Mr. Tulsi and Mr. Gambhir that there were numbermaterials on record to frame charge against the accused persons even under Section 323/34 IPC, we cannot but observe that on a prima facie view of the matter, there is ground to proceed against the accused persons even under Section 304 Part II IPC. On that score, we are inclined to agree both with Mr. Patwalia and Ms. Makhija that the High Court had erred in quashing the charge framed against the accused persons under Section 304 Part II and observing that in view of the materials on record only a charge under Section 323 companyld be brought against the accused persons. Although, Ms. Makhija has strenuously urged that charge under Section 302 IPC should also have been framed against the accused persons, we are number inclined to accept the same as at this stage there is little to establish an intention on the part of the accused to willfully cause the death of R.K. Jain. As has been observed in Kewal Krishans case supra , at the stage of framing of charge, the Court is number required to go into the details of the investigation but to only arrive at a prima facie finding on the materials made available as to whether a charge companyld be sustained as recommended in the charge sheet. The same view has been subsequently reiterated in Devendra Padhis case Supra and in the case of Bharat Parikh vs. Union of India, 2008 1 Scale page 86 wherein the holding of a mini trial at the time of framing of charge has been deprecated. This brings us to the next question as to whether the Trial companyrt as well as the High companyrt was justified in dropping the charge under Section 330 IPC since R.K. Jains death took place while he was in custody. The important question is whether a prima facie case can be said to have been made out for a charge to be framed under Section 330 IPC. Since the cause of death has been shown to be asphyxia on account of detention of the deceased in unhygienic companyditions despite his respiratory problems and the injuries to the ribs and mouth of the deceased companyld possibly have been caused by the attempts made by the doctor at the Hospital to resuscitate the deceased, who had been brought to the Hospital in a companyatose companydition, with the body showing numbersigns of pulse, respiration or blood pressure, prima facie a case is made out for framing of charge under Section 330 IPC. The sheet showing the progress and treatment of the accused on arrival at the Hospital, also companyroborates the same and it also mentions the fact that cardiac pulmonary resuscitation was immediately started and the patient was also put on mechanical ventilator as part of the attempts at resuscitation. Apart from indicating that the patient had died of asphyxia, the medical opinion does number give any reason for such asphyxia and even in reply to the queries made on behalf of the investigating authorities the reply received from Dr. Satpathi, as to the cause of death, was that it had occurred due to asphyxia, but as to how it had occurred was under investigation.

civil appellate jurisdiction civil appeal number3244 of 1988. from the judgement and order dated 8.7.1988 of the karnataka high companyrt in w.a. number560 of 1983. n. bhat s.k. kulkarni and ms. kiran suri for the appellant n bhat m.veerappa and k.h numberin singh for the respondents. the judgment of the companyrt was delivered by p. singh j. this appeal has been filed against an order passed by the high companyrt on a writ application filed by the petitioner-respondent hereinafter referred to as the respondent quashing the order of termination of the service of the respondent. the respondent was appointed as a lecturer in surgical oncology on 3rd july 1981. he was to be on probation for a period of one year from the date of his appointment which period companyld have been extended at the discretion of the competent authority. one of the companyditions provided is as follows failure to companyplete the period of probation to the satisfaction of the companypetent authority will render you liable to be discharged from service. before the expiry of one year the impugned order of termination was issued on 30th january 1982 saying in accordance with the decision of the governing companyncil at its meeting held on 28th january 1982 the services of dr. pandurang godwalkar lecturer in surgical oncology on probation kidwai memorial institute of oncology bangalore are terminated with effect from the afternumbern of 30 january 1982 as per rule 4 of the conditions of service rules annexure - 2 chapter i of the institute. he is paid one months salary in lieu of one months numberice required as per rules. although the order under challenge was order of termination simpliciter the validity thereof was questioned by the respondent on the ground that an order of dismissal had been passed in the garb of an order of termination. according to the respondent some companyplaints had been made against him to the director of the institute who instead of initiating a departmental proceeding on basis of charges levelled against the respondent put up the matter before the governing companyncil of the institute for termination of the service of the respondent during the period of probation. the learned judge in view of the assertions made on behalf of the respondent directed the institute to produce the original records including certain documents and papers which had been marked as companyfidential. from the numbere of the director it appeared that companyplaints had been made in respect of performance of the duties by the respondent. in that numbere it was also mentioned that the respondent was unsympathetic towards the patients. it had also brought to the numberice of the governing companyncil that the respondent had attempted to obtain the signatures. of some of the patients on the petitions stating that he was a good doctor. on one occasion it was reported that the respondent had taken away a girl on his scooter and brought her back late in the night. the said girl was an attendant to a patient in the hospital. the learned judge came to the companyclusion that as the service of the petitioner had been terminated because of the companyplaints made against him it really amounted to his removal for the misconduct alleged in the numbere of the director. according to the learned judge the institute should have initiated a departmental proceeding in respect of the alleged charges and only after due enquiry any action should have been taken. there is numberdispute that the service of the respondent had been terminated during the period of probation the appointment of the respondent was with a clear companydition that failure to companyplete the period of probation to the satisfaction of the companypetent authority shall render him liable to be discharged from the service. relevant part of rule 4 of the companyditions of service rules is as follows termlnation - all appointments shall be terminable on a numberice in writing either by the appointing authority or the employee without assigning any reason as set below during the period one month of probation. after companypletion of the period 1 of probation months. the numberice referred to in rule 1 above shall number be necessary if in lieu thereof an amount equal to the pay and allowance for the period of numberice is paid. generally in companynection with an order of termination a question is raised before the companyrt as to what is the motive behind the termination of the service of the employee concerned - whether the reason mentioned in the order of termination has to be accepted on its face value or the background in which such order of termination simpliciter has been passed should be examined to find out as to whether an officer on probation or holding a temporary appointment has been in fact dismissed from the service without initiating any departmental enquiry. if an employee who is on probation or holding an appointment on temporary basis is removed from the service with stigma because of some specific charge then a plea cannumber be taken that as his service was temporary or his appointment was on probation there was numberrequirement of holding any enquiry affording such an employee an opportunity to show that the charge levelled against him is either number true or it is without any basis. but whenever the service of an employee is terminated during the period of probation or while his appointment is on temporary basis by an order of termination simpliciter alter some preliminary enquiry it cannumber he held that as some enquiry had been made against him before the issuance of order of the termination it really amounted to his removal from service on a charge as such penal in nature when an appointment is made on probation it presupposes that the companyduct performance ability and the capacity of the employee companycerned have to be watched and examined during the period of probation. he is to be confirmed after the expiry of probation only when his service during the period of probation is found to be satisfactory and he is companysidered suitable for the post against which he has been appointed. the principle of tearing of the veil for finding out the real nature of the order shall be applicable only in a case where the companyrt is satisfied that there is a direct nexus between the charge so levelled and the action taken. if the decision is taken to terminate the service of an employee during the period of probation after taking into companysideration the overall performance and some action or inaction on the part of such employee then it cannumber be said that it amounts to his removal from service as punishment. it need number be said that the appointing authority at the stage of companyfirmation or while examining the question as to whether the service of such employee be terminated during the companytinuance of the period of probation is entitled to look into any companyplaint made in respect of such employee while discharging his duties for purpose of making assessment of the performance of such employee. even it such employee while questioning the validity of an order of termination simpliciter brings on the record that some preliminary enquiry or examination of some allegations had been made that will number vitiate the order of termination. reference in this companynection may be made to the case of oil and natural gas companymission v. dr. mohd. s. iskender ali 1980 3 scr 603 where it was pointed out that a temporary employee is appointed on probation for a particular period only in order to test whether his companyduct is good and satisfactory so that he may be retained . it was also said that even if misconduct negligence inefficiency may be the motive or the influencing factor which induced the employer to terminate the service of the employee which such employe admittedly had under the terms of the appointment such termination cannumber be held to be penalty or punishment. same view has been reiterated in connection with appointment on temporary or ad hoc basis in the cases of ravindra kumar misra v. u.p. state handloom corpn. limited1987 suppl. scc 739 state of uttar pradesh v. kaushal kishore shukla 1991 1 scc 691 and triveni shankar saxena v. state of u.p. judgements today 1992 1 s.c. 37. on behalf of the respondent reliance was placed on the case of anumberp jaiswal v. government of india 1984 2 scr in that case the service of the appellant had been terminated during the period of probation. on the materials on record it was held by this companyrt that the order of termination really amounted to punishment because the real foundation of the action against the appellant was the act of misconduct on june 22 1981. the aforesaid judgment is of numberhelp to who respondent because in that case a clear finding was recorded by this companyrt that the service of the appellant had been terminated because of a particular misconduct alleged against him which had never been enquired into. so far the facts of the present case are companycerned the governing companyncil examined the different reports in respect of the respondent during the period of probation and considered the question as to whether he should be allowed to companytinue in the service of the institute.

Lord Justice Richards : On 3 March 2006 Hertfordshire County Council ("the council") laid a large number of informations against National Grid Gas plc ("the defendant") alleging various breaches of duty under the New Roads and Street Works Act 1991 ("the Act") in respect of the reinstatement of the street following the replacement of a gas main in Northfield Gardens, Watford. They included 23 informations alleging breaches of the duty under s.71(2) of the Act to ensure that the reinstatement conforms to prescribed performance standards: the date of the alleged breach in 7 of those informations was 15 September 2005 and the date in the other 16 was 8 November 2005. There were 3 informations alleging breaches of the duty under s.70(2) to begin the reinstatement as soon after the completion of any part of the street works as is reasonably practicable and to carry on and complete the reinstatement with all such dispatch as is reasonably practicable: each related to a different period of time in 2005 (11 February to 15 September, 15 September to 12 October, and 12 October to 8 November). There was also 1 information alleging breach of the duty under s.66(1) to carry on and complete the street works with all such dispatch as is reasonably practicable: in that case the period in question was 11 February 2005 to 14 December 2005. Those informations gave rise to a number of preliminary issues which were the subject of a written judgment handed down by District Judge Allison, sitting at Watford Magistrates' Court, on 12 January 2007. She upheld a defence submission in respect of the informations under s.71(2), holding that the facts alleged constituted a single offence, on each of the two dates, of failing to ensure that the reinstatement conformed to the required standard, and that it was oppressive and an abuse of process to prosecute each failing separately. She therefore directed that the proceedings under s.71(2) should be restricted to a single information in respect of each date. She rejected a defence submission in respect of s.70(2), holding that the duty under that subsection continued to apply after the defendant had purported to complete the reinstatement and during the period of remedial works subsequently required by the council, so that the proceedings under s.70(2) should continue. She upheld a defence submission that there was no case to answer in respect of s.66(1), on the basis that the section was aimed at the street works themselves (digging up the road and replacing the gas pipe) and not at the work of reinstatement. Thereafter the council offered no evidence on the count under s.66(1). It also offered no evidence on 21 of the 23 informations under s.71(2) and amended the remaining 2 informations so as to include by way of additional particulars the defects identified in the others. The defendant pleaded guilty to those 2 informations. The defendant also pleaded guilty to the 3 informations under s.70(2). In addition, the defendant pleaded guilty to 2 informations that I have not otherwise mentioned because they did not feature in the preliminary issues and are not the subject of any appeal. The total fine imposed for all 7 informations to which the defendant pleaded guilty was £9,750. The court now has before it two appeals by case stated. The council appeals against the judge's ruling in respect of ss.71(2) and 66(1), and the defendant appeals against the judge's ruling in respect of s.70(2). The legislative framework Part 3 of the Act relates to street works in England and Wales. "Street works" are defined in s.48(3) as: "works of any of the following kinds (other than works for road purposes) executed in a street in pursuance of a statutory right or a street works licence – (a) placing apparatus, or (b) inspecting, maintaining, adjusting, repairing, altering or renewing apparatus, changing the position of apparatus or removing it, or works required for or incidental to any such works (including, in particular, breaking up or opening the street, or any sewer, drain or tunnel under it, or tunnelling or boring under the street)." Section 54 makes provision for advance notice to be given to the street authority by an undertaker proposing to execute street works in prescribed cases. Notice of the starting date of works must be given in any event under s.55. Section 66 relates to the avoidance of unnecessary delay or obstruction in the execution of street works. It provides, in material part: "66.(1) An undertaker executing street works which involve – (a) breaking up or opening the street, or any sewer, drain or tunnel under it, or (b) tunnelling or boring under the street, shall carry on and complete the works with all such dispatch as is reasonably practicable. (2) An undertaker who fails to do so commits an offence and is liable on summary conviction to a fine not exceeding level 5 on the standard scale." The duty to reinstate is set out in s.70: "70.(1) It is the duty of the undertaker by whom street works are executed to reinstate the street. (2) He shall begin the reinstatement as soon after the completion of any part of the street works as is reasonably practicable and shall carry on and complete the reinstatement with all such dispatch as is reasonably practicable. (3) He shall before the end of the next working day after the day on which the reinstatement is completed inform the street authority that he has completed the reinstatement of the street, stating whether the reinstatement is permanent or interim. (4) If it is interim, he shall complete the permanent reinstatement of the street as soon as reasonably practicable and in any event within six months (or such other period as may be prescribed) from the date on which the interim reinstatement was completed; and he shall notify the street authority when he has done so. … (6) Any undertaker who fails to comply with any provision of this section commits an offence and is liable on summary conviction (a) in the case of an offence consisting of a failure to comply with subsection (3) or (4A), to a fine not exceeding level 4 on the standard scale; and (b) in any other case, to a fine not exceeding level 5 on the standard scale." Section 71 relates to the materials, workmanship and standard of reinstatement. It provides: "71.(1) An undertaker executing street works shall in reinstating the street comply with such requirements as may be prescribed as to the specification of materials to be used and the standards of workmanship to be observed. (2) He shall also ensure that the reinstatement conforms to such performance standards as may be prescribed - (a) in the case of interim reinstatement, until permanent reinstatement is effected, and (b) in the case of permanent reinstatement, for the prescribed period after the completion of the reinstatement. This obligation is extended in certain cases and restricted in others by the provisions of section 73 as to cases where a reinstatement is affected by subsequent works. … (5) An undertaker who fails to comply with his duties under this section commits an offence and is liable on summary conviction to a fine not exceeding level 5 on the standard scale." I have omitted reference to subss. (3) and (4) of s.71, which refer to regulations and codes of practice relevant to the matters mentioned in subss. (1) and (2). The details are material to the substantive breaches alleged in the various informations in this case but are not needed for the purposes of the issues in the two appeals. Section 72 confers certain powers on the street authority in relation to reinstatement. It provides: "72.(1) The street authority may carry out such investigatory works as appear to them to be necessary to ascertain whether an undertaker has complied with his duties under this Part with respect to reinstatement. If such a failure is disclosed, the undertaker shall bear the cost of the investigatory works; if not, the street authority shall bear the costs of the necessary works and of any necessary reinstatement. (2) Where an undertaker has failed to comply with his duties under this Part with respect to reinstatement, he shall bear the cost of - (a) a joint inspection with the street authority to determine the nature of the failure and what remedial works need to be undertaken; (b) an inspection by the authority of the remedial works in progress; and (c) an inspection by the authority when the remedial works have been completed. (3) The street authority may by notice require an undertaker who has failed to comply with his duties under this Part with respect to reinstatement to carry out the necessary remedial works within such period of not less than 7 working days as may be specified in the notice. If he fails to comply with the notice, the authority may carry out the necessary works and recover from him the costs reasonably incurred by them in doing so." Included within the supplementary provisions of Part 3 is s.95, concerning offences. It provides: "95.(1) Any provision of this Part imposing criminal liability in respect of any matter is without prejudice to any civil liability in respect of the same matter. (2) Where a failure to comply with a duty imposed by this Part is continued after conviction, the person in default commits a further offence." Finally, reference should be made to the definition of "reinstatement" in s.105(1), which reads: "'reinstatement' includes making good. " Additional factual background In the course of 2004 the defendant's predecessor in title, Transco plc, carried out work to replace the existing gas main and to renew services along both sides of Northfield Gardens. Northfield Gardens runs round three sides of a large square, with houses on each side of the road, but it is not in dispute that the area of the street works fell within a single "unique street registration number" in the relevant gazetteer and that a single statutory notice under s.54 and/or s.55, covering the entirety of Northfield Gardens, was relied upon by the defendant, without objection by the council, each time advance notice was given of where and when street works were to be carried out. We are therefore concerned in this case with a single, albeit substantial, set of street works. On 7 December 2004 the defendant gave the council notice under s.70(3) that reinstatement of the street was complete (a "works closed" notice). The council's evidence was that, as a result of complaints, various inspections were carried out and numerous defects were identified in the early part of 2005. At a joint inspection in March 2005 the defects were recorded and it was determined what remedial works were required. Despite repeated reminder notices, however, numerous defects remained outstanding by 15 September 2005, when a follow-up inspection was carried out. The remedial works had still not been completed to the requisite standard by 12 October 2005, when a further follow-up inspection was carried out. And some defects were found at yet another follow-up inspection, on 8 November 2005. Only on 14 December 2005 was it found on inspection that the defects had all been rectified to an acceptable standard. That brief chronology explains the dates in the various informations. The first of the 7 informations alleging breaches of s.71(2) on 15 September 2005 was in these terms: "That you did on 15 September in Watford in the County of Hertfordshire being an undertaker by whom street works were executed in Northfield Gardens Watford fail to ensure that the reinstatement of street works complied with performance standards prescribed pursuant to Section 71(2) of the New Roads and Street Works Act 1991 in that you failed to reset and grout paving stones outside house numbers 2, 3, 5, 11, 13, 16, 17, 21, 22, 24, 30, 36, 38, 45, 49, 53, 55, 57, 59, 85 and opposite house number 21 and to the side of house number 38 Northfield Gardens using paving stones of incorrect materials and dimensions leaving the paving stones rocking or uneven thereby leaving the footway in a hazardous condition CONTRARY TO Section 71(2) and (5) of the New Roads and Street Works Act 1991." The allegations in the other 6 informations relating to the same subsection and same date are summarised as follows in the case stated: "1. Failing to replace damaged paving stones outside house numbers 3, 6, 14, 23, 28, 34, 44, 54, 55, 56, 60, 63, 65 and 81 Northfield Gardens. 2. Failing to reset paving stones outside numbers 19, 20, 23 and 34 Northfield Gardens. 3. Failing to re-grout paving stones outside numbers 4, 25, 26, 48, 50, 51 and 67 Northfield Gardens. 4. Failing to reset kerb stones at the junction between Northfield Gardens and Bushey Mill Lane, Watford to the side of house number 83 and 85. 5. Failed to relay bituminous areas of the footway outside numbers 13, 23, 25 and 55 Northfield Gardens to the correct specification. 6. Failed to replace a damaged dropped kerbstone outside Swanley Court and Parkgate Infants School." The position taken in the witness statement of Mr Paul Castleman, the council's Street Works Strategy Manager, was that the number of informations relating to 15 September 2005 could have been far greater, since "each defect equates to a separate offence", but that "in order to reduce the number of offences, where the same defect occurred outside a number of properties, these have been collated into one offence". The first of the 16 informations alleging breaches of s.71(2) on 8 November 2005 was in these terms: "That you did on 8 November in Watford in the County of Hertfordshire being an undertaker by whom street works were executed in Northfield Gardens Watford fail to ensure that the reinstatement of street works complied with the performance standards prescribed pursuant to Section 71(2) of the New Roads and Street Works Act 1991 in that a 40mm trip hazard was left adjacent to reinstated paving stones outside house number 3 Northfields Gardens leaving the footway in a dangerous condition CONTRARY TO Section 71(2) and (5) of the New Roads and Street Works Act 1991." The allegations in the other 15 informations relating to the same subsection and same date are summarised as follows in the case stated: "1. The surface depression outside house number 12 Northfield Gardens was 12mm leaving the footway in a dangerous condition. 2. Paving stones were left damaged and sunken outside number 6 Northfield Gardens causing a trip hazard. 3. The surface depression outside house number 21 Northfield Gardens was 12mm and paving grouting was ineffectual leaving the footway in a hazardous condition. 4. The kerb at the junction of Bushey Mill Lane and Northfield Gardens was left dislodged leaving the footway in a hazardous condition. 5. The surface depression outside house number 49 Northfield Gardens was left low resulting in a 15mm trip hazard. 6. Damaged paving stone adjacent to the boundary of house number 55 Northfield Gardens had not been replaced and its condition had deteriorated resulting in a 30mm trip hazard. 7. A paving stone outside number 77 Northfield Gardens was not properly secured resulting in a 40mm trip hazard. 8. A paving stone outside number 60 Northfield Gardens was not properly secured leaving the footway in a hazardous condition. 9. The surface depression outside house number 34 Northfield Gardens was left low resulting in a 15 mm trip hazard. 10. The bituminous footway adjacent to reinstated paving stones outside Swanley Court and adjacent to Northfield Gardens had not been replaced and the condition had deteriorated leaving the footway in a hazardous condition. 11. The paving stones outside number 56 Northfield Gardens had not been replaced and the surface depression was reduced resulting in a trip hazard. 12. Failed to reset paving stones to an acceptable standard outside house number 24 Northfield Gardens leaving the paving stones rocking or uneven thereby leaving the footway in a hazardous condition. 13. Failed to reset paving stones to an acceptable standard outside house number 30 Northfield Gardens leaving the paving stones rocking or uneven thereby leaving the footway in a hazardous condition. 14. Failed to reset paving stones to an acceptable standard outside house number 45 Northfield Gardens leaving the paving stones rocking or uneven thereby leaving the footway in a hazardous condition. 15. Failed to reset paving stones to an acceptable standard outside house number 52 Northfield Gardens leaving the paving stones rocking or uneven thereby leaving the footway in a hazardous condition." The witness statement of Mr Castleman gave no explanation for the rather different, more house-specific, approach adopted in relation to 8 November as compared with that adopted in relation to 15 September. The first of the informations alleging breaches of s.70(2) was in these terms: "That you did between 11 February 2005 and 15 September 2005 in Watford in the County of Hertfordshire fail to comply with the requirement prescribed in Section 70(2) of the New Roads and Street Works Act 1991 in that being an undertaker by whom street works were executed in Northfield Gardens Watford … you failed to complete the reinstatement of such works with all such dispatch as is reasonably practicable CONTRARY TO Section 70(2) and 70(6) of the New Roads and Street Works Act 1991." The other 2 informations under s.70(2) related to later periods of time (15 September to 12 October, and 12 October to 8 November) and alleged not simply a failure to complete the reinstatement of the works with all such dispatch as is reasonably practicable but a failure "to begin the reinstatement as soon after the completion of any part of the street works as is reasonably practicable and carry on and complete the reinstatement with all such dispatch as was reasonably practicable leaving the footway in a dangerous condition". Finally, the information alleging breach of s.66(1) was in these terms: "That you did between 11 February 2005 and 14 December 2005 at Watford in the County of Hertfordshire fail to comply with the requirement prescribed by Section 66(1) of the New Roads and Street Works Act 1991 in that being an undertaker by whom street works were executed in Northfield Gardens you did not carry on and complete the works with all such dispatch as is reasonably practicable CONTRARY TO Section 66(1) and Section 66(2) of the New Roads and Street Works Act 1991." The section 71(2) issue The argument for the defendant before the district judge was that it was an abuse of process for the defendant to be charged under s.71(2) and (5) with numerous offences all arising on the same date at the same street location. The works in question were a single set of works. To prosecute each failure was oppressive and was a manipulation of the court process designed to expose the defendant to a far greater fine than that intended by Parliament. The council contended that it was entitled as a matter of jurisdiction to lay the informations in the way it had, and that the number of informations was a product of the number of breaches of duty which had occurred over a significant period of time. In any given set of works there can be multiple breaches of duty, each of which amounts to a separate offence for the purposes of s.71. The number of informations laid reflected the extent of the breaches and their seriousness. In the case stated the judge has expressed her conclusions in these terms: "I was of the opinion that the facts alleged against [the defendant] on the two dates detailed in the summonses each constitute a single offence of failing to ensure that the reinstatement conformed to the required standard on each of the two dates. It was clear that the alleged breaches all occurred on the same date, in the same location and in furtherance of a single set of street works. I was of the opinion that it was oppressive and an abuse of process to prosecute each failing separately and that to allow the prosecution to continue on these multiple summonses would be unfair to [the defendant], not least because it would expose them to a fine far greater than parliament intended for offending of this kind." She has posed two questions for the opinion of this court: "1. Was I right to conclude that the laying of 7 informations in respect of alleged contraventions of section 71(2) New Roads and Street Works Act 1991 on 15 September 2005 was an abuse of process? 2. Was I right to conclude that the laying of 16 informations in respect of alleged contraventions of section 71(2) New Roads and Street Works Act 1991 on 8 November was an abuse of process?" Although the judge has asked in those questions whether she was right to conclude that the laying of multiple informations was an abuse of process, the reasons she gave for her decision were twofold - that the facts alleged constituted a single offence, and that it was oppressive and an abuse of process to prosecute each failing separately. Mr Reed, for the council, submits that both aspects of the judge's reasoning were wrong. Subss.(2) and (5) of s.71 cannot properly be read as allowing only one offence of failing to conform to performance standards. The standards contained within the statutory guidance are wide-ranging and there may be many breaches of duty in a large set of street works. The legislation appears to comprehend this by referring in subs.(5) to a failure to comply with "duties" under the section. If, as a matter of jurisdiction, it was open to the council to prosecute multiple offences, there was no proper basis for interfering with the informations unless the judge could properly find that the prosecutions amounted to an abuse of process on the basis of oppressiveness or unfairness. She was not entitled to dismiss the majority of the informations simply because she considered that as a matter of policy the prosecution ought to have been framed differently: DPP v Humphrys [1977] AC 1 at pp.26 and 46. As to abuse of process, Mr Reed submits that this was a case where the laying of several informations was entirely appropriate. There were significant breaches occurring over a considerable period of time within a large stretch of road. The judge's view that multiple informations were unfair because they would expose the defendant to a greater fine than Parliament intended was based on her erroneous view that a reinstatement could only be the subject of one offence under s.71(2). A prosecution based on two single charges under s.71(2) for a set of breaches that included safety hazards and took nearly 10 months to complete was woefully inadequate and an insufficient deterrent. In any event, if the judge felt it appropriate to limit the defendant's liability in this case, the proper approach was to reduce the individual fines accordingly. Mr Reed submits further that the judge did not refer to any other matter that might make it oppressive to proceed on the basis of multiple informations. In particular, there was no suggestion that the defendant would be procedurally or evidentially disadvantaged by the number of informations laid. Thus the council contends that the judge's decision on s.71(2) should be quashed and that, since the defendant disputed the informations under that subsection only on points of law, convictions should be entered in respect of all the informations (with appropriate amendment, back to their original form, of the 2 informations which the judge allowed to proceed and to which the defendant pleaded guilty). Mr Bradnock, for the defendant, seeks to uphold the judge's conclusion on the basis that this was a reinstatement in respect of a single set of street works and that the failure to ensure that the reinstatement conformed to the prescribed performance standards gave rise to only one offence (though a continuing offence which could be the subject of separate prosecutions at different points in time). By issuing 7 informations in relation to alleged defects on one date and 16 informations in relation to alleged defects on another date the council was seeking to prosecute the same offence multiple times in relation to each date. That was impermissible, oppressive and unfair. The council's stance was akin to charging with 16 burglaries a defendant who stole 16 items in the course of a single burglary. Its approach was a clear attempt to circumvent the maximum fine laid down by Parliament, and as such amounted to an abuse of the process of the court. If delay was a concern, informations could have been laid in respect of additional dates. In my view the judge was correct to hold that breach of the duty in s.71(2) to "ensure that the reinstatement conforms to such performance standards as may be prescribed" constitutes a single offence under subs.(5) irrespective of the number of individual defects involved. The duty is to ensure that the reinstatement conforms. There is a failure to comply with that duty when the reinstatement does not conform, whether the non-conformity consists in one defect or a number of defects. It is a single failure - a single breach of duty - and a single offence. The existence of multiple defects may affect the seriousness of the offence but does not generate multiple offences. That seems to me to be the natural construction of the provision. Moreover, to treat each and every separate defect as giving rise to a separate failure, and therefore a separate offence, would be highly artificial and cannot have been the legislative intention. The number of offences committed would then depend on difficult and potentially arbitrary judgments as to how the individual instances of non-conformity were to be defined. The problem is illustrated by the council's view, referred to above, that the occurrence of the same defect, such as a failure to reset and grout paving stones, outside different houses on 15 September could have been charged as separate offences. If a failure to reset and grout paving stones outside no.2 is a separate offence from a failure to reset and grout paving stones outside no.3, why is a failure to reset and grout one paving stone outside no.2 not a separate offence from a failure to reset and grout another paving stone outside no.2? Indeed, why is the failure to reset not a separate offence from the failure to grout? Mr Reed's response was that the number of different offences generated by the defects is a matter of fact and degree and subject to the judgment of the prosecutor. But I cannot accept that s.71(2) was intended to operate in such a way. If the council's case were correct, it would also follow that many of the individual informations laid in this case were bad for duplicity, since the council "collated" (to use Mr Castleman's word) a number of separate offences into a single charge. The reference in s.71(5) to an undertaker's failure to comply with his "duties" under the section does not assist the council. On any view the section imposes more than one duty: there is a duty under subs.(1) as well as a duty under subs.(2). To suggest that, because subs.(5) refers to "duties", subs.(2) must be read as imposing multiple duties (and seemingly, on the council's argument, as many duties as there are instances of non-conformity) is a nonsense. In British Telecommunications Plc v Nottinghamshire County Council (judgment of 21 October 1998) the Divisional Court considered an appeal by case stated against a conviction on 2 informations under s.71(1) and (5). One alleged a failure to comply with the prescribed requirements as to the specification of materials to be used in reinstating the street. The other alleged a failure to comply with the prescribed requirements as to the standards of workmanship to be observed in reinstating the street. Mr Reed sought to rely on this as supporting the council's case. In my judgment, however, it does no such thing. It may be that s.71(1) creates two separate offences, the one relating to specification of materials and the other relating to standards of workmanship, which would explain the separate informations (though the court was not called upon to decide the question). But the recitation of the facts in British Telecommunications shows that each information related to multiple defects: core samples suggesting defects in materials and standards of workmanship had been taken at 6 separate points. Thus the approach taken by the authority under s.71(1) in that case was consistent with what I consider to be the correct approach under s.71(2). In any event the point falling for decision in the present case was not in issue before the court. In Thames Water Utilities Ltd v London Borough of Bromley (judgment of 4 March 2000) the Divisional Court considered an appeal by case stated against a conviction on 16 separate informations alleging offences of failing to complete permanent reinstatement as required by s.70(4). The judgment gives little by way of factual background and, in particular, gives no indication of the number of sets of street works to which the informations related. That is of obvious relevance, since it is possible that separate breaches of the duty to reinstate may arise in relation to separate sets of street works, whereas in the present case we are concerned with the application of the duty to a single set of street works. In any event the present issue was not considered in Thames Water and in my view the case gives no assistance on it. At the heart of the submissions for the council is a policy argument, that it is only by charging multiple offences that a sufficient financial sanction will be available to deter undertakers from taking a lax approach towards the reinstatement of the street and thereby to reduce the hazards to the public arising from delayed or defective reinstatement. It is submitted that Parliament must have intended larger fines to be available in the case of a large set of street works where there are multiple defects in reinstatement. I am not swayed by that policy argument. The intention of Parliament is to be found in the language of the statute, and I have already explained why in my view s.71(2) is to be construed as creating a single offence rather than multiple offences for a breach of duty such as occurred in this case. If the resulting sanctions are insufficient to operate as a deterrent, the remedy lies not in a distorted construction of the statute but in amending legislation. The view I have reached on the proper construction of s.71(2) means that it was not open to the council to lay multiple informations under that subsection in relation to a single date (though the defendant has accepted that it was open to the council to lay separate informations in relation to different dates). The laying of multiple informations in respect of a single offence was an abuse of process. The judge was therefore right to rule as she did and to direct that the case should proceed on the basis of a single information in relation to each date, containing all the particulars of non-conformity relied on in respect of that date. It is unnecessary for me to consider whether the laying of multiple informations would have been open to objection as oppressive or in abuse of process if, contrary to my view, each defect had involved a separate offence. I would therefore give an affirmative answer to each of the questions in the case stated on the s.71(2) issue, upholding the judge's decision by reference to the first of the reasons she gave, and I would dismiss the council's appeal on this issue. The section 70(2) issue The defendant's contention before the judge was that s.70(2) was concerned specifically with the "reinstatement" of street works, whereas the council's complaint related to "remedial works". The council alleged that the defendant failed to begin remedial works with appropriate dispatch. There was no evidence of reinstatement not taking place as soon as reasonably practicable. Indeed, reinstatement was carried out in 2004 and a "works closed" notice was served. The allegations of defective reinstatement under s.71 could not have been brought were this not the case. The correct section for a prosecution based on the facts alleged would be s.71, as a continuing offence. In respect of s.70(2) and (6) there was no case to answer. The council submitted that a "works closed" notice did not mean that reinstatement was necessarily complete. It was simply a notice to the council required by s.70(3) to inform the council that the works could thereafter be inspected. Reliance was placed on British Telecommunications as supporting the view that there was a continuing duty to reinstate properly and that s.70(2) could therefore be relied on in relation to the remedial works. In the case stated the judge sets out her conclusion as follows: "I was of the opinion that Section 70 should be seen to refer to reinstatement to the required standard and would therefore continue to apply after a 'Works Closed' notice has been served if further works are required by the authorities following inspection by them. I was of the opinion therefore that the summonses under Section 70(2) were properly brought and that the section applied to works required to be done by [the council] after the service of a 'works closed' notice; that there was no distinction to be drawn between works done prior to the notice being served and works later required by the authorities and described by [the defendant] as 'remedial' works." The question she has posed for the opinion of this court is: "Was I right to conclude that there was a case for [the defendant] to answer in respect of 3 alleged contraventions of Section 70(2) New Roads and Street Works Act 1991 on dates between 11 February 2005 and 8 November 2005 on the ground that Section 70(2) can relate to delay in commencing 'remedial' works in the street?" Before us, Mr Bradnock has repeated the defendant's submissions to the judge. He says that the council has conflated the two separate concepts of reinstatement and remedial works. Reinstatement refers purely to the act of finishing street works so that the street is left in useable condition: it may be applied to the original works or to remedial works as the case may be. It is an essential part of any street works involving an excavation and cannot exist independently of such works. Remedial works, by contrast, are street works in themselves. They are necessitated by a failure of reinstatement, as s.72(2) makes clear. It is apparent from Mr Castleman's witness statement that the council's allegation is that the defendant failed to begin remedial works with appropriate dispatch, not that reinstatement (whether as part of the substantive works or the remedial works) was delayed. Reinstatement of the substantive works was carried out in 2004. Once a purported reinstatement has been completed, as indicated by the filing of a "works closed" notice under s.70(3), the authority is at liberty to inspect it; and if it does not meet the required standard, an offence will have been committed under s.71. That section creates a continuing offence and any delay can be reflected by the authority laying a suitable number of s.71 informations to cover the entire period for which the undertaker fails to remedy the defects in reinstatement. Mr Bradnock further submits that if the judge's interpretation of s.70(2) were correct, reinstatement could never be said to be complete until the "guarantee" period (i.e. the prescribed period under s.71(2)) for the work carried out had expired without further works being required – in the case of failure to meet required performance standards, two years after the "works closed" notice or two years after the authority's requirement for further works to be undertaken, whichever is the later. Any requirement to carry out further work would prolong the guarantee period and therefore the period of reinstatement. Such an interpretation would render the "works closed" notice meaningless and would make s.71 allegations all but impossible for prosecutors to prove: if street works remained open for the purposes of s.70 even after purported reinstatement had been concluded, an allegation that the relevant standards of workmanship and materials had not been met could be successfully defended by the argument that the defects were merely temporary and reinstatement was not yet complete. For the council, Mr Reed submits that the judge was right to consider that "reinstatement" means proper reinstatement or reinstatement not requiring remedial works; and if she was right on that, then the defendant's case falls down, since on that basis delays in remedial works are necessarily delays in the overall reinstatement under s.70(2). First, "reinstatement" is defined in s.105(1) as including "making good", which indicates that reinstatement is not achieved until remedial works are carried out. Second, in British Telecommunications it was held that "reinstate" means "reinstate properly" (and the same decision undermines the defendant's argument based on the existence of the guarantee period). Third, the purpose of the section is to ensure that the completion of the relevant works is carried out in a manner to enable the proper use of the street in good time, and it is consistent with that aim that "reinstatement" should include the totality of the works required to be carried out to achieve it. Further, the issue of a "works closed" notice does not mean that reinstatement is completed, which is a question of fact. The requirement to give notice under s.70(3) is simply a mechanism to ensure that the authority is aware of the progress of the works. As to the possibility of a prosecution under s.71 for delays in remedial works, that is a tortuous means of interpreting the legislation so as to achieve a result which can be achieved more simply under s.70(2). For my part, if I had come to this issue free from existing authority, I would have been doubtful about the correctness of the judge's decision. In my view there is much to be said for the view that the Act provides in Part 3 a staged approach. The first stage, so far as relevant to the present dispute, relates to the execution of the street works of which notice has been given under s.54 or s.55. Where those street works are of a kind mentioned in s.66(1), there is a duty to carry on and complete the works with all such dispatch as is reasonably practicable. The next stage is the reinstatement of the street, pursuant to the duty under s.70(1). That duty is engaged as the street works are completed: the undertaker is required by s.70(2) to begin the reinstatement as soon after the completion of any part of the street works as is reasonably practicable, and then to carry on and complete the reinstatement with all such dispatch as is reasonably practicable. When the reinstatement is completed, there is a duty to inform the street authority pursuant to s.70(3). The completed reinstatement is required to meet the standards in s.71. If it fails to do so, the undertaker is liable to prosecution under that section. The street authority can carry out the investigatory works referred to in s.72(1), with the costs consequences referred to in that subsection and in s.72(2). By notice under s.72(3) the authority can also require the undertaker to carry out any necessary remedial works; and if the undertaker fails to comply with the notice, the authority can carry out the necessary works and recover from the undertaker the costs reasonably incurred in doing so. On the face of it, that is an intelligible and workable scheme, and it does not require "reinstatement" in s.70 or s.71 to be interpreted as meaning proper reinstatement or reinstatement not requiring remedial works. If the completed reinstatement is defective, remedies are available both in the form of prosecutions and in the form of the street authority's power to get remedial works carried out. That is not, however, the approach that has been taken in the decided cases. Of particular importance is British Telecommunications, in which the essential question for decision was whether the duty to reinstate in accordance with the specification under s.71(1) continues indefinitely so that failure to reinstate in accordance with the specification constitutes a continuing offence for which the undertaker may be prosecuted at any time until the street is reinstated in accordance with the specification. Lord Bingham CJ said that he had found this a difficult question and that his mind had altered more than once in the course of argument. On balance, however, he had concluded that there was a continuing offence, for these reasons: "It seems to me important that the overriding duty to reinstate in section 70(1) of the Act is expressed in wholly general terms and without any qualification whatever as to time, albeit the undertaker is required to give notice to the street authority. Furthermore, the duty laid on an undertaker in section 71(1) is again an obligation to reinstate properly, there being no limitation of time whatever attached to that duty. Mr Treacy is, I think, entitled to submit that 'reinstate' means 'reinstate properly', both because the definition section refers to the street being made good and because the code of practice which is incorporated by reference indicates that compliance with proper standards is inherent in the concept of reinstatement. It does not appear to me that section 71(2) undermines that conclusion since, although it refers to what is in effect a guarantee period, that would be applicable in a case where the work had initially been done properly but had developed defects during the two-year period. Furthermore it seems to me very difficult, as it seemed to Henry LJ in Camden London Borough Council v Marshall, to give any effect to section 95(2) if there is not, in fact, a continuing duty. It was the language of section 376(2) that was the crucial factor leading to his decision. It seems to me difficult to construe section 95(2) on the premise that a duty ends on the completion of the reinstatement, even if that reinstatement is defective. It is scarcely possible as it seems to me to envisage any prosecution being begun before purported completion of the reinstatement, but on BT's argument the duty to reinstate properly would have come to an end on purported completion, yet here in section 95(2) we find reference to a failure to comply with a duty being continued after conviction and that seems to me to point strongly towards the continuation of the duty. … I would accordingly conclude that the failure to reinstate in accordance with the Act and prescribed standards and the specification creates a continuing offence which may be the subject of prosecution unless and until the time comes when the reinstatement is properly carried out. If further proceedings are brought after a conviction then the matter is covered by section 95(2)." Collins J agreed, stating that the duty in s.71(1) is to reinstate properly and that "a reinstatement which is not done properly, and in respect of which there is a breach of section 71(1), can be the subject of a prosecution, notwithstanding that the contractor in question has purported to complete the reinstatement". In Thames Water the undertaker had informed the street authority of the completion of an interim reinstatement but had thereafter done nothing. Informations alleging failure to complete the permanent reinstatement as soon as practicable and in any event within 6 months, as required by s.70(4), were laid over a year later. The issue was whether they were out of time. The court followed the reasoning in British Telecommunications in holding that they were not. A suggestion that Lord Bingham had perhaps overlooked the significance of s.72(3) was rejected, and the reasoning of Lord Bingham in relation to s.95(2) was described as wholly convincing. In my judgment, British Telecommunications is neither irrelevant nor distinguishable, as submitted by Mr Bradnock, and I am satisfied that this court should follow the reasoning in it. The doubts I have expressed come nowhere near satisfying the conditions set out in R v Manchester Coroner, ex p. Tal [1985] 1 QB 67, 81, for a departure by one divisional court from a prior decision of another divisional court. The fact that there are now two prior decisions and that the first of them was by a court which included Lord Bingham, and on an issue that he considered difficult, makes it all the more appropriate that a consistent line should be taken. On that basis it seems to me that the matters relied on by the council were properly included in informations alleging a breach of the duty under s.70(2). "Reinstatement" must be given the same meaning in s.70 as in s.71, and in each case it must be taken to mean "proper reinstatement", i.e. a reinstatement meeting the requirements of s.71. The issue of a "works closed" notice under s.70(3) marks the point where the undertaker has purported to complete the reinstatement, but the contractor's view of the matter tells one nothing about whether there has in fact been a proper reinstatement. The reinstatement will not have been completed for the purposes of the statute unless and until it is a proper reinstatement meeting the s.71 requirements. Where it does not meet those requirements, the carrying out of remedial works to correct the defects forms part of the continuing process of reinstatement and is subject to the duty under s.70(2) to carry on and complete the reinstatement with all such dispatch as is reasonably practicable. It follows that it was open to the council to bring a prosecution on the basis that the process of reinstatement continued during the periods specified in the 3 informations and that reinstatement was not carried on and completed with all such dispatch as was reasonably practicable during those periods. I would therefore give an affirmative answer to the judge's question on s.70(2) and would dismiss the defendant's appeal on this issue. The section 66(1) issue The defendant's contention before the judge was that s.66 is designed to catch those who delay completion of existing street works rather than remedial works. The council contended that s.66(1) relates to the amount of time taken to complete the entirety of the works, from their commencement to satisfactory reinstatement. In the case stated the judge refers to the terms of s.66(1) and s.70(1), and continues: "Considering the wording of these two sections I was of the opinion that the use of the word 'executed' in section 70 indicates that section 66 applies to the actual work undertaken (i.e. in this case the digging up of the road and the replacing of the gas pipes) and that Section 70 is aimed at the work that is necessary to reinstate the road. I noted that the Section 70 summonses [the defendant] faced spanned the identical time frame as the section 66 matter. I therefore concluded that the prosecution under section 66 was ill founded and that there was therefore no case to answer." The question she has posed for the opinion of this court is: "Was I right to conclude that there was no case to answer in respect of the alleged contravention of Section 66(1) and Section 66(2) of the New Roads and Street Works Act 1991 between 11 February 2005 and 14 December 2005 on the ground that Section 66 does not relate to delays in the carrying out of remedial works in the street?" Mr Reed submits that the judge wrongly interpreted s.66(1) in taking the view that it is restricted in its meaning to the initial street works. "Street works" is defined in s.48(1) by way of the broad purposes of the undertaker's actions in the street, rather than by way of the particular works to the street. The "works" referred to in s.66(1) must be read in this context. There is no limitation in the subsection as to the section of works to which the requirement in s.66(1) relates. Whilst s.70(1) refers to the need to complete reinstatement with the same degree of dispatch, there is no reason why s.66(1) cannot relate to the works as a whole. Further, the judge was wrong to rely on the point that the s.66(1) offence covered the same time span as the s.70 offences: the s.70 offences did not allege delays through to 14 December 2005, and they related, individually, to only parts of the entire period covered by the s.66(1) offence. The s.66(1) offence was regarded as an overarching offence dealing with the entirety of the works in question. The laying of an information in such terms was accurate and appropriate. Mr Bradnock supports the judge's conclusion. He submits that s.66(1) is intended to address the problem of an undertaker who delays completion of existing street works, not an undertaker who delays commencement of remedial works, which was the substance of the allegation against the defendant. The subsection refers to "executing" street works, and it is wholly unrealistic to suggest that the defendant was executing street works in Northfield Gardens throughout the period from 11 February 2005 to 14 December 2005, when the essence of the council's complaint is that the defendant was repeatedly failing to do so. For much of the period in question there was no notice in force indicating that street works were being undertaken and no apparatus or workers on site. Further, the council has a remedy under s.71 if reinstatement has been inadequately carried out and the commencement of remedial work is delayed: s.66(1) is not needed and is not the appropriate provision for this purpose. Even if the judge was wrong to conclude that s.66(1) is restricted in its scope to "the actual work undertaken" and has no application to the reinstatement of those works, that error would have no bearing on the facts of this case or the question of commencement of remedial works, and the ruling that the defendant had no case to answer was correct. In my judgment the judge was correct in the conclusion she reached on this issue. As touched upon already in the context of the s.70(2) issue, it seems to me that the execution of the street works and the reinstatement of the street are separate, and that the former is governed by s.66 and the latter by s.70. The duty to reinstate under s.70 is engaged as the street works are completed. It is wrong to treat s.66 as encompassing the entire process, from the street works through to reinstatement (including remedial works): it is concerned only with the street works stage of the process. That s.66(1) is concerned only with the "street works" is clear from its terms and from its position in the statute (under the sub-heading "General requirements as to execution of street works"). The definition of "street works" in s.48(3) does not refer to reinstatement; and the separate definition of "reinstatement" in s.105(1) does not refer to street works. They are separate concepts. Moreover, there is simply no reason why the statute should be construed in the way suggested by the council. The avoidance of unnecessary delay in the carrying on and completion of the street works is secured by the duty under s.66(1), whilst the avoidance of unnecessary delay in the carrying on and completion of the reinstatement is secured by the duty under s.70(1). To construe s.66(1) as encompassing the reinstatement as well as the street works themselves would be to duplicate the effect of the relevant part of s.70(1). Nothing in the previous decisions compels any different conclusion from that which I have indicated. Again, therefore, I would give an affirmative answer to the judge's question and I would dismiss the council's appeal on this issue. Summary In the result, I would uphold the judge's decision on all three issues and dismiss both appeals. Mr Justice Openshaw : I agree.

This appeal arises out of the following facts 1.1 Janardhan Pathak, the deceased, was a Gate Keeper with the Peepal Parao Forest Range which fell within the jurisdiction of Police Station Lal Kuan. As the deceased was companying out from his hut and proceeding towards the tea shop, the appellant, Mahendra Singh, who was a Police Constable, fired a shot at him with his service rifle killing him instantaneously. The murder was apparently companymitted because the deceased had companyplained to the Head Constable at Police Station Lal Kuan about the nefarious activities of the appellant. The appellant then ran away from the spot and got a case registered at Police Station Rudrapur against the deceased for offences punishable Crl.A. No. 889 of 2006 REPORTABLE under Sections 342, 353, 332 of the Indian Penal Code and also deposited his rifle in Police Station Rudrapur vide Exhibit Ka 5 instead of P.S. Lal Kuan where the incident had happened. The post mortem revealed the presence of two gun shot injuries on the person of the deceased - one of entry and the other of exit, with the wound of entry having tattooing marks around it. 1.2 The trial companyrt relying on the prosecution evidence companyvicted the appellant on a charge of murder and under the Arms Act and sentenced him accordingly. The matter was then taken in appeal to the High Court and the High Court has companyfirmed the judgment of the trial companyrt and dismissed the appeal. Before us, Mr. P.S. Narasimha, the learned Senior Counsel for the appellant, has number seriously challenged the companyviction of the appellant and has pointed out that in the light of the prosecution evidence itself it was apparent that the appellant had first been attacked and had also suffered several injuries and that during the companyrse of a scuffle which followed the rifle had accidentally gone off and that the appellant was at the most guilty of having exceeded the right of private defence and was, therefore, liable to be punished for an offence of culpable homicide number amounting to murder. The learned companynsel has focused on the fact that the gun Crl.A. No. 889 of 2006 REPORTABLE shot injury had been caused to the deceased from a very close range and number from a distance of 12 or 15 feet as was the case of the eye witnesses and the prosecution. Mr. S.S. Shamshery, the learned companynsel for the State of Uttaranchal has, however, supported the judgment of the trial companyrt as well as the High Court and has pointed out that the appellant, being a police official, was companyscious of the fact that in order to get away from a case of murder he had to create a defence and for that reason had self-suffered some injuries and lodged a report in Police Station, Rudrapur instead of Police Station Lal Kuan. We have companysidered the arguments advanced by the learned companynsel for the parties. It has to be borne in mind that the obligation to prove an exception lies on an accused but at the same time the onus of proof which the accused has to discharge is number as strict as in the case of the prosecution which had to prove its case beyond doubt. It has also to be borne in the mind that it is very difficult, and often suicidal, for an accused to raise a plea whereby he admits his presence but if the prosecution evidence itself shows that the defence taken by him is probable, the accused is entitled to claim the benefit of that evidence as well. It will be seen that the case of the Crl.A. No. 889 of 2006 REPORTABLE appellant, as projected by Mr. Narasimha, during the companyrse of the arguments, is that the appellants had first been attacked and some injuries had first been caused to him and in the scuffle that followed one shot had been fired. He has also pointed out that the presence of tattooing around the wound was clearly indicative that the prosecution story that the gun shots had been fired from a distance of 12 to 14 feet was obviously wrong and it was, therefore, plausible to suggest that shot had been fired from a much closer range. We numberice from the evidence of P.Ws. 2,5 and 8, as also from the site plan, that the shot had been fired from 15 to 18 feet. The injuries found on the dead body are produced herein below Lacerated wound 1cm X .5cm X .5cm on dorsum of right thumb bleeding. Margins irregular. Contusion 4cm X 2cm over bed of right shoulder. Colour was reddish. Complaint of pain on back of neck but numberexternal mark of injury and numbertenderness was there. Complaint of pain on right leg below knee joint. No external mark of injury. Shows tenderness. Dr. Modi in his book, A Text Book of Medical Jurisprudence and Toxicology 24th Edition, page 543 has referred to the fact that signs of tattooing in the case of a rifle shot would NORMALLY be upto 75 cms. Obviously, in this situation the rifle companyld number have Crl.A. No. 889 of 2006 REPORTABLE been fired from 15 to 18 feet. It is also clear that the appellant has sustained some injuries though simple in nature and they too are reproduced below Abraded companytusion just below the right eye maxillary prominence size 2cm X 2cm. Fresh oozing present. Transverse incised wound lower part of right deltoid muscle 4cm X cm X skin deep. Oozing present. Vertical lacerated wound left chest between right nipple and sternum 7cm X cm skin deep. Oozing present. Lacerated wound left deltoid muscle transversely oblique 4 cm X 1/3 cm X skin deep.

MR JUSTICE ARNOLD : Contents Topic Paras Introduction 1 Procedural history 2-9 The Claimants 10-14 The evidence in support of the claim 15-31 The draft order and draft letter 32-34 "Speculative invoicing" 35-37 ACS:Law and Media CAT 38-55 Infringement claims brought by Golden Eye 56-58 Similarities and differences 59-63 The legal context 64-75     CDPA 1988 65     The Enforcement Directive 66     The Human Rights Act 1998 67     The Convention rights 68-69     The Charter of Fundamental Rights of the European Union 70-73     Data Protection Directive 74     Data Protection Act 1998 75 The Norwich Pharmacal jurisdiction 76-83 Is there a duty of full and frank disclosure on a Norwich Pharmacal application? 84-88 Have arguable wrongs been committed against the Claimants? 89-106     Golden Eye's title to sue the Intended Defendants 90-91     Are the agreements between Golden Eye and the Other Claimants champertous? 92-100     The evidence of infringement 101-106 Was O2 mixed up in those arguable wrongs? 107 Are the Claimants intending to try to seek redress for those arguable wrongs? 108-113 Is disclosure of the information necessary for the Claimants to pursue that redress? 114-115 Is the order sought proportionate? 116-146     The correct approach to considering proportionality 117     The Claimants' rights 118     The Intended Defendants' rights 119     The terms of the draft order 120-122     The draft letter 123-130     The claim for £700 131-138     Safeguards suggested by Consumer Focus 139-143         Notification of the Intended Defendants 140         Supervising solicitor 141         Group Litigation Order 142         Test cases 143     An alternative safeguard 144     The claim by Golden Eye and Ben Dover Productions 145     The claim by the Other Claimants 146 Discretion 147 An issue not raised 148-151 Conclusion 152 Introduction This is a claim by Golden Eye (International) Ltd ("Golden Eye") and thirteen other claimants for a Norwich Pharmacal order against Telefonica UK Ltd trading as O2 ("O2"). O2 is one of the six largest retail internet service providers ("ISPs") in the UK. The object of the claim is to obtain disclosure of the names and addresses of customers of O2 who are alleged to have committed infringements of copyright through peer-to-peer ("P2P") filesharing using the BitTorrent protocol. (P2P filesharing using BitTorrent is described in my judgment in Dramatico Entertainment Ltd v British Sky Broadcasting Ltd [2012] EWHC 268 (Ch) at [19-[20].) For reasons that I will explain, the claim raises fundamental questions as to the operation of the Norwich Pharmacal regime, the legitimacy of so-called "speculative invoicing" and how to balance the rights of copyright owners and consumers. Procedural history Golden Eye has previously obtained similar orders against two other large ISPs, the first against British Telecommunications plc ("BT") granted by Proudman J in October 2009 and the second against British Sky Broadcasting Ltd granted by Vos J on 4 February 2010. The present claim was made by a Part 8 Claim Form issued on 23 September 2011. The Claim Form was issued by Golden Eye itself, rather than by solicitors instructed on its behalf. The application was supported by a witness statement of Julian Becker, a director of Golden Eye, dated 12 September 2011. In his statement, Mr Becker said that O2 had been put on notice of the claim and had stated through its solicitors (Baker & McKenzie LLP) that it did not oppose the making of the order sought provided that the order was in the terms approved by Baker & McKenzie on O2's behalf. In a covering letter dated 20 September 2011 Golden Eye stated: "We are the First Applicant and act for the Second – Fourteenth Applicants in this application. … It may be somewhat unusual for the Applicants to apply on their account. However, there has recently been a certain amount of publicity associated with this type of claim (ACS Law; Davenport Lyons). We therefore believe that we will be best served acting for ourselves." The letter went on to request that the claim be considered on paper, and enclosed a copy of the skeleton argument which had prepared by counsel instructed on its behalf on the application against BT. On 7 October 2011 Baker & McKenzie filed an acknowledgement of service on behalf of O2 stating that O2 did not intend to contest the claim. On 18 November 2011 the parties were given notice of a disposal hearing before Chief Master Winegarten on 6 December 2011. On 28 November 2011 Baker & McKenzie wrote to the Chief Master to confirm that O2 did not oppose the making of an order in the terms submitted by Golden Eye, and therefore did not intend to attend the hearing. At the hearing on 6 December 2011 Mr Becker attended on behalf of the Claimants. The Chief Master raised a number of questions about the proposed order, which he asked Mr Becker to relay to Baker & McKenzie. Mr Becker duly did so, and on 14 December 2011 Baker & McKenzie wrote to the Chief Master answering his questions. In the letter Baker & McKenzie stated that, prior to issuing the Claim Form, Golden Eye had provided O2 with a draft of the proposed order and that Baker & McKenzie had made amendments to the draft. A number of amendments were identified and explained. The letter reiterated that O2 did not oppose the making of an order in that form. Having considered the letter, the Chief Master decided to refer the claim to a judge. On 16 January 2012 I directed that (1) the claim be listed for a hearing, (2) the Claimants file and serve upon O2 a copy of the tracking report upon which they relied (as to which, see below) and (3) that the Claimants serve a copy of the claim and supporting evidence upon Consumer Focus in order that Consumer Focus could consider whether to make representations on behalf of the persons who would be identified if the order is granted ("the Intended Defendants"). The reason why I made the third direction was that I was concerned that the persons with a real interest in opposing the making of an order, or at least in seeking alterations to the terms of the proposed order, were the Intended Defendants rather than O2, but that there was no practical way in which to enable any Intended Defendant to do so. I shall return to this point below. Consumer Focus is a trading name for the National Consumer Council of England, Wales and Scotland. Consumer Focus is a statutory body created by the Consumers Estate Agents and Redress Act 2007. It represents the interests of consumers, particularly low income and vulnerable consumers. It has been recently been active in the field of copyright. For example, in January 2011 Consumer Focus published a consultation document entitled "Competition, copyright and collective rights management" inviting comments from the public to inform its intended submission to the Hargreaves Review of IP and Growth; on 1 March 2011 it duly made a submission to the Hargreaves Review; on 8 November 2011 it jointly organised with PICTFOR (the Parliamentary, Internet, Communications and Technology Forum) a panel discussion of some of the Hargreaves Review's recommendations entitled "Copyright collecting societies: does the UK need minimum standards"; and on 21 February 2012 it jointly organised with the Creators' Rights Alliance a one day seminar entitled "Consumers' and creators' common ground". Golden Eye duly sent the papers to Consumer Focus, and Consumer Focus applied to intervene in the proceedings. There being no rule in CPR applicable to intervention in proceedings before this Court, the application was made informally under the Court's inherent jurisdiction. Although initially resistant to the application to intervene, the Claimants sensibly did not in the end resist the application provided that they were given permission to file supplementary evidence to deal with certain points raised by Consumer Focus. Accordingly, I granted Consumer Focus permission to intervene on those terms. As counsel for Consumer Focus made clear, Consumer Focus undertook the task of presenting adversarial argument on behalf of the Intended Defendants, rather than merely assisting the Court with legal submissions as an amicus curiae (friend of the Court). I am grateful to it for doing so. The Claimants The Claimants divide into two groups. The first group consists of Golden Eye and Ben Dover Productions. Ben Dover Productions is a partnership between Lindsay Honey and Linzi Drew Honey. Lindsay Honey is also a director of Golden Eye. Under the pseudonym Ben Dover, he directed, produced and starred in a series of pornographic films between 1995 and 2008. Ben Dover Productions is the owner of the copyright in those films. Golden Eye is owned 50/50 by Mr Becker and Mr Honey. By an agreement between Ben Dover Productions and Golden Eye dated 14 December 2009 ("the Ben Dover Agreement"), Ben Dover Productions granted Golden Eye a royalty free worldwide exclusive licence of all copyrights and rights in the nature of copyright in the works listed in Schedule 1 to the agreement for a period of five years. Schedule 1 lists 105 pornographic films which it appears have been released on DVD. About half of these are indicated to have been given R18 certificates (i.e. for sale in licensed sex shops only), while no indication of any British Board of Film Classification certificate is given for the remainder. Clause 3.3 of the agreement empowers Golden Eye to decide what, if any, action to take in respect of any suspected infringements of copyright and gives its sole control over and conduct of all proceedings on terms that it shall bear the costs and be entitled to retain all sums recovered. In addition to exploiting Ben Dover Productions' films pursuant to the Ben Dover Agreement, Golden Eye markets a range of associated merchandise under the Ben Dover trade mark. The second group of claimants consists of the Third to Fourteenth Claimants ("the Other Claimants"). The Other Claimants are also owners of the copyrights in pornographic films. Each of the Other Claimants has entered into an agreement with Golden Eye. The agreements are dated between 30 June 2010 and 18 January 2011. The agreements are all in essentially the same form. The term of each of the agreements is two years and the territory is England and Wales. The key clause is clause 2, which provides: "2. GRANT OF RIGHTS 2.1 Licensor is the owner of the Copyright and/or related ancillary rights in the Works under international copyright law. 2.2 Licensor grants Licensee the exclusive right to act for it in relation to any alleged breaches of copyright arising out of 'peer to peer' copying of material across the Internet. The parties agree that additional movies can be added to Schedule 1 with a written supplemental Agreement. 2.3 In case of any infringement of suspected or past infringement by any third party of copyright subsisting in the Works: (a) the Licensee shall, in its sole discretion, decide what action if any to take; and (b) the Licensee shall have sole control over, and conduct of, all claims and proceedings; (c) the Licensee may require the Licensor to lend its name to such proceedings and provide reasonable assistance, subject to the Licensee giving the Licensor an indemnity in respect of all costs damages and expenses that it may incur including an award of costs against it, directly resulting from Licensor's involvement in such proceedings. 2.4 During the Term, the Licensor shall not: (a) itself exercise; or (b) grant any license permitting any third party to exercise, the rights granted to the Licensee under clause 2.2. 2.4 The Licensor warrants that it owns the Copyright free from any claims or encumbrances and is entitled to grant the rights granted under this agreement. 2.5 In consideration of the rights hereby granted under this Agreement, the Licensee agrees to pay to the Licensor 25% of any Revenue. These monies shall be payable by the Licensee in a manner and at intervals agreed between the parties." In the case of the agreements with Orchid MG Ltd, Kudeta BVBA and RP Films Ltd, the figure specified in clause 2.5 is 27.5%, 37.5% and 27.5% respectively, rather than 25%. The evidence in support of the claim Originally, the only evidence filed in support of the claim was Mr Becker's first witness statement. In paragraphs 1-3, headed "Introduction", he explained that the Claimants sought disclosure by O2 of the names and addresses of the subscribers associated with the IP addresses shown in the CD-ROM attached as Exhibit 1, that the Claimants believed that those IP addresses had been used by the subscribers to make available copyright material for P2P copying and that O2 did not oppose the making of an order in the terms set out in Exhibit 2. In paragraphs 4-14, headed "Underlying cause of action", Mr Becker dealt with the Claimants' claims against the Intended Defendants. In paragraph 5 he stated: "The works in question are certain films created by a number of entities, both natural and corporate. The copyright in these works is owned by the Second to Fourteenth Applicants. [Golden Eye] has entered into a number of agreements which have the effect, inter alia, of allowing [Golden Eye] to bring a claim for breach of copyright on behalf of the Second to Fourteenth Applicants. Copies of the licence agreements are attached hereto as Exhibit 3…" In paragraphs 6-8 Mr Becker briefly explained P2P file sharing, and said that the Claimants were concerned that there was substantial amount of P2P file sharing of their films. In paragraph 9 he said that Golden Eye had subscribed to a tracking service which was able to identify IP addresses from which persons were making available the Second to Fourteenth Claimants' films over P2P networks. In paragraphs 10-13 he explained that it was the Claimants' case that the persons so identified were making the films available to the public contrary to section 20 of the Copyright, Designs and Patents Act 1988 ("CDPA 1988") and authorising within the meaning of section 16 of the 1988 Act the downloading of films which involved the making of infringing copies, and/or acting as joint tortfeasors with the downloaders. In paragraph 14 he said: "[Golden Eye] has a right to bring this application on behalf of the Second to Fourteenth Applicants in its own name pursuant to section 101 of the Copyright Designs and Patents Act 1988." In paragraphs 15-18, headed "The Respondent and the Information Sought", Mr Becker explained in slightly more detail the basis for the Claimants' application against O2. In paragraph 15 he said: "As mentioned above, [Golden Eye] has subscribed to a service which can detect persons making its copyright films available for distribution. The persons responsible are identified by reference to the IP address assigned to them at the time that the film is being made available online." He went on to explain that the only way in which it was possible to find out the names and addresses of the subscribers to whom the IP addresses had been assigned at the relevant times was to obtain disclosure from the ISP. In paragraph 18 he said: "The Applicants are willing to undertake to the Court that they have a genuine intention to pursue infringement actions against any subscribers disclosed to them by the Respondent pursuant to the order sought, where there is a legitimate and appropriate basis to do so, unless a compromise can be reached with such subscriber." In paragraphs 19-25, headed "Correspondence and Procedural Points", Mr Becker said that the Claimants believed that the films listed in Exhibit 1 were being made available for download on P2P filesharing networks on the dates and times listed via the IP addresses listed and that he had written to O2 but O2 was unable to consent to provision of the information sought for data protection and privacy reasons. In paragraph 21 he stated: "If the order is made as sought, [Golden Eye] intends (on behalf of the Second to Fourteenth Applicants and subject to sight of the exact information provided) to send pre-action correspondence to the persons so identified and, if appropriate in due course, to bring proceedings against those persons." He went to deal with certain points in the draft Order. The CD-ROM in Exhibit 1 contains three electronic spreadsheets which list (i) the IP address, (ii) the date, time and time zone, (iii) the ISP and provider network, (iv) a reference number, (v) user and content hash numbers, (vi) the copyright holder and (vii) the work for each alleged infringement. The spreadsheets contain a total of 9,124 entries. It follows that the Claimants are seeking the disclosure of the names and addresses of up to 9,124 O2 subscribers. It has been estimated by Mr Becker that a print-out of the spreadsheets would occupy over a thousand pages. Mr Becker's witness statement neither exhibited, nor was accompanied by, any evidence from the provider of the tracking service referred to by Mr Becker who had been responsible for producing the information in Exhibit 1, as it plainly ought to have done. It was for this reason that I made the second direction set out in paragraph 7 above. In response to that direction, Mr Becker wrote to the Court on 7 February 2012 saying: "The service that has been subscribed to is run by a man called Alireza Torabi who is an IT Consultant. He has prepared a statement setting out the way in which his software detects downloading. His statement is included with this letter. I also have a report from an expert, Mr Vogler which sets out how the system works." Enclosed with Mr Becker's letter were an expert report by Clement Vogler dated 27 June 2020 and a witness statement of Alireza Torabi dated 3 February 2012. In my view both Mr Vogler and Mr Torabi are "experts" as defined in CPR r. 35.2(1), that is to say, "a person who has been instructed to give or prepare expert evidence for the purpose of proceedings". CPR Part 35 does not define "expert evidence". It is generally accepted, however, that expert evidence is evidence the giving of which requires particular expertise in the field in question by virtue of study and/or experience. More specifically, Evans-Lombe J held in Barings plc v Coopers & Lybrand [2001] PNLR 22 at [45] that: "Expert evidence is admissible under s.3 of the Civil Evidence Act 1972 in any case where the Court accepts that there exists a recognised expertise governed by recognised standards and rules of conduct capable of influencing the Court's decision on any of the issues which it has to decide and the witness to be called satisfies the Court that he has a sufficient familiarity with and knowledge of the expertise in question to render his opinion potentially of value in resolving any of those issues." Both Mr Vogler and Mr Torabi have qualifications in information technology, and both give evidence about the operation of software used to monitor P2P filesharing, which is clearly a field requiring technical expertise. Mr Vogler's report appears broadly to comply with the requirements of CPR r. 35.10, Practice Direction 35 – Experts and Assessors and the Protocol for the Instruction of Experts to Give Evidence in Civil Claims. It records that he was instructed to prepare the report by Golden Eye. In his report Mr Vogler describes tests he carried out to verify that a computer application produced by NG3 Systems Ltd ("NG3") called XTrack version 3.0, which is able to identify the source of a file transmitted over the internet through certain P2P networks, namely transmissions involving the eDonkey network and the BitTorrent protocol, correctly identified the IP addresses and dates and times of uploading of a number of test files which he had uploaded. The tests were carried out in October and November 2009. Mr Vogler explains he did not have Xtrack installed on his computer, and did not concern himself with how it worked, but treated it as a "black box". He simply presented it with inputs, namely his test files, and examined the outputs to see if they corresponded to his inputs. He was satisfied that they did correspond. In section 6 of his report, Mr Vogler explains that an IP address identifies a device, which may be a computer or a router. Although ISPs often assign IP addresses dynamically, they retain records which enable the customer to whom the IP address had been assigned to be identified. He goes on to say that the actual user of the computer at the relevant time may or may not be the customer registered with the ISP. He also acknowledges two possible circumstances in which Xtrack might wrongly identify someone as the source of an upload, the more straightforward of which is where the victim's computer has been taken over by a trojan which enables a third party to control the computer. Mr Torabi's statement does not begin to comply with the requirements of CPR r. 35.10, PD35 and the Protocol. In his statement Mr Torabi says that Golden Eye is a subscriber of his, that he uses "detection/logging software … based on an Open Source software called Transmission" and that he prepared the spreadsheets exhibited to Mr Becker's statement. He also explains briefly what Transmission does. He does not refer to Xtrack at all, and there is nothing on the face of his statement to link Transmission with Xtrack. Following the hearing before me, Mr Becker filed a second witness statement in which he confirmed certain matters which counsel for the Claimants had stated on instructions during the hearing. In addition, Mr Becker set out certain matters of which he had been informed by Mr Torabi. In particular, Mr Becker confirmed: (i) the relationship between Golden Eye and Ben Dover Productions which I have described above; (ii) that Mr Torabi was paid according to the time spent by him; (iii) that the software used by Mr Torabi was indeed Xtrack (Mr Torabi had referred to Transmission, because Xtrack is based on Transmission); (iv) that Mr Torabi had used XTrack to monitor filesharing via BitTorrent; and (v) that the IP addresses identified by Mr Torabi were the IP addresses of uploaders/seeders of the files in question. Strictly speaking, the Claimants should have filed an expert report from Mr Torabi complying with the requirements of CPR r. 35.10, PD35 and the Protocol containing the matters set out in his statement and in Mr Becker's second statement, but in all the circumstances I am prepared to overlook this omission. No evidence has been filed by any of the Other Claimants, and Mr Becker's evidence concerning the Other Claimants is limited to the passage quoted in paragraph 16 above. The draft order and draft letter The draft order annexed to the Claim Form and contained in Exhibit 2 to Mr Becker's first witness statement is in the following terms: "UPON the Application as set out in the Claim Form dated … 2011 and Application Notice dated AND UPON the Applicants undertaking not (without further order of the Court) to use or disclose the information provided to it pursuant to this order (or any of it) save for the purposes of these proceedings, or save for the purpose of bringing separate proceedings against any person(s) identified pursuant to this Order, and save for the purposes of any pre-action correspondence relating thereto. AND UPON reading the documents marked in the Court file as having been read AND UPON the Respondent not consenting to this Order but having indicated through their solicitors, Baker & McKenzie, that it does not contest to the making of the Order herein; AND UPON it appearing to the court that there is a prima facie case that each of the respective subscribers associated with the internet protocol addresses listed in Schedule 1 to this order has copied one or more of each of the Applicants' works (the 'Works') without the respective Applicant's permission for the purpose of making it available via file sharing web sites for third parties to download which may give rise to a claim for copyright infringement; AND UPON the Applicants having undertaken to the Court that they have a genuine intention to pursue a claim against any of the subscribers with whom a compromise is not reached and where there is a legitimate and appropriate legal basis to do so; AND UPON it appearing to the Court that on the aforementioned facts each of the Applicants have a real prospect of success in a claim by the Applicants for relevant infringement of the copyright in one or more of the Works; AND UPON each of the Applicants undertaking not to disclose to the general public, by making or issuing a statement to the media, the names or addresses of any person or persons whose identity is made known to the Applicants as a result of the grant of the relief ordered below until after (1) the express consent of the respective person, or (2) the Applicants have commenced proceedings to enforce their copyright and related rights against such person or persons as contemplated by paragraph of this Order; IT IS ORDERED THAT; 1 The Respondent shall within a reasonable period of time from the date of this Order disclose to the First Applicant (if or to the extent known or otherwise available to the Respondent, after carrying out a reasonable search) the name and postal address of the registered owner or owners of each of the internet account or accounts that were assigned to the internet protocol address listed in Schedule 1 hereto, on the dates, times and time zones shown therein. Such disclosure shall be in electronic diary form subject to asymmetric encryption as specified to the First Applicant so far as reasonably practicable and convenient to the Respondent. 2 The Applicants are granted permission (to the extent that it is necessary) to use the information provided to it pursuant to the Order in paragraph 1 herein for the purposes of bringing separate proceedings for copyright infringement against those said persons (or any of them), and for the purposes of any pre-action correspondence relating thereto. 3 Until such time as it has complied with the Order in paragraph 1 herein, the Respondent shall not delete or destroy its records of the information sought. 4(a) The First Applicant shall be the only Applicant entitled to request details of IP addresses held by the Respondent pursuant to this Order. The First Applicant shall issue a request to the Respondent for the details of the registered owner or owners of the IP addresses listed in Schedule 1 in batched of no more than 1000 IP addresses (each a 'Batch'). 4(b) Within 7 days of the date of this Order, the First Applicant, on behalf of all the Applicants, shall pay into an escrow account to be held by the Respondent's solicitors, Baker & McKenzie LLP, (the 'Escrow Account') a sum equal to £2.20 per IP address requested within the initial Batch together with £2500 costs to be held as security for the costs specified in paragraph 5 below. 4(c) At least 7 days prior to the making of any further request to the Respondent in respect of subsequent Batches, the First Applicant, on behalf of all of the Applicants, shall pay into the Escrow Account a sum equal to £2.20 per IP address requested within each subsequent Batch. 4(d) For the avoidance of doubt, the Respondent shall be under no obligation to disclose details of any IP address requested within a Batch unless and until the corresponding payment into the Escrow Account has been made. 4(f) The First Applicant shall be entitled to set-off the amounts to be paid into the Escrow Account in respect of subsequent Batches (in accordance with paragraph 4(c)) against any sums remaining in the Escrow Account and not drawn down by the Respondent on the basis of paragraph 4(e). If any sums remain in the Escrow Account after the final Batch has been requested by reason of paragraph 4(e), the Respondent shall return such sums to the Respondent [sic] as soon as reasonably practicable. 5 The Respondents shall be entitled within 14 days of invoicing the First Applicant to draw down such amount from the Escrow Account to cover its reasonable costs will include all the reasonable costs (including solicitors' costs) of (1) considering the Application, (2) responding to, preparing for and attending (if necessary) the hearing of this Application, (3) complying with this Order (including reasonable software development and costs for the purposes of efficiently complying with this and future orders to be agreed) and (4) responding to queries and complaints pertaining to this Order which are received by the respective Respondent after the date on which disclosure takes place. 6 To the extent that the Respondent's reasonable costs exceed the amount contained within the Escrow Account, the First Applicant shall, within 30 days of being invoiced in writing, pay to the Respondent the outstanding reasonable costs of complying with the Order in any event such costs to be assessed if not agreed. 7 The Order in paragraph 4 herein is without prejudice to the rights (if any) of the Applicants to seek to recover the said costs and/or their own costs of this application (or any of them) from the persons identified pursuant to this Order (or any of them) whether by way of an order for costs or damages in these or any other proceedings, or by any other means whatsoever. However, the Applicants will not use or disclose any documents and/or information disclosed pursuant to this Order for any purpose other than pursuing a claim for infringement of the copyright of the Applicants copyright in one or more of the Works. 8 The Applicants shall include in every first letter of claim to each potential defendant a copy of this order and the letter in the form set out in Schedule 2 hereto. 9 Within six months of the date of disclosure, the First Applicant shall provide to the Respondent a written report stating precisely from the relevant names disclosed how many of those persons (1) were sent letters of claim; (2) makes a positive and expressed confession of liability; (3) by their own volition accepts the First Applicant's compromise agreement without an expressed confession of liability; (4) requests the Applicants commences proceedings; and (5) against whom the Applicants have issued legal proceedings. 10 Within twelve months of the date of disclosure, the Applicants shall destroy all copies of any data which has not been used to either send a letter or claim or issue legal proceedings for infringement of copyright on the terms set out in this Order and shall provide written confirmation to the Respondent that such destruction has taken place." The intention is that Schedule 1 will consist of a copy of the CD-ROM in Exhibit 1 to Mr Becker's statement. Schedule 2 contains a draft letter in the following terms: "Dear GOLDEN EYE (INTERNATIONAL) LIMITED ('GEIL') Nature of GEIL's rights It is with regret that we are writing this letter to you. However, GEIL is very concerned at the illicit distribution of films over the internet. GEIL has the exclusive licence of all of the rights in the film sold under the name '[E]' ('the Work'). The Work has been made available for sale in the United Kingdom. This letter is written pursuant to the Code of Practice ('the Code') for pre-action conduct in intellectual property disputes. This letter follows the Code and your response should also follow the Code. Applicant copy of the relevant part of the Code is enclosed with this letter. This letter will set out the claim made by GEIL. In accordance with the Code, you are required to provide a full written response as soon as is reasonably possible. We draw your attention to paragraph 4.1 of the Code. Forensic Analyst We have obtained the services of a forensic computer analyst to search for and identify internet addresses from which out copyright works (including the Work) are being made available on so called 'peer to peer' (P2P) internet sites for the purposes of making them available for download by third parties without our client's consent or licence. Evidence GEIL's forensic computer analyst has provided us with evidence that the following UK date and time, [B] [C], all or part of the Work was made available from the internet protocol (or IP) address [Applicant], specifically for the purpose of downloading by third parties. We attach a copy of his report. We showed this evidence to your internet service provider Telefonica UK Limited ('O2') who would not supply us with any information without a Court order. We therefore made an application to Court asking for an Order against O2 that they disclose the names and addresses associated with the IP address on the date and time in question. On 2011 Mr Justice , sitting in the High Court, ordered O2 to give us disclosure of your name and address for the purpose of this letter. For your information we enclose a copy of that Order. In accordance with that Order, O2 identified you as the subscriber noted in their systems as on their network associated with the IP address on the date and at the time in question. Please be assured that we have stringent security measures in force to ensure that, so far as is humanly possible, the data we hold is fully protected. Infringing Acts The act of file sharing the Work without the consent of GEIL is unlawful and, in particular, has caused damage to our business. In effect, every copy of the Work that is downloaded represents a potential lost sale. Whenever the Work is made available for download to other parties there is the opportunity for multiple downloads to take place resulting in lost revenue. In addition to GEIL selling direct, we also enter into licensing agreements for third party organisations to distribute our content. File sharing also results in lost royalty revenue and weakening of the brands saleability. We have set out below the infringing acts you are liable for to GEIL: 1. either for copying the Work on to the hard drive of your personal (or office) computer ('PC') (pursuant to the sections 16(1)(a) and 17 of the Copyright Designs and Patents Act 1988) ('The Act'); and/or for 2. making the Work available to third parties for downloading (pursuant to sections 16(1)(d) and 20 of the Act). Please note that such making available can be caused simply by a person connected to your internet connection downloading the Work, during the course of which the part downloaded is then made available to other third parties connected to the network in question. In the event that you were not responsible for the infringing acts outlined above, you should make full disclosure to us of the other parties at your residence using your internet connection to make the Work available for download. Legal Consequences As we have stated above, the extensive file sharing activity is causing damage to GEIL's business. We are therefore left with no alternative but to monitor carefully its intellectual property rights and enforce them against infringers. In the event that this matter cannot be resolved, it may become necessary for GEIL to being a claim against you for copyright infringement. This claim would be brought in the civil court, where liability is determined on the balance of probabilities. In that event, we must make you aware that if successful, we will be entitled to recover from you damages and possibly a contribution towards the legal costs if you choose to instruct lawyers. If GEIL secures a judgment, and in the event that you were not able to pay whatever sums the court may order you to pay, we would have no option but to take steps to enforce the debt against you. Proposed Settlement GEIL is prepared to give you the opportunity to avoid legal action by proposing a settlement offer, the details of which are set out below. Our offer to resolve the claim against you is intended, on this occasion, to focus your attention on the potentially serious consequences of your actions (or inaction, by permitting a third party to use your internet connection). We also trust that these actions will not be repeated. Our offer is that you: 1. promise in a written undertaking not to upload, download, make available or otherwise share the Work or any of GEIL works (or other intellectual property) and/or permit others to do the same using your internet connection, at any time in the future, either from the above IP address or any other; 2. agree to delete any copies of the Work (and any other intellectual property of GEIL from your hard drive and/or operating system and/or any copies saved to disk (or other media), other than those that were purchased by you from a legitimate source; and 3. pay £700.00 as compensation to GEIL for its losses. Next Steps – payment and undertakings You can provide the undertaking (referred to at 1 and 2 above) by signing the written undertakings enclosed with this letter and returning them to us, together with your payment, using the attached payment form. Payment must be made either by cheque, bank transfer, credit card or debit card. No other form of payment will be accepted. Alternatively you can make payment or speak to a member of our Copyright Infringement Department on 0871 990 6500 or pay online at www.goldeneyeint.com. For the avoidance of doubt, these undertakings will represent an agreement between you and GEIL and if you act in breach of that agreement, we will have no option but to take further action against you. In accordance with the Code, a response is required as soon as reasonably possible. We consider 14 days to be a reasonable period. Accordingly, if this matter is to settle, the payment and undertakings must be made and received by us within 14 days of receipt of this letter. In the event that either the payment or undertakings are not received within fourteen days of the date of this letter, GEIL reserves the right to take further action which could include commencement of proceedings and possibly an application to your ISP to slow down or terminate your internet connection. Legal Advice If you are in any doubt about the contents of this letter and its seriousness, we would recommend that you seek legal advice as a matter of urgency. All submissions from you must be in writing. You may also contact us by email at [email protected] (quoting the reference at the top of this letter) or by fax on 0871 990 6510. Yours faithfully Copyright Infringement Department Golden Eye (International) Limited" Although the draft letter is expressed in terms appropriate to claims for infringement of copyrights of which Ben Dover Productions is the owner and Golden Eye is the exclusive licensee, and paragraph 8 of the draft order on its face requires all letters to be in that form, counsel for the Claimants explained that it was intended that the letter would be suitably adapted in the case of claims concerning infringements of copyrights owned by the Other Claimants. "Speculative invoicing" Consumer Focus accepts that consumers infringe copyright online, in particular through P2P filesharing. Consumer Focus also accepts that copyright owners have a legitimate interest in obtaining legal remedies to combat such infringements, for example by obtaining blocking injunctions against ISPs pursuant to section 97A of the CDPA 1988 (as to which, see Twentieth Century Fox Film Corp v British Telecommunications plc [2011] EWHC 1981 (Ch), [2011] RPC 28 and Dramatico v BSkyB). Consumer Focus contends, however, that the present claim is a manifestation of a more unsavoury practice called "speculative invoicing", which has attracted considerable media attention in the last couple of years. Consumer Focus describes this as follows. In essence, it involves the sending of letters before action to thousands of internet subscribers whose internet connection is alleged to have been used for small-scale copyright infringement and whose names and addresses have been obtained by means of Norwich Pharmacal orders against their IPSs. Without seeking to confirm whether the internet subscriber was the person responsible for the uploading/downloading of the copyright work that has been detected, the internet subscriber is requested to pay a substantial sum which has no relation to the actual damage caused by the alleged copyright infringement or the costs incurred. Typical sums demanded are in the range £500 to £1000. Invariably, there is a profit-sharing arrangement between the party conducting the litigation and the client, with the former getting the lion's share. The tactic is to scare people into paying the sums by threatening to issue court proceedings. If this does not work, proceedings are not normally issued. This is because the economic model for speculative invoicing means that it is more profitable to collect monies from those who pay rather than incur substantial costs in pursuing those who do not pay in court. Where proceedings are issued, they are not pursued if a default judgment cannot be obtained. Consumer Focus says that, because speculative invoicing is indiscriminate, it can cause real suffering on the part of consumers. In support of this, Consumer Focus relies upon a response by Citizens Advice (an operating name of the National Association of Citizens Advice Bureaux) dated July 2010 to an Ofcom consultation on "Online infringement of copyright and Digital Economy Act 2010 – draft initial obligations code". The response set out a number of examples of cases of individuals who had contacted CAB after receiving letters asking for substantial sums about which they were concerned. The following example is typical: "A CAB client in Buckinghamshire was worried about the consequences of not paying a £295 demand for copyright breach despite being certain that no breach had occurred in her household. At the time of the claimed download the client was at work, her eldest child was away at university and the two younger children were at school. She checked the download history of all the computers and found no evidence to substantiate the claim." Similar examples are given in the decision of the Solicitors Disciplinary Tribunal and the judgments of HHJ Birss QC referred to below. ACS:Law and Media CAT Consumer Focus has drawn particular attention to the activities of a solicitor called Andrew Crossley who traded as ACS:Law. By a decision dated 6 February 2012 the Solicitors Disciplinary Tribunal ordered that Mr Crossley be suspended from practice for a period of two years from 16 January 2012. The following account is based partly on the Tribunal's decision and partly on the judgments of HHJ Birss QC referred to below. Between 2006 and 2009 another firm of solicitors called Davenport Lyons (referred by the Tribunal as "Firm A") had developed and pursued a scheme for recovering compensation for copyright owners whose copyright works had been subject to filesharing. In April 2009 ACS:Law entered into an agreement with Davenport Lyons under which Davenport Lyons transferred this work to ACS:Law, including the members of staff involved and permission to use the precedents that had been created. In May 2009 four of Davenport Lyons' clients transferred their instructions to ACS:Law. Subsequently, ACS:Law obtained two further clients, one of whom was Media C.A.T. Ltd ("Media CAT"). ACS:Law instructed four companies to conduct monitoring of IP addresses involved in P2P filesharing. In the case of Media CAT, the monitoring was carried by NG3. Using information provided by the monitoring companies, ACS:Law obtained Norwich Pharmacal orders on behalf of its clients against ISPs requiring disclosure of the names and addresses of the subscribers to whom the IP addresses detected had been allocated at the relevant times. Once ACS:Law had the names and addresses, it sent letters of claim to the subscribers together with supporting documentation. A point of some significance which is scarcely mentioned in the Tribunal's decision, but which HHJ Birss QC noted in his judgments, is that, at least in the case of Media CAT's claims, the letters of claim concerned pornographic films. The letters of claim demanded payment of a specified sum as compensation. In the case of Media CAT, the sum demanded varied, but in general it was initially £540 and later £495. Mr Crossley's own evidence was that the reason for the reduction was that "the client wants to bring the figure below £500 because he believes there is a psychological barrier at £500 that prevents people from paying so he is trying to optimise revenue on settlement". ACS:Law entered into retainers for "non-contentious" work with its clients which provided for the net sums recovered (the damages and costs paid by the persons to whom letters of claim were sent less applicable disbursements and the ISPs' costs) to split between ACS:Law, the monitoring company and the client. In the case of Media CAT, the split was 52.5% to ACS:Law, 12.5% to NG3 and 35% to Media CAT. (It should be noted that the third and fourth judgments of HHJ Birss QC cited below refer to ACS:Law receiving 65% of the revenue. It appears that he was unaware that NG3 received 12.5%.) In addition, ACS:Law entered into retainers for "contentious" work with three clients, including Media CAT, which incorporated collective conditional fee agreements. As at 30 June 2010, ACS:Law had sent 20,323 letters of claim and had recovered the total sum of £936,570.92, of which ACS:Law received £341,078.92. As at 9 August 2010 the Solicitors' Regulation Authority had received 511 complaints about ACS:Law. In addition, at least 30 individuals had complained to the consumer magazine Which? Many also complained to their MPs. Over a period from August to November 2010 ACS:Law acting on behalf of Media CAT commenced claims for copyright infringement against 27 individuals in the Patents County Court. In November 2010 they applied for default judgment in eight of these cases using a procedure almost unheard of in intellectual property cases called a request for judgment ("RFJ"), which is without notice to the defendant. These RFJs came before HHJ Birss QC on paper. In a judgment dated 1 December 2010 he refused the RFJs (see Media CAT v A [2010] EWPCC 17). The judgment questioned whether the RFJ procedure was appropriate for copyright cases of the kind brought by Media CAT. The RFJ procedure is designed for claims for specified sums of money (and certain other claims) where no judicial decision is required, whereas Media CAT's claims raised difficult and potentially controversial legal issues. The judgment also analysed Media CAT's particulars of claim briefly, and raised a number of concerns with the way the matter was presented. One was that Media CAT did not appear to be either the owner of or an exclusive licensee of the copyrights, but rather the beneficiary of an agreement with such persons giving it the right "to identify, pursue and prosecute instances of copyright infringement". Another was that Media CAT alleged that the defendants could be liable for infringement where third parties had gained access to the defendants' internet connections due to inadequate security. After the judgment in Media CAT v A the Patents County Court received a letter from a defendant in another case brought by Media CAT. The letter complained about various aspects of the way in which Media CAT's case was being conducted. On 17 December 2010 HHJ Birss QC convened a hearing for directions in all 27 Media CAT cases commenced before the Patents County Court on 17 January 2011 (see Media CAT v Billington [2010] EWPCC 18). On 13 January 2011 Mr Crossley attended the court office with 27 notices of discontinuance, and asked the Court to vacate the hearing on 17 January 2011. HHJ Birss QC declined to vacate the hearing, but after some discussion on that day the matter was adjourned for a week. At the adjourned hearing two witness statements from Mr Crossley were put before the Court setting out the history of Media CAT's claims. He made it clear that MediaCAT intended to re-issue claims which had been discontinued, saying that the reason for the discontinuance was to enable them to be reformulated. Some of the claims had been settled, but the defendants in a number of claims applied for the notices of discontinuance to be set aside as an abuse of the process. On 8 February 2011 HHJ Birss QC handed down a judgment setting aside the notices of discontinuance as an abuse of process: see Media CAT v Adams [2011] EWPCC 6, [2011] FSR 8. The judgment merits reading in full, but for present purposes the following points are particularly pertinent. First, HHJ Birss QC commented on the standing of Media CAT to bring the claims as follows: "4. The claimant Media CAT has claimed at various stages to be (i) a copyright protection society (whose members are the owners of the copyright in the works), (ii) the exclusive territorial licensee of rights in the work, and (iii) to represent the owners of copyright or exclusive licensees of that copyright. It is none of those. Copyright protection societies or collecting societies (such as the PRS, MCPS and the like) are reputable organisations concerned with licensing copyright in various contexts under licensing schemes. Media CAT is not one of those and Mr Ludbrook, Media CAT's counsel at this hearing, accepted Media CAT was not a 'copyright protection society'. No copyright lawyer would use that term to describe Media CAT. Also no copyright lawyer would call Media CAT an exclusive territorial licensee of the copyright. It does not have a licence to do any of the acts restricted by copyright (such as copying the films or issuing them to the public, see sections 16(1) and 92(1) of the Copyright Designs and Patents Act 1988). Finally Media CAT does not represent the copyright owners in the sense that it brings the proceedings in a representative capacity nor do I understand it to act on behalf of the copyright owners in the sense that its acts can bind the copyright owners by a form of agency. Mr Ludbrook did not seek to persuade me that Media CAT was any of these things. 5. So who is Media CAT? At best it is a company with a contract which gives it 'all rights necessary to allow [Media CAT] to inquire claim demand and prosecute through the civil courts where necessary any person or persons identified as having made available for download a film for which [an agreement] has expressly licensed'. The expression quoted comes from clause 1.1.1 of an agreement between Media CAT and a company called Sheptonhurst Ltd dated 19th November 2009. According to the agreement Sheptonhurst are the owners of copyright in the films (clause 2.2) and the agreement purports to give Media CAT the right I have described. It also purports to give Media CAT the 'sole and exclusive right to demand collect and receive all revenues in respect of illegal file sharing' on the terms of the agreement. The extent to which it is legally possible for a company like Media CAT to acquire the rights it claims in relation to copyright is open to question and has not been tested in court." Secondly, HHJ Birss QC was critical of the letters of claim sent by ACS:Law on behalf of Media CAT, in particular for the following reasons: "17. … A claimant or potential claimant in a civil case is not required by the law to write a mealy mouthed or apologetic letter to a potential defendant. Robust correspondence between lawyers and sophisticated parties is part of the legal process. However letters which deal with issues of the complexity of the ones arising in this case need to be considered very carefully if they are addressed to ordinary members of the public. 18. The letters assert Media CAT is a copyright protection society (which it is not) and the exclusive territorial licensee of rights granted by the copyright owner (which it is not). … The letter would be understood by many people as a statement that they have been caught infringing copyright in a pornographic film, that Media CAT has evidence of precisely that and that a court has already looked into the matter (a copy of the Order of Chief Master Winegarten is provided). They may think that their own ISP has decided that they are indeed infringing. … 19. A sum of £495 is demanded as compensation. This sum is said to include damages as well as 'ISP administration costs (and its legal costs where applicable), a contribution to our clients legal costs incurred to date and all additional costs'. However no breakdown of the figure is given. The letter states that if this sum is agreed no further payment will be sought in relation to the infringement(s) being written about and the matter will be closed. In a section headed 'next steps - commencing proceedings' it is made clear that legal proceedings will be commenced if the matter cannot be settled to Media CAT's satisfaction. … 20. The letter ends with a statement that 'this letter complies with the Code of Practice for Pre-Action Conduct in Intellectual Property Disputes (January 2004) a copy of which is available on our website'. That sounds official but there is in fact no formal Pre-action Protocol for Intellectual Property. The CPR includes a Practice Direction – Pre-action Conduct which applies generally and 9 specific pre-action protocols are in force which deal with particular areas of practice. Intellectual Property cases are not one of those areas. There was an attempt some years ago to settle a pre-action protocol for IP cases but the protocol was not adopted by the court. It may be the informal one is being referred to. The absence of an official protocol is the reason why CPR Pt 63 r63.20(2), which relates to proceedings before this the Patents County Court, refers only to the general Practice Direction – Pre-action Conduct. 21. Perhaps many, maybe more of the recipients of these letters have been squarely infringing the copyright of Sheptonhurst on a major scale and know that they have been doing exactly that. They may think £495 is a small price to pay and settled immediately. That is a matter for them. However it is easy for seasoned lawyers to under-estimate the effect a letter of this kind could have on ordinary members of the public. This court's office has had telephone calls from people in tears having received correspondence from ACS:Law on behalf of Media CAT. Clearly a recipient of a letter like this needs to take urgent and specialist legal advice. Obviously many people do not and find it very difficult to do so. Some people will be tempted to pay, regardless of whether they think they have actually done anything, simply because of the desire to avoid embarrassment and publicity given that the allegation is about pornography. Others may take the view that it all looks and sounds very official and rather than conduct a legal fight they cannot afford, they will pay £495. After all the letter refers to an order of the High Court which identified them in the first place. Lay members of the public will not know the intricacies of the Norwich Pharmacal jurisdiction. They will not appreciate that the court order is not based on a finding of infringement at all." Thirdly, HHJ Birss QC elaborated on his concerns about Media CAT's allegations of infringement: "27. The Particulars of Claim also mentioned unsecured internet connections and tied in with that alleged infringement by the individual defendant either by infringing themselves or 'by allowing others to do so'. The judgment notes that I am aware of no published decision in this country which deals with the issue of unsecured internet connections in the context of copyright infringement and refers in passing to a decision of German Bundesgerichtshof (BGH) on the point. The point about 'allowing' is that the word used in s16(2) of the 1988 Act is 'authorising' not 'allowing'. They are by no means the same and the difference may be very important if the allegation is about unauthorised use of an internet router by third parties. 28. This question of unsecured internet connections and infringing by 'allowing others' is a critical one since Media CAT's monitoring exercise cannot and does not purport to identify the individual who actually did anything. All the IP address identifies is an internet connection, which is likely today to be a wireless home broadband router. All Media CAT's monitoring can identify is the person who has the contract with their ISP to have internet access. Assuming a case in Media CAT's favour that the IP address is indeed linked to wholesale infringements of the copyright in question (like the Polydor case (above)), Media CAT do not know who did it and know that they do not know who did it. … 29. Media CAT's case on this is in two parts. Of course Media CAT cannot know who actually used the P2P software, so in paragraph 3 of the Particulars of Claim they plead that the software was used either by the named defendant who was identified by the ISP, or by someone they authorised to use the internet connection or someone who gained access to the internet connection 'due to the router having no or no adequate security'. Then in paragraph 5 the plea is that "in the premises" the defendant has by himself, or by allowing others to do so, infringed. So taken together these two paragraphs show that the Particulars of Claim is pleaded on the basis that one way or another the defendant must be liable for the infringement which is taking place. 30. But the argument is based on equating 'allowing' and 'authorising' and on other points. What if the defendant authorises another to use their internet connection in general and, unknown to them, the authorised user uses P2P software and infringes copyright? Does the act of authorising use of an internet connection turn the person doing the authorising into a person authorising the infringement within s16(2)? I am not aware of a case with decides that question either. Then there is the question of whether leaving an internet connection 'unsecured' opens up the door to liability for infringement by others piggy backing on the connection unbeknownst to the owner. Finally what does 'unsecured' mean? Wireless routers have different levels of security available and if the level of security is relevant to liability - where is the line to be drawn? No case has decided these issues…." Fourthly, HHJ Birss QC held that the notices of discontinuance were an abuse of the process for two reasons. First, they would give the copyright owners, who had not been joined to the proceedings, an unwarranted collateral advantage stemming from a breach of section 102 of the CDPA 1988 and the avoidance of CPR r. 19.3, namely that the copyright owners would avoid being subject to CPR r. 38.7. Secondly, they would give Media CAT, ACS:Law and the copyright owners an unwarranted collateral advantage of avoiding judicial scrutiny of the underlying claims on which the Norwich Pharmacal orders were based. His reasons for reaching the latter conclusion are too long to quote in full, but they include the following: "98. The question in my judgment is whether the effect the notices of discontinuance undoubtedly have of bringing these cases to an end and thereby terminating any scrutiny by the court of the claims is an unwarranted advantage to Media CAT amounting to an abuse of the court's process. In my judgment it is the existence of a huge wider pool of parallel claims including but not limited to the 2[7] now before the court which is a decisive factor here. Problems with the 2[7] claims before the court of the kind discussed in this judgment are generic to all of them and to all the other claims Media CAT is making against the individuals identified by the Norwich Pharmacal orders in the first place. 99. Media CAT and ACS:Law have a very real interest in avoiding public scrutiny of the cause of action because in parallel to the 2[7] court cases, a wholesale letter writing campaign is being conducted from which revenues are being generated. This letter writing exercise is founded on the threat of legal proceedings such as the claims before this court. 100. … Simple arithmetic shows that the sums involved in the Media CAT exercise must be considerable. 10,000 letters for Media CAT claiming £495 each would still generate about £1 Million if 80% of the recipients refused to pay and only the 20% remainder did so. Note that ACS:Law's interest is specifically mentioned in the previous paragraph because of course they receive 65% of the revenues from the letter writing exercise. In fact Media CAT's financial interest is actually much less than that of ACS:Law. Whether it was intended to or not, I cannot imagine a system better designed to create disincentives to test the issues in court. Why take cases to court and test the assertions when one can just write more letters and collect payments from a proportion of the recipients? 101. Beyond Mr Crossley's statement the only evidence I have seen of Media CAT making good an intention to press the claims in court is the 8 RJFs seeking default judgment in the October/November 2010. Mr Crossley's explanations never refer to a trial and never mention joining the copyright owners into the proceedings. His statements concerning his and his clients intent to litigate would all be true even if all Media CAT ever intended was to go as far as RFJs. I have seen no evidence of actions evidencing a desire to press these claims beyond applications for judgment in default. Furthermore even assuming Media CAT and ACS:Law knew at the start that they would have to litigate some claims sometime to some extent, it is not at all clear what Media CAT intends to do now. Mr Crossley says he was keen to continue the litigation and he stands by the initial letters of claim. In my judgment the letters of claim are flawed and not a solid place to stand. Mr Crossley is keen to continue the litigation but he is not doing so. 102. The GCB episode is damning in my judgment. This shows that Media CAT is a party who, while coming to court to discontinue, is at the very same time trying to ram home claims formulated on exactly the same basis away from the gaze of the court. That will not do. I find that these notices of discontinuance are indeed an abuse of the court's process. The advantage of discontinuing as opposed to applying to amend is unwarranted in that it avoids judicial scrutiny of the underlying basis for wider campaign orchestrated by Media CAT and ACS:Law to generate revenue under the various agreements such as the Sheptonhurst agreement." Fifthly, HHJ Birss QC made the following observations about the Norwich Pharmacal jurisdiction: "13. The Norwich Pharmacal jurisdiction has been considered and used in many further cases and wider contexts. It plays an important role in the courts armoury to see that justice is done. It is not a requirement that the applicant will be bringing court proceedings, see British Steel Corp v Granada Television Ltd [1981 AC 1096, Lord Fraser at 1200C-G and Ashworth Hospital Authority v MGN Ltd [2002] UKHL 29 [2001] 1 WLR 2033, Lord Woolf CJ at [41]-[47]. In Ashworth the reason for seeking the identity of the person in question was to discipline the person, which in practise would mean they would be dismissed (see [19]). 14. Nevertheless there is a potential difficulty with the Norwich Pharmacal process which is put into focus by the cases before me. The respondent to the Norwich Pharmacal application for disclosure - while obviously wishing to ensure that an order is not made when it would be inappropriate to do so – has no direct interest in the underlying cause of action relied on. The respondent is not going to be sued. A Norwich Pharmacal application is not and cannot be the place in which to try the cause of action. That happens when the person's identity is revealed and then usually proceedings are commenced. Even if proceedings are not commenced – in a situation like Ashworth where a single name is being sought in order to discipline the person – no doubt that person would be able to take whatever steps to defend themselves they wished to and if necessary the matter could come to an appropriate court or tribunal. … 112. I cannot imagine that the court making the Norwich Pharmacal orders in this case did so with a view to setting in train an exercise that was to be conducted in the manner that has subsequently emerged. In my judgment when a Norwich Pharmacal order is sought of the kind made in this case, it may well be worth considering how to manage the subsequent use of the identities disclosed. Perhaps consideration should be given to making a Group Litigation Order under CPR Part 19 from the outset and providing a mechanism for identifying tests cases at an early stage before a letter writing campaign begins. When Anton Piller (search and seizure) orders are made the practice is for a supervising solicitor who does not act for the claimant to be closely involved in order to ensure that the orders are not abused. The supervising solicitors are experienced practitioners. Perhaps a court asked for a Norwich Pharmacal order of the kind made here should consider requiring some similar form of supervision from a[n] experienced neutral solicitor." Subsequently HHJ Birss QC struck out the subsisting claims, made a "stage one" wasted costs order against Mr Crossley and joined Mr Crossley to the proceedings for the purposes of the defendants seeking an order for costs against him under section 51 of the Senior Courts Act 1981: see Media CAT v Adams (No 2) [2011] EWPCC 10, [2011] FSR 29. My understanding is that the costs proceedings were subsequently settled. ACS:Law ceased trading at the end of January 2011. In March 2011 the Solicitors Regulation Authority commenced disciplinary proceedings against Mr Crossley. At the hearing before the Tribunal, Mr Crossley admitted six allegations of breach of the Solicitors' Code of Conduct 2007, including: i) acting in a way that was likely to diminish the trust the public places in him or in the legal profession; ii) entering into arrangements to receive contingency fees for work done in prosecuting or defending contentious proceedings before the courts of England and Wales except as permitted by statute or the common law; iii) acting where there was a conflict of interest in circumstances not permitted under the Rules, in particular because there was a conflict or significant risk that his interests were in conflict with those of his clients; and iv) using his position as a solicitor to take or attempt to take unfair advantage of other persons, being recipients of letters of claim either for his own benefit or the benefit of his clients. Infringement claims brought by Golden Eye So far as the evidence before me goes, Golden Eye has only brought three claims for infringement arising out of information obtained by virtue of the Norwich Pharmacal orders made by Proudman and Vos JJ. All three claims were issued in the Northampton County Court, in at least two cases using the Money Claim Online system ("MCOL"). I would observe that MCOL is unsuitable for copyright infringement claims and should not be used for that purpose. All three claims were subsequently transferred to another county court and thence to the Patents County Court. In each case the Particulars of Claim were in the following form (the example quoted is from Golden Eye v Maricar): "The Claimant is the exclusive licensee in the UK of rights in the film sold under the name Fancy an Indian? (the film), including the right to act in relation to any breach of copyright. On 27th November 2009 the Claimant believes the defendant unlawfully made all or part of the film available from his IP address for downloading by third parties. On 29th September 2010 the Claimant sent a letter before action to the Defendant setting out in full its claim for breach of copyright. The Defendant failed to reply. The Claimant sent another letter to the Defendant on 8th November 2010 to which no response was received. The Claimant claims #700 for breach of copyright. The Claimant claims interest under section 69 of the County Courts Act 1984 at the rate of 8% a year from 27/11/2009 to 21/01/2011 on #700.00 and also interest at the same rate up to the date of judgment or earlier payment at a daily rate of #0.15." In two of these cases, Golden Eye served a notice of discontinuance after the claims had been transferred to the Patents County Court. In one of those cases the defendant applied for various orders including an order that the copyright owner, Ben Dover Productions, be added. In a third case Golden Eye obtained a default judgment, but the defendant applied to set it aside. On 23 September 2011 HHJ Birss QC directed an oral hearing of the applications in the latter two cases: see Golden Eye v Maricar [2011] EWPCC 27. The evidence before me does not reveal what happened subsequently. It appears probable that both cases were settled. Similarities and differences Counsel for Consumer Focus was at pains to emphasise the similarities between the present case and the ACS:Law/Media CAT cases, while counsel for the Claimants was at pains to emphasise the differences. Counsel for Consumer Focus particularly stressed the following similarities: i) Golden Eye had entered into agreements with the Other Claimants under which Golden Eye was not licensed by the copyright owner to do any of the acts restricted by the copyrights in the films, but only to "act for it in relation to any alleged breaches of copyright arising out of [P2P filesharing]". ii) Those agreements typically provided for Golden Eye to receive 75% of the revenue (slightly less in some cases). iii) Golden Eye intended to send letters of claim to up to 9,124 Intended Defendants. iv) The draft letter of claim which Golden Eye proposed to send was similar to the letters of claim sent by ACS:Law, and included some (though not all) of the objectionable features commented on by HHJ Birss QC. v) The letter claimed £700 by way of compensation without any attempt at justifying that figure. As counsel pointed out, if all 9,124 Intended Defendants paid that sum, the revenue generated would be £6,386,000, of which Golden Eye would receive approximately £4.8 million (given that it receives 100% of the revenue where the copyright owner is Ben Dover Productions, but it receives less than 75% in some cases). vi) The conduct of the three claims brought by Golden Eye against alleged infringers as a result of the earlier Norwich Pharmacal orders suggested a desire to avoid judicial scrutiny of such claims. Counsel for Golden Eye particularly stressed the following differences: i) ACS:Law has not been involved in Golden Eye's claims. Golden Eye brought the present claim itself, albeit that it instructed solicitors and counsel for the purposes of the hearing before me. There is therefore no question of a solicitor acting improperly in the various ways that Mr Crossley did. ii) The copyright owners have been joined to this claim as claimants from the outset. iii) In the case of the agreement between Golden Eye and Ben Dover Productions, as explained below, there is no dispute that it constitutes an exclusive licence giving Golden Eye title to sue. An additional difference which was not mentioned by counsel for the Claimants, but which I regard as relevant, is that the Claimants appear to be taking a somewhat less ambitious approach than Media CAT to the scope of their potential claims of infringement against the Intended Defendants. I shall return to this point below. I accept that there are both similarities and differences between the present claim and those made by ACS:Law/Media CAT. In any event, the present claim must be considered on its own merits. The legal context Although the legal context for the present application consists primarily of the jurisprudence concerning an equitable remedy under English law, it is also necessary to have regard to a number of domestic and European legislative provisions. CDPA 1988 The CDPA 1988 includes the following provisions: "Exclusive licences 92.(1) In this Part an 'exclusive licence' means a licence in writing signed by on behalf of the copyright owner authorising the licensee to the exclusion of all other persons, including the person granting the licence, to exercise a right which would otherwise be exercisable by the copyright owner. … Provisions as to damages in infringement action 97. … (2) The court may in an action for infringement of copyright having regard to all the circumstances, and in particular to- (a) the flagrancy of the infringement, and (b) any benefit accruing to the defendant by reason of the infringement, award such additional damages as the justice of the case may require. … Rights and remedies of exclusive licenseee 101.(1) An exclusive licensee has, except against the copyright owner, the same rights and remedies in respect of matters occurring after the grant of the licence as if the licence had been an assignment. (2) His rights and remedies are concurrent with those of the copyright owner; and references in the relevant provisions of this Part to the copyright owner shall be construed accordingly. (3) In an action brought by an exclusive licensee by virtue of this section a defendant may avail himself of any defence which would have been available to him if the action had been brought by the copyright owner. … Exercise of concurrent rights 102.(1) Where an action for infringement of copyright brought by the copyright owner or an exclusive licensee relates (wholly or partly) to an infringement in respect of which they have concurrent rights of action, the copyright owner or, as the case may be, the exclusive licensee may not, without the leave of the court, proceed with the action unless the other is either joined as a plaintiff or added as a defendant. (2) A copyright owner or exclusive licensee who is added as a defendant in pursuance of subsection (1) is not liable for any costs in the action unless he takes part in the proceedings. (3) The above provisions do not affect the granting of interlocutory relief on an application by a copyright owner or exclusive licensee alone. (4) Where an action for infringement of copyright is brought which relates (wholly or partly) to an infringement in respect of which the copyright owner and an exclusive licensee have or had concurrent rights of action— (a) the court shall in assessing damages take into account— (i) the terms of the licence, and (ii) any pecuniary remedy already awarded or available to either of them in respect of the infringement; (b) no account of profits shall be directed if an award of damages has been made, or an account of profits has been directed, in favour of the other of them in respect of the infringement; and (c) the court shall if an account of profits is directed apportion the profits between them as the court considers just, subject to any agreement between them; and these provisions apply whether or not the copyright owner and the exclusive licensee are both parties to the action. …" The Enforcement Directive Article 3 of European Parliament and Council Directive 2004/48/EC of 29 April 2004 on the enforcement of intellectual property rights ("the Enforcement Directive") provides as follows: "General obligation 1. Member States shall provide for the measures, procedures and remedies necessary to ensure the enforcement of the intellectual property rights covered by this Directive. Those measures, procedures and remedies shall be fair and equitable and shall not be unnecessarily complicated or costly, or entail unreasonable time-limits or unwarranted delays. 2. Those measures, procedures and remedies shall also be effective, proportionate and dissuasive and shall be applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse." The Human Rights Act 1998 Section 6(1) of the Human Rights Act 1998 provides that "It is unlawful for a public authority to act in a way which is incompatible with a Convention right", and section 6(2)(a) defines "public authority" as including a court. The Convention rights The Convention rights that are relevant in the present case are those guaranteed by Article 8 of, and Article 1 of the First Protocol to, the European Convention on Human Rights. Article 8 provides: "1. Everyone has the right to respect for his private and family life, his home and his correspondence. 2. There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others." Article 1 of the First Protocol provides: "Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. The preceding provisions shall not, however, in any way impair the right of a state to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties." The Charter of Fundamental Rights of the European Union The Charter of Fundamental Rights of the European Union ("the Charter") was originally proclaimed by the European Parliament, Council and Commission at Nice in December 2000. As amended in December 2007, it became legally binding with the coming into force of the Lisbon Treaty in December 2009. The Charter includes the following provisions: "Article 7 Respect for private and family life Everyone has the right to respect for his or her private and family life, home and communications. Article 8 Protection of personal data 1. Everyone has the right to the protection of personal data concerning him or her. 2. Such data must be processed fairly for specified purposes and on the basis of the consent of the person concerned or some other legitimate basis laid down by law. Everyone has the right of access to data which has been collected concerning him or her, and the right to have it rectified. 3. Compliance with these rules shall be subject to control by an independent authority. … Article 17 Right to property 1. Everyone has the right to own, use, dispose of and bequeath his or her lawfully acquired possessions. No one may be deprived of his or her possessions, except in the public interest and in the cases and under the conditions provided for by law, subject to fair compensation being paid in good time for their loss. The use of property may be regulated by law in so far as is necessary for the general interest. 2. Intellectual property shall be protected. … Article 52 Scope and interpretation of rights and principles 1. Any limitation on the exercise of the rights and freedoms recognised by this Charter must be provided for by law and respect the essence of those rights and freedoms. Subject to the principle of proportionality, limitations may be made only if they are necessary and genuinely meet objectives of general interest recognised by the Union or the need to protect the rights and freedoms of others. 2. Rights recognised by this Charter for which provision is made in the Treaties shall be exercised under the conditions and within the limits defined by those Treaties. 3. In so far as this Charter contains rights which correspond to rights guaranteed by the Convention for the Protection of Human Rights and Fundamental Freedoms, the meaning and scope of those rights shall be the same as those laid down by the said Convention. This provision shall not prevent Union law providing more extensive protection. 4. In so far as this Charter recognises fundamental rights as they result from the constitutional traditions common to the Member States, those rights shall be interpreted in harmony with those traditions. 5. The provisions of this Charter which contain principles may be implemented by legislative and executive acts taken by institutions, bodies, offices and agencies of the Union, and by acts of Member States when they are implementing Union law, in the exercise of their respective powers. They shall be judicially cognisable only in the interpretation of such acts and in the ruling on their legality. 6. Full account shall be taken of national laws and practices as specified in this Charter. 7. The explanations drawn up as a way of providing guidance in the interpretation of this Charter shall be given due regard by the courts of the Union and of the Member States." Protocol No 30 on the application of the Charter to Poland and to the United Kingdom, annexed to the Treaty on European Union and the Treaty on the Functioning of the European Union, provides as follows: "Article 1 1.       The Charter does not extend the ability of the Court of Justice of the European Union, or any court or tribunal of Poland or of the United Kingdom, to find that the laws, regulations or administrative provisions, practices or action of Poland or of the United Kingdom are inconsistent with the fundamental rights, freedoms and principles that it reaffirms. 2.       In particular, and for the avoidance of doubt, nothing in Title IV of the Charter creates justiciable rights applicable to Poland or the United Kingdom except in so far as Poland or the United Kingdom has provided for such rights in its national law. Article 2 To the extent that a provision of the Charter refers to national laws and practices, it shall only apply to Poland or the United Kingdom to the extent that the rights or principles that it contains are recognised in the law or practices of Poland or of the United Kingdom." None of the provisions of the Charter quoted in paragraph 71 above are in Title IV. Data Protection Directive European Parliament and Council Directive 95/46/EC of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data includes the following provisions: "Article 1 Object of the Directive 1. In accordance with this Directive, Member States shall protect the fundamental rights and freedoms of natural persons, and in particular their right to privacy with respect to the processing of personal data. … Article 7 Member States shall provide that personal data may be processed only if: … (f) processing is necessary for the purposes of the legitimate interests pursued by the controller or by the third party or parties to whom the data are disclosed, except where such interests are overridden by the interests for fundamental rights and freedoms of the data subject which require protection under Article 1 (1). Article 13 Exemptions and restrictions 1. Member States may adopt legislative measures to restrict the scope of the obligations and rights provided for in Articles 6 (1), 10, 11 (1), 12 and 21 when such a restriction constitutes a necessary measures to safeguard: … (g) the protection of the data subject or of the rights and freedoms of others." Data Protection Act 1998 Section 35 of the Data Protection Act 1998 provides: "(1) Personal data are exempt from the non-disclosure provisions where the disclosure is required by or under any enactment, by any rule of law or by the order of a court. (2) Personal data are exempt from the non-disclosure provisions where the disclosure is necessary – (a) For the purpose of, or in connection with, any legal proceedings (including prospective legal proceedings), or (b) For the purpose of obtaining legal advice, or is otherwise necessary for the purposes of establishing, exercising or defending legal rights." The Norwich Pharmacal jurisdiction In Norwich Pharmacal Co v Customs and Excise Commissioners [1974] AC 133 the claimants were the owners and licensees of a patent for a chemical compound known as furazolidone. It appeared that the patent was being infringed by illicit importations of furazolidone manufactured abroad. In order to obtain the names and addresses of the importers the claimants brought actions against the Commissioners of Customs and Excise alleging infringement of the patent and seeking orders for the disclosure of the relevant information. On a summons for inspection of documents, the Commissioners claimed privilege against production of the relevant documents. Graham J ordered discovery of the names and addresses of the importers. The Court of Appeal reversed that decision. The appellants appealed to the House of Lords. At the hearing of the appeal, the claimants abandoned the contention that they had a cause of action for infringement by the Commissioners themselves, and the appeal proceeded on the basis that the case was and always had been an action solely for discovery. Their Lordships held that, as Lord Reid put it at 175B-C: "… if through no fault of his own a person gets mixed up in the tortious acts of others so as to facilitate their wrong-doing he may incur no personal liability but he comes under a duty to assist the person who has been wronged by giving him full information and disclosing the identity of the wrongdoers. I do not think that it matters whether he became so mixed up by voluntary action on his part or because it was his duty to do what he did. It may be that if this causes him expense the person seeking the information ought to reimburse him. But justice requires that he should co-operate in righting the wrong if he unwittingly facilitated its perpetration." It followed that prima facie the Commissioners were under an equitable duty to disclose the information sought. Furthermore, in the circumstances of the case there was nothing to preclude the making of an order for discovery. Accordingly, the House of Lords allowed the appeal. Since then, a substantial body of jurisprudence has developed with regard to the exercise of this jurisdiction. Two subsequent decisions of the House of Lords are cited by HHJ Birss QC in the passage from his third Media CAT judgment cited in paragraph 53 above. For present purposes, two decisions of the Court of Appeal are particularly pertinent. Totalise plc v Motley Fool Ltd [2001] EWCA Civ 1897, [2002] 1 WLR 1233 concerned the appropriate costs order on a Norwich Pharmacal application for disclosure of the name and contact information of a person who had posted defamatory statements on a website. Aldous LJ giving the judgment of the Court of Appeal said: "24. It is not necessary to construe section 35 or paragraphs 5 and 6 of Schedule 2, but it is manifest from paragraph 6 of Schedule 2 [of the Data Protection Act 1998] that no order is to be made for disclosure of a data subject's identity, whether under the Norwich Pharmacal doctrine or otherwise, unless the court has first considered whether the disclosure is warranted having regard to the rights and freedoms or the legitimate interests of the data subject. By virtue of section 10 of the Contempt of Court Act 1981, if applicable, the court must also be satisfied that disclosure is necessary in the interests of justice. 25. In a case such as the present, and particularly since the coming into force on 2 October 2000 of the Human Rights Act 1998, the court must be careful not to make an order which unjustifiably invades the right of an individual to respect for his private life, especially when that individual is in the nature of things not before the court: see the Human Rights Act 1998, section 6, and the European Convention for the Protection of Human Rights and Fundamental Freedoms, articles 10 and (arguably at least) 6(1). There is nothing in article 10 which supports Mr Moloney's contention that it protects the named but not the anonymous, and there are many situations in which - again contrary to Mr Moloney's contention - the protection of a person's identity from disclosure may be legitimate. 26. It is difficult to see how the court can carry out this task if what it is refereeing is a contest between two parties, neither of whom is the person most concerned, the data subject; one of whom is the data subject's prospective antagonist; and the other of whom knows the data subject's identity, has undertaken to keep it confidential so far as the law permits, and would like to get out of the cross-fire as rapidly and as cheaply as possible. However, the website operator can, where appropriate, tell the user what is going on and to offer to pass on in writing to the claimant and the court any worthwhile reason the user wants to put forward for not having his or her identity disclosed. Further, the court could require that to be done before making an order. Doing so will enable the court to do what is required of it with slightly more confidence that it is respecting the law laid down in more than one statute by Parliament and doing no injustice to a third party, in particular not violating his convention rights." In Rugby Football Union v Viagogo Ltd [2011] EWCA Civ 1585 the RFU alleged that Viagogo had permitted a large number of tickets for the Autumn International 2010 and the Six Nations 2011 matches held at the RFU's stadium at Twickenham to be advertised on Viagogo's website for sale at prices far above the face value of the tickets. The RFU contended that both the sellers and the purchasers of those tickets have committed actionable wrongs against the RFU, which made great efforts to prevent the sale of such tickets at an inflated price on a "black market"; that Viagogo have become innocently involved in such wrongdoing in such a manner; and that the court should make a Norwich Pharmacal order requiring Viagogo to identify the persons advertising and selling such tickets and identifying the tickets so sold by block, row, seat number and price. At first instance Tugendhat J identified five issues for decision: i) had arguable wrongs been committed against the RFU? ii) was Viagogo mixed up in those arguable wrongs? iii) was the RFU intending to try to seek redress for those wrongs? iv) was disclosure of the information which the RFU required necessary for it to pursue that redress? v) should the court exercise its discretion in favour of granting relief? Tugendhat J answered all five questions in the affirmative. In the Court of Appeal, Viagogo advanced a new argument that the judge should have had regard to the fact that the order sought involved an interference with the fundamental rights of individuals under Articles 7 and 8 of the Charter and that, in the light of those provisions, the Data Protection Directive and section 35 of the Data Protection Act 1998, disclosure should only have been ordered if it was both strictly necessary and proportionate. In support of this argument Viagogo relied upon the decisions of the Court of Justice of the European Union in Case C-73/07 Tietosuojavaltuutettu v Satakunen Markkinapörssi Oy [2008] ECR I-9831 and Case C-92/09 Volker und Markus Schecke GbR v Land Hessen [2010] ECR I-0000. The Court of Appeal proceeded on the basis that it had to be shown that the disclosure was both necessary and proportionate: see the judgment of Longmore LJ, with whom Patten and Rafferty LJJ agreed, at [12] and [27]. The Court of Appeal affirmed Tugendhat J's decision. In relation to the questions of necessity and proportionality, Longmore LJ said: "25. The judge concluded that the RFU had no available means of finding out the information it was seeking other than through Viagogo and that the making of the order was, therefore, necessary. In his oral argument Mr Howe did not suggest that there were such other available means of obtaining such information. His submission was rather that the RFU had the remedy in their own hands because, instead of issuing tickets to Members Clubs and sponsors, they could issue them only to named individual applicants and require them to present personal identification in the form of a passport or other document when they entered the ground. That, of course, would be wholly inimical to the way in which the RFU wishes to distribute tickets for important matches and it can hardly be appropriate for the owner of a website to require the RFU to make such fundamental alteration to its ticketing operations. 26. In the absence of any plausible suggestion as to how the RFU could obtain information as to the identity of those selling tickets for more than their face value, it seems to me that a Norwich Pharmacal order is, indeed, necessary and I would not disagree with the judge under this head. … 28. Once it is established that there is arguable wrongdoing by unidentified individuals and that there is no realistic way of discovering the arguable wrong doers other than a Norwich Pharmacal order, it will generally be proportionate to make such an order revealing the identity of those arguable wrongdoers. There can be no reasonable expectation of privacy in respect of data which reveal such arguable wrongs and Viagogo's own conditions of business point out to their customers that there may be circumstances in which their personal data will be passed on to others. Mr Mill submitted that the acceptance of such conditions constituted a waiver by Viagogo's customers of confidentiality in their personal data. I doubt if that is right but the fact that Viagogo's conditions of business contemplate that personal data of their customers may be revealed is not wholly irrelevant to proportionality. 29. I would prefer to say that the requirement that Viagogo disclose a limited amount of personal data in this case is proportionate because there is no other way in which arguable wrongdoing can be exposed. In this case, as in many other Norwich Pharmacal cases, necessity and proportionality may go hand in hand. The terms of the order must, of course, be proportionate but Viagogo have never suggested that some more limited form of order would be appropriate. The only personal data ordered to be revealed are the names and addresses of the arguable wrongdoers. That seems to me to be both proportionate and just." Is there a duty of full and frank disclosure on a Norwich Pharmacal application? In R v Kensington Income Tax Commissioners ex parte de Polignac [1917] 1 KB 486 Warrington LJ said at 509: "It is perfectly well settled that a person who makes an ex parte application to the court—that is to say, in the absence of the person who will be affected by that which the court is asked to do—is under an obligation to the court to make the fullest possible disclosure of all material facts within his knowledge, and if he does not make that fullest possible disclosure, then he cannot obtain any advantage from the proceedings, and he will be deprived of any advantage he may have already obtained by means of the order which has thus wrongly been obtained by him. That is perfectly plain and requires no authority to justify it." Counsel for Consumer Focus submitted that an applicant for a Norwich Pharmacal order should be regarded as subject to the same duty of full and frank disclosure as an applicant seeking an injunction or other order without notice to the respondent. He acknowledged that there was nothing in the existing case law since Norwich Pharmacal was decided 40 years ago to suggest that applicants were subject to such a duty and that applications for Norwich Pharmacal orders were usually made on notice to the respondent, as in the present case. He argued, however, that applications for Norwich Pharmacal orders were made without notice to "the person who will be affected by that which the court is asked to do" i.e. the Intended Defendants. This is an ingenious argument which may require further consideration in another case. In my judgment it is not necessary to decide whether it is correct for the purposes of the present claim, however, for the following reasons. First, as a result of Consumer Focus's intervention, I have had the benefit of adversarial argument on behalf of the Intended Defendants. Secondly, the duty of full and frank disclosure normally comes into play when the respondent to the application applies to set aside the order on the ground of non-compliance with that duty. It is well established that the court may set aside and order made on a without notice application, and decline to grant a fresh order, if the applicant has not complied with the duty. At the stage of the without notice application, however, the court will normally assume that the applicant is complying with the duty. Thirdly, counsel for Consumer Focus identified five particular matters in his skeleton argument which he contended that the Claimants should address. In the event, the Claimants have addressed each of these matters in further evidence. Nevertheless, there are two specific points which call for further comment. First, as I have recorded above, it is now apparent that in the Media CAT cases NG3 received 12.5% of the revenue. It seems clear that that fact was not disclosed to the court on the applications for Norwich Pharmacal orders. Paragraph 7.6 of the Protocol for the Instruction of Experts to Give Evidence in Civil Claims expressly prohibits payments to an expert witness which are contingent upon the outcome of the case, since it is contrary to the expert's overriding duty to the court imposed by CPR r. 35.3. Prima facie an arrangement of the kind entered into by NG3 is contrary to that principle: see R (Factortame Ltd) v Secretary of State for Transport, Local Government and the Regions (No 8) [2002] EWCA Civ 932, [2003] QB 381 at [63]-[73]. If an applicant for a Norwich Pharmacal order wishes to contend that such an arrangement is acceptable, then, as counsel for the Claimants accepted, the arrangement ought to be disclosed to the court. But in my view that this is so by virtue of the principles applicable to expert witnesses regardless of whether there is a duty of full and frank disclosure of the kind discussed above. The second is that, although the Claimants have filed further evidence answering the five questions raised by counsel for Consumer Focus in his skeleton argument, they have chosen not to adduce any evidence to address another point which counsel for Consumer Focus made in his oral submissions. This is what happened as a result of the orders made by Proudman and Vos JJ. I do not know, because Golden Eye has not disclosed, how many subscribers were identified in response to those orders. Nor do I know how many letters of claim Golden Eye sent or with what results. It is probable, however, that a substantial number of subscribers were identified, a substantial number of letters of claim sent and substantial sums of money paid to Golden Eye by some of the recipients of such letters. Nor do I know how many claims Golden Eye issued or with what results. I only know the information recorded in paragraphs 56-58 above because it was set out in the judgment of HHJ Birss QC cited there. Despite a specific challenge by counsel for Consumer Focus, Golden Eye has not explained why it discontinued at least two claims. Even assuming that the Claimants are under no obligation to reveal these matters, their failure to do so is something that I consider that the court can and should take into account. Have arguable wrongs been committed against the Claimants? Consumer Focus raised three matters for consideration under this heading. Golden Eye's title to sue the Intended Defendants Counsel for Consumer Focus accepted that the Ben Dover Agreement fulfilled the requirements for an exclusive licence in section 92(1) CDPA 1988, so as to give Golden Eye title to sue the Intended Defendants for infringement of copyright; but he submitted that the agreements between Golden Eye and the Other Claimants did not. Counsel for the Claimants did not argue to the contrary, and I accept that submission. As counsel for the Claimants pointed out, however: i) Golden Eye has title to sue in respect of all films covered by the Ben Dover Agreement; ii) joinder of Ben Dover Productions as a claimant will comply with section 102(1) CDPA 1988; iii) in the case of the Other Claimants, the fact that Golden Eye does not have title to sue is no bar to claims being brought by the Other Claimants. Are the agreements between Golden Eye and the Other Claimants champertous? Consumer Focus contended that the agreements between Golden Eye and the Other Claimants were champertous, and therefore unenforceable as being contrary to public policy. As Lord Phillips of Worth Matravers MR explained when delivering the judgment of the Court of Appeal in Factortame (No 8): "31. Champerty is a variety of maintenance. Maintenance and champerty used to be both crimes and torts. A champertous agreement was illegal and void, involving as it did criminal conduct. Sections 13(1) and 14(1) of the Criminal Law Act 1967 abolished both the crimes and the torts of maintenance and champerty. Section 14(2) provided, however: 'The abolition of criminal and civil liability under the law of England and Wales for maintenance and champerty shall not affect any rule of that law as to the cases in which a contract is to be treated as contrary to public policy or otherwise illegal.' Thus, champerty survives as a rule of public policy capable of rendering a contract unenforceable. 32. 'A person is guilty of maintenance if he supports litigation in which he has no legitimate concern without just cause or excuse': see Chitty on Contracts, 28th ed (1999), vol 1, para 17-050. Champerty 'occurs when the person maintaining another stipulates for a share of the proceeds of the action or suit': Chitty, para 17-054. Because the question of whether maintenance and champerty can be justified is one of public policy, the law must be kept under review as public policy changes. As Danckwerts LJ observed in Hill v Archbold [1968] 1 QB 686, 697: 'the law of maintenance depends upon the question of public policy, and public policy ... is not a fixed and immutable matter. It is a conception which, if it has any sense at all, must be alterable by the passage of time.'" Counsel for Consumer Focus advanced two arguments under this heading, which I consider that it is important to distinguish between. The first argument is that the agreements are champertous because they constitute assignments of bare causes of action coupled with a division of the proceeds recovered: see Giles v Thompson [1994] 1 AC 142 at 153G, 161B-C (Lord Mustill). In my judgment counsel for the Claimants is correct to submit that the short answer to this argument is that the agreements do not constitute assignments of causes of action. Under clause 2.2 of the agreements the Other Claimants granted Golden Eye "the right to act" for them, but that is not the same thing. That the agreements do not assign any causes of action is confirmed by clause 2.3(c), under which Golden Eye may require the Other Claimants to "lend [their] name[s]" to proceedings. Thus the Other Claimants are claimants in this claim, and the Claimants accept that the Other Claimants will be necessary claimants in any claims brought against the Intended Defendants relating to their copyright works. The second argument is that the agreements are champertous because they are agreements to conduct litigation coupled with a division of the spoils. Counsel for Consumer Focus submitted that agreements to conduct litigation (or providing advocacy services) coupled with a division of the proceeds were subject to a "per se" rule that they were champertous, rather than to a case-by-case assessment of their effect on the proper administration of justice. That submission is supported by the decision of the Court of Appeal in Sibthorpe v Southwark London Borough Council [2011] EWCA Civ 25, [2011] 1 WLR 2111. It begs the question, however, of whether the agreements in question are "agreements to conduct litigation" in that sense. There was no dispute about that in Sibthorpe, since the agreements in issue were conditional fee agreements between solicitors and their clients. As Lord Phillips explained in Factortame (No 8) at [60]: "There is good reason why principles of maintenance and champerty should apply with particular rigour to those conducting litigation or appearing as advocates. To demonstrate this we can do no better than cite a passage in the judgment of Buckley LJ in Wallersteiner v Moir (No 2) [1975] QB 373, 401-402: 'A contingency fee, that is, an arrangement under which the legal advisers of a litigant shall be remunerated only in the event of the litigant succeeding in recovering money or other property in the action, has hitherto always been regarded as illegal under English law on the ground that it involves maintenance of the action by the legal adviser. Moreover where, as is usual in such a case, the remuneration which the adviser is to receive is to be, or to be measured by, a proportion of the fund or of the value of the property recovered, the arrangement may fall within that particular class of maintenance called champerty ... It may, however, be worthwhile to indicate briefly the nature of the public policy question. It can, I think, be summarised in two statements. First, in litigation a professional lawyer's role is to advise his client with a clear eye and an unbiased judgment. Secondly, a solicitor retained to conduct litigation is not merely the agent and adviser to his client, but also an officer of the court with a duty to the court to ensure that his client's case, which he must, of course, present and conduct with the utmost care of his client's interests, is also presented and conducted with scrupulous fairness and integrity. A barrister owes similar obligations. A legal adviser who acquires a personal financial interest in the outcome of the litigation may obviously find himself in a situation in which that interest conflicts with those obligations ...'" In the present case, counsel for the Claimants submitted that the agreements in question were not agreements to conduct litigation in that sense, and therefore a less strict approach was appropriate. He pointed out that Golden Eye do not purport to be solicitors (or any other form of legal representative), nor do they purport to provide the services that solicitors provide, nor are they officers of the court. He argued that it made no difference that Golden Eye acted in person through Mr Becker, rather than instructing solicitors, some of the time. For the purposes of the hearing before me, of course, the Claimants instructed solicitors and counsel. Counsel for the Claimants went on to submit that the mere fact that the Other Claimants appointed Golden Eye to act on their behalf on terms that Golden Eye received 75% (or less) of the proceeds did not jeopardise the proper administration of justice, and therefore the agreements were not champertous. In Factortame (No 8) the Court of Appeal was concerned with agreements between the claimants and Grant Thornton under which Grant Thornton received 8% of the damages. Lord Phillips dealt with the nature of the services provided by Grant Thornton as follows: "23. When we come to consider the law of champerty we shall find that its application requires an analysis of the facts of the particular case. Special principles apply to those who are entitled to have the conduct of litigation, and in particular to solicitors. On behalf of the minister, Mr Friedman argued that those principles had application to Grant Thornton because the services that they were providing were, in large measure, the type of services that solicitors customarily provide in the course of the conduct of litigation. In addition, or by way of an alternative to this submission, Mr Friedman submitted that some of the services provided by Grant Thornton were in the nature of expert evidence and that principles of, or similar to, the law of champerty could render unenforceable an agreement by experts to give evidence in a case in consideration of a share of any recovery. Having regard to these submissions it has been necessary for us to consider the nature of the services provided by Grant Thornton and, in particular, whether they have been providing services which are customarily provided to litigants by solicitors. 24. Section 28 of the Courts and Legal Services Act 1990 makes provision for those who have the 'right to conduct litigation'. Such a right can only be granted by 'the appropriate authorised body'. The Law Society is such a body. The Institute of Chartered Accountants is not. Thus accountants have no right to 'conduct litigation'. The right to conduct litigation is defined by section 119 of the Act. It means the right '(a) to issue proceedings before any court; and (b) to perform any ancillary functions in relation to proceedings (such as entering appearances to actions)'. 25. Section 20 of the Solicitors Act 1974 makes it an indictable criminal offence for an unqualified person to 'act as a solicitor'. It is plain, in the light of this, that the 'conduct of litigation' which is reserved to a solicitor or other authorised person by section 28 of the 1990 Act must be given a restricted ambit. It cannot embrace all the activities that are ancillary to litigation and which are sometimes carried on by a solicitor and sometimes by a person who has no right to conduct litigation. 26. Thus, in Piper Double Glazing Ltd v DC Contracts [1994] 1 WLR 777, where the issue was whether the fees for the services of claims consultants in relation to the conduct of an arbitration could be recovered as costs, Potter J observed, at p 783: 'By acting as claims consultants in the arbitration, Knowles neither acted as a solicitor nor purported to act as a solicitor within the letter or spirit of section 20(1) or section 25(1) of the Solicitors Act 1974. An unqualified person does not act as a solicitor within the meaning of section 25(1) merely by doing acts of a kind commonly done by solicitors. To fall within that phrase, the act in question must be an act which it is lawful only for a qualified solicitor to do and/or any other act in relation to which the unqualified person purports to act as a solicitor ...' 27. Thomas Cooper have at all times had the conduct of the litigation on behalf of the claimants. Grant Thornton have done nothing for which they required authority under section 28 of the 1990 Act or which offended against section 20 of the 1974 Act . Their services have been ancillary to the conduct of the litigation by Thomas Cooper. Of what have those services consisted? 28. The bill of costs prepared by Thomas Cooper starts with a narrative which includes the following description of the role played by Grant Thornton: 'The firm of Grant Thornton chartered accountants were appointed by the applicants and their solicitors to advise on, co-ordinate and play a major part in the gathering of voluminous and complex evidence as to loss, particularly that within their expertise as chartered accountants. Grant Thornton were also instrumental in the appointment of the independent experts instructed and again played a major part in the assisting and liaising with those experts and also with solicitors and counsel. Grant Thornton worked closely with the experts to create the original model for calculating the losses claimed. Grant Thornton made a considerable number of modifications to the model and created several different versions to accommodate various contentions and arguments. Grant Thornton were engaged throughout in a supporting and advisory role to the [claimants] and their legal representatives. Grant Thornton's involvement was also very cost effective, as overall their charging rates were significantly lower than Thomas Cooper & Stibbard's rates and it will be appreciated that Thomas Cooper & Stibbard would have had to carry out all the work undertaken by Grant Thornton if Grant Thornton had not been involved.' 29. We consider that this is an accurate summary, subject to one comment. Grant Thornton's work consisted largely of important back-up services for the two independent experts, Mr Banks and Mr Anton. Many of those services, such as the collection of documentary evidence and liaison with the clients in Spain, could have formed part of the services provided by Thomas Cooper themselves. Most of the services would, however, more naturally have formed part of a package of forensic accountancy services which would have included the provision of the expert evidence itself. It was only the fact that they considered that they were precluded by their interest in recovering their outstanding accountancy fees from their clients' damages that led Grant Thornton to engage Mr Anton as an independent accountancy expert. 30. There can be no doubt that Grant Thornton played a very important role in the damages phase of the litigation. Particularly important was their input into the agreement of a computer model. As Mr Friedman pointed out, their fees outstripped those of Thomas Cooper. One further matter Mr Friedman emphasised: their services included advising the claimants on settlement offers." The Court of Appeal concluded that the agreements were not champertous since they did not jeopardise the proper administration of justice. This was partly because of the nature of the services provided by Grant Thornton, but also because of the fact that liability had been determined when the agreements were entered into, the financial circumstances of the claimants, the modest percentage to which Grant Thornton were entitled and the fact that the preparation of the computer model was carried out jointly with the Ministry's experts: see [79]-[91]. There have been a number of other cases in the past decade or so in which courts have held that agreements to provide services connected with litigation in return for a percentage of the proceeds were not champertous: i) In Stocznia Gdanska SA v Latreefers Inc. (No. 2) [2001] 2 BCLC 116 a third party had agreed to fund the costs of a party to litigation in return for a 55% share of the proceeds. The Court of Appeal expressed a strong provisional view that in the particular circumstances of the case the agreement was not champertous: see the judgment of the Court delivered by Morritt LJ at [63]. ii) In Dal-Sterling Group plc v WSP South & West Ltd. (unreported, 18 July 2001) the claimant, which operated as a claims consultant in the construction industry, agreed to provide consultancy services to a contractor pursuing claims against London Underground Ltd in return for 22.5% of any recovery above a specified level. HHJ Seymour QC, sitting in the Technology and Construction Court, held that the agreement was enforceable. iii) In Papera Traders Co Ltd v Hyundai Merchant Marine Co Ltd (No. 2) [2002] EWHC 2130 (Comm), [2002] 2 Lloyd's Rep 692 Cresswell J held that an agreement under which salvage contractors were paid 5% of recoveries in respect of various "recovery services", which included various elements closely related to litigation, was enforceable. iv) In Mansell v Robinson [2007 EWHC 101 (QB) Underhill J held that an agreement under which services of an investigative and public relations nature were provided in return for 1% of the proceeds (plus a weekly fee and expenses) was not champertous. v) In London & Regional (St George's Court) Ltd v Ministry of Defence [2008] EWHC 526 (TCC) Coulson J held that a settlement agreement between the parties to building contract, the employer and the contractor, under which the contractor was entitled to "pursue, prosecute and if necessary enforce" claims against the tenant of the building using the employer's name on terms that the employer was to receive the first £200,000 of any proceeds, but thereafter the contractor was entitled to them, was not champertous. I accept the submission of counsel for the Claimants that Golden Eye is not conducting litigation in the sense discussed above, and therefore the stricter rule applicable to agreements to conduct litigation is not engaged by the agreements between Golden Eye and the Other Claimants. It follows that it is necessary to consider whether those agreements jeopardise the proper administration of justice. There is no evidence of any pre-existing commercial relationship between Golden Eye and the Other Claimants, nor of any other pre-existing commercial interest of Golden Eye in the Other Claimants' causes of action against the Intended Defendants. Although Golden Eye is not conducting litigation, it has engaged and paid Mr Torabi. Furthermore, under the terms of the agreements, it has full control over the litigation. Liability of the Intended Defendants has not yet been established. It is probable that many of them are liable for infringement, but many may not be. Of most concern, to my mind, is the division of revenues. Nevertheless, with some hesitation, I do not feel able to conclude that the agreements are likely to jeopardise the proper administration of justice and thus champertous. They are commercial arrangements between Golden Eye and the Other Claimants under which Golden Eye undertakes the effort, cost and risk of applying for Norwich Pharmacal orders and making claims against alleged infringers, including it appears the costs of instructing solicitors and counsel, in return for a handsome share of the proceeds. There is nothing in the arrangement which imperils the ability of the court properly to control the circumstances in which an order will be granted and the use which may be made of the information obtained if an order is granted or to control the conduct of subsequent claims against the Intended Defendants. Finally, I should note that counsel for the Claimants argued that, even if the agreements were champertous, and therefore unenforceable, that would not present an obstacle either to the present claim or to claims against the Intended Defendants because the Other Claimants were parties to the present claim and would be parties to claims against the Intended Defendants. As at present advised, this argument appears to me to have force, but it is not necessary for me to decide whether it is correct. The evidence of infringement Consumer Focus served an expert report from Dr Richard Clayton. Dr Clayton is a Senior Research Assistant in the Computer Laboratory of the University of Cambridge. He worked for Demon Internet, then the largest UK ISP, from 1995 to 2000. In 2006 he was awarded a PhD for his thesis "Anonymity and Traceability in Cyberspace". He has written or co-written some 40 peer-reviewed publications. He has advised Parliamentary Select Committees, and has acted as an expert witness in several criminal and civil cases. Dr Clayton's expert report provides a lucid explanation of the technical issues surrounding traceability, that is to say, determining "who did that?" on the internet. Mr Torabi took issue via Mr Becker's second statement with a number of points of detail in Dr Clayton's report. Clearly I cannot resolve those disputes. I do not understand there to be any dispute, however, as to the basic position, which may be summarised as follows: i) Most ISPs allocate IP addresses to consumers dynamically, so that a particular IP address is allocated for a few hours, day or possibly weeks. ii) Since 2009 ISPs who have been served with the relevant statutory notice are required by UK law to retain records of which customer was using which IP address at any particular time for a period of one year. iii) It is technically possible, using appropriate monitoring or tracking software, to identify IP addresses which are participating in P2P filesharing of particular files at particular times. iv) For the results to be reliable, it is important to ensure that the monitoring software is functioning correctly. In particular, it is vital that the computer on which it is running has a correctly synchronised clock. v) Even if the monitoring software is functioning correctly, ISPs sometimes misidentify the subscriber to whom the IP address which has been detected was allocated at the relevant time. This can occur, for example, because of mistakes over time zones. vi) Even if the monitoring software is functioning correctly and the ISP correctly identifies the subscriber to whom the IP address which has been detected was allocated at the relevant time, it does not necessarily follow that the subscriber was the person who was participating in the P2P filesharing which was detected. There are a number of alternative possibilities, including the following: a) The IP address identifies a computer and someone else in the same household (whether a resident or visitor) was using the computer at the relevant time (which might be with or without the knowledge of the subscriber). b) The IP address identifies a router and someone else in the same household (whether a resident or visitor) was using a computer communicating via the same router (which might be with or without the knowledge of the subscriber). c) The IP address identifies a wireless router with an insecure (either open or weakly encrypted) connection and someone outside the household was accessing the internet via that router (in all probability, without the knowledge of the subscriber). d) The IP address identifies a computer or router, the computer or a computer connected to the router has been infected by a trojan and someone outside the household was using the computer to access the internet (almost certainly, without the knowledge of the subscriber). e) The IP address identifies a computer which is open to public use, for example in an internet café or library. vii) It is not possible to estimate an overall likely rate of erroneous identification. All that can be said with certainty is that there will be an unknown percentage of errors. Dr Clayton made certain criticisms of the verification procedures carried out, or not carried out, by Mr Vogler and Mr Torabi. Some of these criticisms, though not all, have been answered by Mr Torabi in his response via Mr Becker. In particular, Mr Torabi has identified the clock synchronisation source he used, which he says is accurate to 0.1 second. Overall, it seems to me that the Claimants' evidence is sufficiently cogent to establish a good arguable case that (1) P2P filesharing of the Claimants' copyright works took place via the IP addresses and at the dates and times identified by Mr Torabi, and (2) many, but not all, of the subscribers to whom those IP addresses were allocated by O2 at those dates and times were the persons engaged in such filesharing. Consumer Focus did not dispute that the persons who engaged in such filesharing had infringed the Claimants' copyrights for the reasons given in Dramatico v BSkyB. As Consumer Focus rightly contends, however, an unknown percentage of the 9,124 subscribers who will be identified by O2 if the order sought is granted (that is to say, of the Intended Defendants) will not be guilty of having committed the infringements. Was O2 mixed up in those arguable wrongs? Consumer Focus did not dispute that O2 was mixed up in the infringements. Are the Claimants intending to try to seek redress for those arguable wrongs? Consumer Focus contended that the Claimants were not genuinely intending to try to seek redress. In support of this contention counsel for Consumer Focus argued that (i) the division of revenue between Golden Eye and the Other Claimants had all the hallmarks of a money-making exercise for Golden Eye, (ii) the sum of £700 requested in the draft letter was unsupported and unsupportable, (iii) the Claimants were equivocal about their willingness to pursue infringement actions and (iv) the conduct of the three claims brought by Golden Eye against alleged infringers suggested a desire to avoid judicial scrutiny. I have no hesitation in rejecting this contention so far as Golden Eye and Ben Dover Productions are concerned. In my judgment Mr Becker's evidence establishes a genuine commercial desire on the part of Golden Eye and Ben Dover Productions to obtain compensation for infringements of their copyrights. As counsel for the Claimants pointed out, it is not a requirement for the grant of Norwich Pharmacal relief that the applicant intend, still less undertake, to bring proceedings against the wrongdoer(s). Sending a letter before action with a view to persuading the wrongdoer to agree to pay compensation and to give an undertaking not to infringe in the future is one way of seeking redress. There is no requirement for the intending claimant to commit himself to bringing proceedings if redress cannot be obtained consensually. Furthermore, a claimant faced with multiple infringers is entitled to be selective as to which ones, if any, he sues. In making that decision, the claimant is entitled to have regard to the costs of litigation. As matters stand, claims for copyright infringement are automatically and compulsorily allocated to the multi-track by CPR r. 63.1(3). Even under the streamlined procedures introduced for claims in the Patents County Court in October 2010, litigating a claim for damages of £700 is likely to be uneconomic, except perhaps as a test case. The Government has announced its intention to introduce a small claims track for (inter alia) copyright claims in the Patents County Court in the near future, which will provide some assistance to claimants with low-value claims, but that is not a complete panacea. If Consumer Focus is right to suggest, as discussed below, that £700 is excessive by an order of magnitude, then even bringing a small claim is unattractive. Yet further, given the economic realities I have just referred to, a claimant with a large number of low-value claims could not be criticised for adopting a policy of not pursuing those claims if a substantive defence is filed (i.e. the defendant neither admits the claims nor allows judgment to be entered in default). For this reason, although I agree with counsel for Consumer Focus that Golden Eye's failure to explain why it discontinued the two claims discussed above invites the inference that it wanted to avoid judicial scrutiny of the claims, I do not consider that it is possible to place much weight on this factor. Counsel for the Claimants also relied upon the undertaking offered by the Claimants in the sixth recital of the draft Order as confirming the genuineness of their intention to bring claims against the Intended Defendants where appropriate. As counsel for Consumer Focus submitted, this is a rather qualified undertaking. That is inevitable in the circumstances, however. The Claimants can hardly be expected to give an unqualified undertaking to sue regardless of what the Intended Defendants may say in response to the letters of claim. Indeed, Consumer Focus would rightly protest if the Claimants were to suggest doing that. In the case of the Other Claimants, I am more doubtful. As I have pointed out, there is no evidence from them in support of this claim. Nevertheless, I cannot ignore the evidence provided by the agreements themselves that the Other Claimants are also copyright owners and the evidence provided by Mr Torabi's spreadsheets that they too have been victims of copyright infringement. As discussed above, I am troubled by the division of revenues that they have agreed with Golden Eye, but on the other hand it is for them to be the judge of their own commercial best interests. In that regard, it is relevant to note that some of them bargained a little harder with Golden Eye than others. On balance, therefore, I am satisfied that the Other Claimants are genuinely intending to try to seek redress. Is disclosure of the information necessary for the Claimants to pursue that redress? Consumer Focus accepted that, without the information sought by this claim, the Claimants cannot issue proceedings or engage in pre-action correspondence with the Intended Defendants. Nevertheless, counsel for Consumer Focus submitted that the disclosure was not necessary to obtain redress against the Intended Defendants since, in truth, the purpose of the exercise was not to protect the rights of the copyright owners. I do not accept this submission. To the extent that the Claimants' copyrights have been infringed, it is plainly necessary for the information sought to be disclosed for the Claimants to be able to protect those rights by seeking redress as described above. Is the order sought proportionate? In addition to the reasons which were accepted by the Court of Appeal in RFU v Viagogo, there are two further reasons why it is necessary to consider the proportionality of the proposed order in the present case. The first is that Article 3(2) of the Enforcement Directive imposes a general obligation to consider the proportionality of remedies for the infringement of intellectual property rights, including orders for the disclosure of the identities of infringers: see Case C-324/09 L'Oréal SA v eBay International AG [2011] ECR I-0000 at [139]-[144]. The second is that the CJEU has held that, when adopting measures to protect copyright owners against online infringement, national courts must strike a fair balance between the protection of intellectual property rights guaranteed by Article 17(2) of the Charter and the protection of the fundamental rights of individuals who are affected by such measures, and in particular the rights safeguarded by Articles 7 and 8 of the Charter: see Case C-275/06 Productores de Musica de España (Promusicae) v Telefonica de España SAU [2008] ECR I-271 at [61]-[68] and Case C-70/10 Scarlet Extended SA v Société belge des auteurs compositeurs et éditeurs (SABAM) [2011] ECR I-0000 at [42]-[46], [50]-[53]. The correct approach to considering proportionality In my judgment the correct approach to considering proportionality can be summarised in the following propositions. First, the Claimants' copyrights are property rights protected by Article 1 of the First Protocol to the ECHR and intellectual property rights within Article 17(2) of the Charter. Secondly, the right to privacy under Article 8(1) ECHR/Article 7 of the Charter and the right to the protection of personal data under Article 8 of the Charter are engaged by the present claim. Thirdly, the Claimants' copyrights are "rights of others" within Article 8(2) ECHR/Article 52(1) of the Charter. Fourthly, the approach laid down by Lord Steyn where both Article 8 and Article 10 ECHR rights are involved in Re S [2004] UKHL 47, [2005] 1 AC 593 at [17] is also applicable where a balance falls to be struck between Article 1 of the First Protocol/Article 17(2) of the Charter on the one hand and Article 8 ECHR/Article 7 of the Charter and Article 8 of the Charter on the other hand. That approach is as follows: (i) neither Article as such has precedence over the other; (ii) where the values under the two Articles are in conflict, an intense focus on the comparative importance of the specific rights being claimed in the individual case is necessary; (iii) the justifications for interfering with or restricting each right must be taken into account; (iv) finally, the proportionality test – or "ultimate balancing test" - must be applied to each. The Claimants' rights The Claimants' position can be summarised as follows. They are owners of copyrights which have been infringed on a substantial scale by individuals who have been engaged in P2P filesharing. The only way in which they can ascertain the identify of those individuals and seek compensation for past infringements is by (i) obtaining disclosure of the names and addresses of the Intended Defendants, (ii) writing letters of claim to the Intended Defendants seeking voluntary settlements and (iii) where it is cost-effective to do so, bringing proceedings for infringement. The Intended Defendants' rights The Intended Defendants are not, of course, before me. With the assistance of Consumer Focus' submissions, however, it seems to me that the position of the Intended Defendants can be summarised as follows. It is likely that most of the Intended Defendants are ordinary consumers, many of whom may be on low incomes and without ready access to legal advice, particularly specialised legal advice of the kind required for a claim of this nature. The grant of the order sought will invade their privacy and impinge upon their data protection rights. Furthermore, it will expose them to receiving letters of claim and may expose them to proceedings for infringement in circumstances where they may not be guilty of infringement, where the subject matter of the claim may cause them embarrassment, where a proper defence to the claim would require specialised legal advice that they may not be able to afford and where they may not consider it cost-effective for them to defend the claim even if they are innocent. The terms of the draft order In consider the proportionality of the order sought, it seems to me that it is important to have regard to the precise terms of that order. The terms of the draft order having been negotiated between Golden Eye and Baker & McKenzie, it is in a form that O2 is content with. Thus it may be regarded as proportionate as between the Claimants and O2. It does not follow, however, that it is proportionate as between the Claimants and the Intended Defendants. The draft order contains a number of safeguards for the Intended Defendants, such as the second and eighth recitals and paragraphs 8 and 10. As HHJ Birss QC pointed out, however, it is important to bear in mind that a copy of the order will be sent to the Intended Defendants to explain to them why O2 has disclosed their names and addresses. For the reasons given in paragraph 119 above, it is important that the Intended Defendants are not given the wrong impression about what the Court decided when it made the order or why and that the order should not cause the Intended Defendants unnecessary anxiety or distress. In my view the fifth and seventh recitals of the draft order are capable of giving consumers the wrong impression. The eighth recital, while designed to protect the Intended Defendants, is also capable of causing unnecessary distress because it could be read as an implicit threat of publicity once proceedings have been commenced. The reason why that may cause distress is because of the pornographic nature of the films combined with the fact that the Intended Defendant may not in fact have been a person who was engaged in filesharing of those films. The draft letter Although it is not normally the role of the courts to supervise pre-action correspondence, the draft order requires the letter of claim to be in the form set out in Schedule 2 and which I have reproduced above. In my view the ACS:Law/Media CAT episode shows very clearly why that this is an appropriate course to take, and why a court being asked to make a Norwich Pharmacal order in circumstances such as these needs carefully to consider the terms of the draft letter of claim. Once again, as HHJ Birss QC pointed out, the court needs to consider the impact of the letter of claim upon ordinary consumers who may not have access to specialised legal advice, who may be innocent of what is alleged against them and who may be embarrassed and/or distressed by being alleged to have been involved in filesharing involving pornography. Considered in that light, and leaving aside the claim for £700 for the moment, I consider that the draft letter is objectionable in a number of respects. First, the reference to the Code of Practice is inappropriate both for the reasons given by HHJ Birss QC and because it was not designed for letters to ordinary consumers. Secondly, the draft letter does not make it clear that the fact that an order for disclosure has been made does not mean that the court has considered the merits of allegation of infringement against the Intended Defendant. Thirdly, the draft letter asserts under the heading "Infringing Acts" that the Intended Defendant is liable for infringement. Although the last paragraph under that heading implicitly acknowledges the possibility that the Intended Defendant may not be the person who was responsible for the infringing acts, this acknowledgement is not sufficiently explicit. Furthermore, the reference under the heading "Proposed Settlement" to "inaction, by permitting a third party to use your internet connection" undermines the effect of the implicit acknowledgement. As HHJ Birss QC has explained, nothing less than authorisation suffices for infringement, at least in the context of a claim for damages. Fourthly, the second paragraph under the heading "Legal Consequences" is too one-sided in that it sets out the consequences to the Intended Defendant of a successful claim without acknowledging the consequences to the relevant Claimant of an unsuccessful one. Fifthly, the reference to "other intellectual property" under the heading "Proposed Settlement" is unjustified. There is no evidence that any other intellectual property rights of the Claimants have been infringed. Sixthly, I consider that requiring a response within 14 days is unreasonable given that the Intended Defendants are consumers and that there is no urgency in the matter. 28 days would be reasonable. Lastly, the threat to make "an application to your ISP to slow down or terminate your internet connection" is unjustified. Counsel for the Claimants accepted that the word "application" was inappropriate, and said that "request" would better convey what was intended. I do not agree that a threat even of that nature is justified in a letter of this kind, however. The claim for £700 As noted above, counsel for Consumer Focus attacked the claim for £700 made in the draft letter as unsupported and unsupportable. In the draft letter no attempt is made to explain or justify this sum whatsoever. It is simply demanded "as compensation to GEIL for its losses". Counsel for Consumer Focus submitted that it was inconceivable that every Intended Defendant could have caused the relevant copyright owner(s), or Golden Eye in the case of films covered by the Ben Dover Agreement, loss of £700. He submitted that the most that could be reasonably demanded was a figure an order of magnitude lower i.e. around £70. Counsel for the Claimants in his submissions, and Mr Becker in second witness statement, sought to justify the figure by reference to the following points. First, the Claimants are not pursuing people who are mere downloaders. Each of the IP addresses in question has been used for seeding/uploading. Thus the Claimants contend that the loss of revenue that they have suffered is not merely that associated with a download by the infringer in question, but with an unknown number of downloads by other infringers. The Claimants contend that damages for this should be quantified on a reasonable royalty basis. Secondly, the Claimants contend that they are likely to obtain additional damages under section 97(2)(a) of the CDPA 1988, particularly on the ground of flagrancy. I agree with counsel for Consumer Focus that the figure of £700 is unsupportable. My reasons are as follows. First, the Claimants know that an unknown percentage of the Intended Defendants are not infringers at all. Intended Defendants who have not in fact committed any infringements are not liable to pay any sum. Secondly, in the case of those Intended Defendants who are infringers, the Claimants have no idea about the scale of the infringements committed by each infringer. Some might have infringed on a very substantial scale indeed, while others might only have infringed to a minor extent. In intellectual property cases, it is usual for the claimant to seek disclosure from the defendant pursuant to Island Records Ltd v Tring International plc [1996] 1 WLR 1256 before electing between inquiry as to damages and an account of profits, let alone before seeking to quantify his damages. If the Claimants were genuinely interested in seeking accurately to quantify their losses, then it seems to me that they would wish to seek some form of disclosure at least in the first instance. I appreciate that it may not be cost-effective for disclosure to be pursued if the Intended Defendant is unwilling to cooperate, but I do not consider that that justifies demanding an arbitrary figure from all the Intended Defendants in the letter of claim. Thirdly, Mr Becker suggests that the reasonable royalty should be assessed on the basis of a "time limited license [sic] to exploit a work by providing copies of it on an unlimited worldwide basis". This assumes that infringement by making available to the public occurs at the place where the uploading/seeding takes place, but that is not necessarily correct: see Dramatico v BSkyB at [67]. Fourthly, I do not think it can be assumed that additional damages will necessarily be awarded. Again, this may well turn on the extent of the infringement. Fifthly, I think that Mr Becker's response in his second witness statement to the point made by counsel for Consumer Focus referred to in sub-paragraph 60(v) above is telling: "... it assumes that £700 will be successfully obtained from each of the 9000, when that is plainly wrong. In fact, it is likely that only a small proportion will result in a successfully obtained payment of any sum." This comes quite close to an admission that the figure of £700 has been selected so as to maximise the revenue obtained from the letters of claim, rather than as a realistic estimate of the damages recoverable by the relevant Claimant from each Intended Defendant. In any event, that is the inference I draw in the light of the matters discussed above and in the absence of any disclosure of the information referred to in paragraph 88 above. Accordingly, I do not consider that the Claimants are justified in sending letters of claim to every Intended Defendant demanding the payment of £700. What the Claimants ought to do is to proceed in the conventional manner, that is to say, to require the Intended Defendants who do not dispute liability to disclose such information as they are able to provide as to the extent to which they have engaged in P2P filesharing of the relevant Claimants' copyright works. In my view it would be acceptable for the Claimants to indicate that they are prepared to accept a lump sum in settlement of their claims, including the request for disclosure, but not to specify a figure in the initial letter. The settlement sum should be individually negotiated with each Intended Defendant. Safeguards suggested by Consumer Focus Consumer Focus suggested a number of possible safeguards for the Intended Defendants which it is convenient to consider at this juncture. Notification of the Intended Defendants. The first possibility is notification of the Intended Defendants by O2 for their anonymous comment prior to the making of any order as suggested by Aldous LJ in Totalise. In my view this is impractical given the sheer number of Intended Defendants. Given encouragement and time, hundreds of the 9,124 Intended Defendants might respond to the invitation. Those who respond are likely to be those who dispute infringement. What is the court supposed to do if, say 200 respond denying infringement and the remainder are silent? Furthermore, the process of inviting comment would in itself invade the Intended Defendants' privacy to some extent. It would also add significantly to the overall costs of the process. Supervising solicitor. The second possibility is the appointment of a supervising solicitor as suggested by HHJ Birss QC in Media CAT v Adams. In the context of a search and seizure order, the supervising solicitor has a clearly defined role, which is to serve the order, to explain it to the respondent, to take disputed items into his or her safekeeping and to report to the court on the execution of the order. I find it to difficult see what the role of a supervising solicitor would be in this context, however, particularly given that I have had the opportunity of considering the draft letter. Is the supervising solicitor intended to arbitrate between the Claimants and the Intended Defendants in some way? I agree that it would desirable for some form of low-cost arbitration procedure to be made available, but arbitration requires the consent of both parties, it cannot be imposed. Group Litigation Order. The third possibility is the making of a Group Litigation Order ("GLO"), again as suggested by HHJ Birss QC in Media CAT v Adams. In my judgment it is doubtful that the Claimants' claims against the Intended Defendants are suitable for a GLO, however. The GLO regime is primarily designed for large numbers of claimants suing a common defendant or group of defendants for sums of money that may be relatively small for each claimant but are large in aggregate. It is not really designed for a small number of claimants suing a huge number of unrelated defendants for very small sums of damages. This is particularly so given that the Intended Defendants do not have a common interest. On the contrary, they are likely to fall into a number of groups: (i) those who admit infringement; (ii) those who deny infringement on spurious grounds; (iii) those who deny infringement on grounds that give rise to a serious issue to be tried; and (iv) those who have not infringed on any view. Even the third group is likely further to divide into a number of sub-groups, as can be seen from sub-paragraph 103(vi) above. In any event, a more fundamental problem is that a GLO would not really address the principal concern raised by Consumer Focus, which is the impact of the Claimants' intended letters of claim upon the Intended Defendants. Indeed, if the letter of claim had to include a statement to the effect that any claim by the Claimants would be entered on a GLO group register and give information about the GLO regime, the effect could be even more intimidating to the ordinary consumer. Test cases. The fourth possibility is the selection and determination of suitable test cases. In my view this suggestion has much to commend it. This is not something which this Court can direct at this stage, however. Furthermore, it must be acknowledged that there are various practical problems to be faced. First, as discussed above, the Intended Defendants will fall into various groups. Only once they have been put on notice of the claims can their differing positions be ascertained. Only then can one start trying to identify suitable Intended Defendants willing to participate in test cases. This would require a fairly substantial communications exercise. Secondly, few of the Claimants' claims against the Intended Defendants are likely to be economic to litigate even in the Patents County Court even once the small claims track becomes available. Thirdly, many of the Intended Defendants will not have the means to do so. I suspect that these difficulties would be difficult to surmount without considerable assistance and support from an organisation such as Consumer Focus (or perhaps the Consumers' Association). An alternative safeguard I asked counsel for the Claimants whether the Claimants would be willing to accept that it be a condition of the making of an order that any resulting claims be brought in the Patents County Court, so as to ensure that they were dealt with by a specialised tribunal. He informed me that the Claimants would be willing to accede to that condition. The claim by Golden Eye and Ben Dover Productions If one considers first the claim by Golden Eye and Ben Dover Productions, the claim for a Norwich Pharmacal order is one made by a copyright owner and its exclusive licensee, both of whom have been joined to the claim and will be joined to any infringement claims. Given the commercial background explained above, there is nothing particularly unusual, let alone objectionable, about the Ben Dover Agreement. The mere fact that the copyright works are pornographic films is no reason to refuse the grant of relief, since there is no suggestion that they are obscene or otherwise unlawful. Golden Eye and Ben Dover Productions have a good arguable case that many of the relevant Intended Defendants have infringed their copyrights. I am satisfied that they do intend to seek redress for those wrongs and that disclosure is necessary to enable them to do so. In these circumstances, I conclude that the Claimants' interests in enforcing their copyrights outweigh the Intended Defendants' interest in protecting their privacy and data protection rights, and thus it is proportionate to order disclosure, provided that the order and the proposed letter of claim are framed so as properly to safeguard the legitimate interests of the Intended Defendants, and in particular the interests of Intended Defendants who have not in fact committed the infringements in question. This will require the draft order and the draft letter to be amended to address the concerns I have set out in paragraphs 121-138 above. In addition, it will be a term of the order that any claims against the Intended Defendants be brought in the Patents County Court. The claim by the Other Claimants If the Other Claimants were themselves making claims for Norwich Pharmacal relief, without the involvement of Golden Eye, then I would almost certainly reach the same conclusion. What then is the impact of Golden Eye's involvement? As discussed above, I have not accepted that the agreements between Golden Eye and the Other Claimants are champertous. Nor have I been persuaded that those agreements mean that the Other Claimants are not genuinely intending to try to seek redress. It does not follow, however, that it is appropriate, when balancing the competing interests, to make an order which endorses an arrangement under which the Other Claimants surrender total control of the litigation to Golden Eye and Golden Eye receives about 75% of the revenues in return. On the contrary, I consider that that would be tantamount to the court sanctioning the sale of the Intended Defendants' privacy and data protection rights to the highest bidder. Accordingly, in my judgment, to make such an order would not proportionately and fairly balance the interests of the Other Claimants with the Intended Defendants' interests. (I do not consider Golden Eye to have any legitimate interest separate from those of the Other Claimants for this purpose.) If the Other Claimants want to obtain redress for the wrongs they have suffered, they must obtain it themselves. Discretion I doubt that there is an independent role for the exercise of discretion once the court has undertaken a thorough proportionality analysis. If there is, however, for the reasons set out above, I exercise my discretion to make an order in favour of Golden Eye and Ben Dover Productions on the terms indicated, but decline to exercise my discretion in favour of the Other Claimants. An issue not raised In Case C-461/10 Bonnier Audio AB v Perfect Communication Sweden AB the Högsta domstolen in Sweden referred the following questions to the CJEU for a preliminary ruling: "1. Does Directive 2006/24 ... on the retention of data generated or processed in connection with the provision of publicly available electronic communications services or of public communications networks and amending Directive 2002/58/EC (the Data Storage Directive), and in particular Articles 3, 4, 5 and 11 thereof, preclude the application of a national provision which is based on Article 8 of Directive 2004/48 ... on the enforcement of intellectual property rights [the Enforcement Directive] and which permits an internet service provider in civil proceedings, in order to identify a particular subscriber, to be ordered to give a copyright holder or its representative information on the subscriber to whom the internet service provider provided a specific IP address, which address, it is claimed, was used in the infringement? The question is based on the assumption that the applicant has adduced evidence of the infringement of a particular copyright and that the measure is proportionate. 2. Is the answer to Question 1 affected by the fact that the Member State has not implemented the Data Storage Directive despite the fact that the period prescribed for implementation has expired?" On 17 November 2011 the Opinion of Advocate General Jääskinen was published in eight languages, none of them English. The Advocate General advised the CJEU to answer the first question as follows in the French version: "La directive 2006/24 ...  modifiant la directive 2002/58/CE, ne s'applique pas au traitement des données à caractère personnel à d'autres fins que celles visées à l'article 1er, paragraphe 1, de cette directive. Par conséquent, ladite directive ne s'oppose pas à l'application d'une disposition nationale au titre de laquelle, dans le cadre d'une procédure civile, aux fins d'identifier un abonné déterminé, le juge enjoint à un fournisseur d'accès à Internet de divulguer au titulaire de droits d'auteur, ou à son ayant droit, des informations relatives à l'identité de l'abonné à qui ledit opérateur a attribué une adresse IP qui aurait servi à l'atteinte audit droit. Toutefois, ces informations doivent avoir été conservées pour pouvoir être divulguées et utilisées à cette fin conformément à des dispositions législatives nationales détaillées, qui ont été adoptées dans le respect du droit de l'Union en matière de protection des données à caractère personnel." That being so, there was no need to answer the second question.  Google Translate renders this answer as follows: "Directive 2006/24 ... and amending Directive 2002/58/EC does not apply to the processing of personal data for purposes other than those referred to in Article 1, paragraph 1 of this Directive. Therefore, the directive does not preclude the application of a national provision under which, in the context of civil proceedings, in order to identify a specific subscriber, the judge ordered a provider access to the Internet to disclose to the holder of copyright, or his successor in title, information concerning the identity of the subscriber to whom the trader has allocated an IP address that would have been used to achieve that right. However, this information must be retained in order to be disclosed and used for this purpose in accordance with detailed national legislation, which were adopted in compliance with EU law on the protection of personal data." At the time of writing this judgment, the judgment of the Court is still awaited. No argument was raised before me that to the effect that the answer suggested by the Advocate General was wrong. Nor was it suggested that the present claim be stayed, or judgment postponed, until after the Court's judgment. Conclusion For the reasons given above I shall make a Norwich Pharmacal order in favour of Golden Eye and Ben Dover Productions on the terms indicated, but I decline to make any order in favour of the Other Claimants. I shall hear counsel as to the precise wording of the order and of the letter of claim.

FOURTH SECTION CASE OF MIERNICKI v. POLAND (Application no. 10847/02) JUDGMENT STRASBOURG 27 October 2009 FINAL 10/05/2010 This judgment will become final in the circumstances set out in Article 44 § 2 of the Convention. It may be subject to editorial revision. In the case of Miernicki v. Poland, The European Court of Human Rights (Fourth Section), sitting as a Chamber composed of: Nicolas Bratza, President,Lech Garlicki,Giovanni Bonello,Ljiljana Mijović,Ján Šikuta,Mihai Poalelungi,Nebojša Vučinić, judges,and Fatoş Aracı, Deputy Section Registrar, Having deliberated in private on 6 October 2009, Delivers the following judgment, which was adopted on that date: PROCEDURE 1. The case originated in an application (no. 10847/02) against the Republic of Poland lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Polish national, Mr Jan Miernicki (“the applicant”), on 12 June 2001. 2. The applicant was represented by Ms A. Kawecka-Guzek, a lawyer practising in Zielona Góra. The Polish Government (“the Government”) were represented by their Agent, Mr J. Wołąsiewicz of the Ministry of Foreign Affairs. 3. On 8 October 2007 the President of the Fourth Section decided to give notice of the application to the Government. It was also decided to examine the merits of the application at the same time as its admissibility (Article 29 § 3). THE FACTS I. THE CIRCUMSTANCES OF THE CASE 4. The applicant was born in 1951 and lives in Zgorzelec. He is currently detained in Wołów Prison. A. Criminal proceedings against the applicant and his detention on remand 5. On 23 August 2000 the applicant was arrested by the police on suspicion of having committed, inter alia, several offences of drug trafficking and leading an organised armed criminal gang. On 25 August 2000 the Wrocław District Court (Sąd Rejonowy) ordered his detention pending trial. It relied on a reasonable suspicion that the applicant had committed the offences with which he had been charged and the likelihood of a severe sentence of imprisonment being imposed on him. Further, the court stressed that the applicant could tamper with evidence, in particular given that he had been charged with being the leader of an organised armed criminal gang. 6. On 17 November 2000 and 28 March 2001 the Jelenia Góra Regional Court extended the applicant's detention. 7. On 10 May 2001 the Wrocław Court of Appeal dismissed the applicant's appeal against the decision of 28 March 2001. The court noted that the reasons for his detention were still valid. Moreover, it referred to the strong risk that the applicant could jeopardise the proper course of the investigation. The court held that according to the testimonies of the key prosecution witness (świadek koronny), even during his detention the applicant had tried to threaten witnesses in the case. 8. On 26 July 2001 the Jelenia Gora Regional Court extended the applicant's detention. On 16 August 2001 the Wrocław Court of Appeal (Sąd Apelacyjny) extended the applicant's detention to 30 September 2001. A subsequent extension was ordered by the Wrocław Court of Appeal on 25 September 2001. The decision was served on the applicant on 2 October 2001. In his appeal, the applicant alleged that he had been illegally deprived of his liberty for two days, due to the fact that the decision in question had been served on him after the expiry of the previous detention order given on 16 August 2001. 9. On 17 October 2001 the Wrocław Court of Appeal dismissed the applicant's appeal. The court explained that the first-instance decision had indeed been served on him on 2 October 2001, in compliance with the law. It underlined the fact that the order had been given before the expiration of the previous one. 10. In their decisions concerning the extension of the applicant's detention, the courts relied on the likelihood that he had committed the offences as the leader of an organised armed criminal gang. They attached importance to the grave nature of these offences and the likelihood of a severe sentence of imprisonment being imposed on him. Furthermore, they referred to the complexity of the case, the fact that many suspects were involved and that some of them had not yet been arrested. They stressed that the detention was justified by the need to obtain further evidence, in particular, to have witnesses examined by the German authorities by means of a rogatory letter, to obtain expert reports and to hear a key prosecution witness. 11. The applicant's appeal against the detention order, likewise his further appeals against decisions to extend his detention and all his subsequent, numerous applications for release and appeals against refusals to release him, were unsuccessful. The courts held that the reasons for his detention were still valid. 12. On 15 November 2001 the applicant and 14 co-defendants were indicted before the Jelenia Góra Regional Court (Sąd Okręgowy). The bill of indictment against the applicant comprised several charges of drug trafficking, leadership of an armed organised criminal gang, incitement to produce a radio bomb and circulating forged banknotes. 13. The detention was then subsequently extended by the Jelenia Góra Regional Court on 27 November 2001 and 28 May 2002 and later by the Wrocław Court of Appeal on 8 August 2002. The courts repeated the grounds given in the previous decisions. 14. On 16 September 2002 the Wrocław Court of Appeal dismissed an appeal by the applicant against the extension of his detention ordered on 8 August 2002. One of the judges (W.K.) dismissing the appeal had also presided over the court's session on 8 August 2002. 15. On 15 January 2003 the Wrocław Court of Appeal extended the applicant's detention. The court relied on the grounds given in the previous decisions. 16. During the trial, on 12 July 2002, the Jelenia Góra Court adjourned the first-instance hearing. It was resumed after forty-nine days, that is, on 30 August 2002. The applicant unsuccessfully objected to the continuation of the hearing. Under the relevant provisions of the Code of Criminal Procedure, he requested that the first-instance hearing be recommenced from the beginning. The court rejected the applicant's objection, despite the fact that it admitted that the continuation of the hearing had been in breach of certain provisions of the Code of Criminal Procedure. 17. In the course of the investigation and the trial, the courts informed the prosecutor and the applicant's lawyer about the dates of the sessions concerning the extension and the review of the applicant's detention. Nevertheless, the applicant's lawyer failed to attend some of the sessions. 18. Between 1 March 2002 and 28 February 2003 the court held fifteen hearings. 19. On 7 March 2003 the Jelenia Góra Regional Court convicted the applicant as charged and sentenced him to eight years' imprisonment. He appealed, alleging, inter alia, that the first-instance judgment should be quashed due to errors of fact, evidence and procedure, in particular the erroneous continuation of the first-instance hearing in August 2002. 20. After the delivery of the first-instance judgment, the applicant's detention was extended on several occasions. 21. On 30 October 2003 the Wrocław Court of Appeal upheld the first‑instance judgment. 22. On an unknown date in February 2004 the applicant's lawyer lodged a cassation appeal. However, he did not raise an issue in relation to the adjournment of the first-instance hearing in July 2002 and its subsequent continuation on a later date. 23. On 10 February 2005 the Supreme Court dismissed the cassation appeal. 24. The applicant is serving a prison sentence. B. Censorship of the applicant's correspondence 25. Five envelopes in which the applicant sent his letters to the Court in 2002 bear red stamps reading “censored” (cenzurowano), with no signatures. It appears that the envelopes had been cut open and subsequently resealed with adhesive tape. According to the postage stamps the letters were posted on 19 and 23 April, 21 August, 30 October and 28 November 2002. II. RELEVANT DOMESTIC LAW AND PRACTICE A. Preventive measures, including pre-trial detention 26. The relevant domestic law and practice concerning the imposition of pre-trial detention (aresztowanie tymczasowe), the grounds for its extension, release from detention and rules governing other “preventive measures” (środki zapobiegawcze) are stated in the Court's judgments in the cases of Gołek v. Poland, no.31330/02, §§ 27-33, 25 April 2006 and Celejewski v. Poland, no. 17584/04, §§ 22-23, 4 August 2006. B. Procedure for disqualification of a judge 27. At the relevant time the Code of Criminal Procedure (Kodeks postępowania karnego) did not provide for any specific legal rules concerning disqualification of a judge deciding on the extension of a detainee's pre-trial detention. 28. Article 40 § 1 of the Code of Criminal Procedure provides: “A judge is ex lege disqualified from his participation in a case, if: ... 6) he has participated, in a lower court, in the delivery of a decision subject to an appeal, or has himself delivered a ruling subject to an appeal ...” 29. Article 42 of the Code of Criminal Procedure provides for the procedure for disqualification of a judge: “§ 1. A disqualification shall be effected by the judge ex officio, by the court of its own motion, or upon a challenge made by a party to the proceedings. § 2. Upon discovery by a judge of grounds for his disqualification pursuant to Article 40, he shall disqualify himself by a written statement to be filed in the record of the case; another judge shall be substituted in his place. § 3. A judge against whom an application to challenge has been lodged pursuant to the provisions of Article 41 may file an appropriate written statement in the record of the case, and shall cease to participate in the case. He must, however, take measures which are not amenable to delay. § 4. Except in the event referred to in paragraph 2 above, the decision on a disqualification shall be made by the court before which the proceedings are pending; the judge concerned shall not participate in the panel which is to adopt the decision on that disqualification. If no such panel can be formed, the decision on the disqualification shall be made by a court of higher instance”. 30. As can be seen from a decision of the Katowice Court of Appeal, delivered on 19 October 2005 (no. II AKz 644/05), the wording “[a judge] shall be disqualified” (“wyłączony od udziału w sprawie”), which is used in Article 40 § 1 of the Code of Criminal Procedure, does not mean that such a judge should be excluded from delivery of a judgment only. In the opinion of the court the provision in question should also apply to all procedural decisions during the criminal proceedings, such as, for example, the imposition of pre-trial detention. The court underlined the fact that in respect of such procedural decisions the broad definition “participation in a case” should apply. On the contrary, if the disqualification of a judge only meant that no second judgment could be given by the same judge, then the legislator would have adopted a narrower definition, namely, “participation in examination of the merits of the case” (“wyłączony od udziału w rozpoznaniu sprawy”). A similar opinion was expressed by the Supreme Court (Sąd Najwyższy) in its decision of 10 August 2004 (no. III KZ 9/04) and of 10 March 1997 (no. V KZ 24/97). The Supreme Court underlined the fact that Article 40 § 1 of the Code of Criminal Procedure provides for procedural guarantees, which cannot be interpreted narrowly. C. Monitoring of detainees' correspondence 31. The legal provisions concerning the monitoring of detainees' correspondence applicable at the relevant time are set out in the Court's judgment in the case of Michta v. Poland, no.13425/02, §§ 33-39, 4 May 2006. THE LAW I. ALLEGED VIOLATION OF ARTICLE 5 §§ 1 AND 4 OF THE CONVENTION ON ACCOUNT OF THE LACK OF IMPARTIALITY OF THE COURT DECIDING ON THE LAWFULNESS OF THE APPLICANT'S DETENTION 32. The applicant complained, without invoking any provisions of the Convention, that the decision of the Wrocław Court of Appeal of 16 September 2002 dismissing his appeal against the decision of the Wrocław Court of Appeal dated 8 August 2002 to extend his pre-trial detention was unlawful because one of the judges who participated in the dismissal of that appeal had presided over the court's session at which the detention had been extended on 8 August 2002. 33. The Court notes that this complaint falls to be examined under Article 5 § 1 of the Convention in conjunction with Article 5 § 4 of the Convention, which, in so far as relevant, read as follows: “1. Everyone has the right to liberty and security of person. No one shall be deprived of his liberty save in the following cases and in accordance with a procedure prescribed by law: ... 4. Everyone who is deprived of his liberty by arrest or detention shall be entitled to take proceedings by which the lawfulness of his detention shall be decided speedily by a court and his release ordered if the detention is not lawful. ...” 34. The Government contested that argument. A. Admissibility 1. The Government's preliminary objection on exhaustion of domestic remedies 35. The Government submitted that the applicant had not exhausted available domestic remedies. In this connexion, they pointed out that the applicant, although represented by a defence lawyer, had not raised the substance of his complaint before the domestic organs. They submitted that the applicant's lawyer had been present at the session held on 8 August 2002. He had subsequently been duly summoned for the session scheduled for 16 September 2002 but he had failed to attend. Had he been present, he could have challenged judge W.K for bias. 36. The Government further argued that the applicant could have drawn the attention of the domestic courts to the wrong composition of the court dealing with his appeal at any later stage of the proceedings. 37. The applicant did not comment. 2. The Court's assessment 38. The Court notes that the applicant could not appeal against the decision of 16 September 2002. By this decision the Wroclaw Court of Appeal dismissed the applicant's appeal against the decision of 8 August 2002. Furthermore, the Court observes that the Government did not point to any existing remedy which, with a sufficient degree of certainty, could have afforded redress in respect of the breaches alleged. 39. For these reasons, the Government's plea of inadmissibility on the ground of non-exhaustion of domestic remedies must be dismissed. 3. Conclusion as to admissibility 40. The Court notes that this complaint is not manifestly ill-founded within the meaning of Article 35 § 3 of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible. B. Merits 1. The parties' submissions (a) The applicant 41. The applicant maintained that the composition of the court which decided on his appeal against the detention order was not in conformity with the domestic law. (b) The Government 42. The Government admitted that the Wroclaw Court of Appeal had not acted in accordance with the relevant provisions of the Code of Criminal Procedure in that the bench of three judges that had given the decision of 16 September 2002 had been composed contrary to the domestic law. The Government therefore accepted that Article 5 § 1 of the Convention had been violated. The Government refrained from expressing their position on the alleged violation of Article 5 § 4 of the Convention. 2. The Court's assessment (a) Article 5 § 1 of the Convention (i) General principles 43. The Court reiterates that the expressions “lawful” and “in accordance with a procedure prescribed by law” in Article 5 § 1 essentially refer back to national law and state the obligation to conform to the substantive and procedural rules thereof (see, among other authorities, Douiyeb v. the Netherlands [GC], no. 31464/96, § 44, judgment of 4 August 1999, and Baranowski v. Poland, no. 28358/95, § 50, judgment of 28 March 2000). 44. It is in the first place for the national authorities, notably the courts, to interpret and apply domestic law. However, since under Article 5 § 1 failure to comply with domestic law entails a breach of the Convention, it follows that the Court can, and should, exercise a certain power of review of such compliance (see Benham v. the United Kingdom, judgment of 10 June 1996, Reports of Judgments and decisions 1996-III, § 41). (ii) Application of the above principles in the present case 45. In the present case, the applicant's appeal against the extension of his detention was examined and dismissed on 16 September 2002 by the Wroclaw Court of Appeal, which was composed of three judges, including W.K, who had given the first-instance decision. The next decision extending the applicant's detention was given on 15 January 2003 (see paragraphs 14 and 15 above). 46. The Court observes that, according to Article 40 § 1 of the Code of Criminal Procedure, a judge is ex lege disqualified from his participation in a case, if he has participated, in a lower court, in the delivery of a decision subject to an appeal. Moreover, it is his obligation to disqualify himself from the proceedings. Thus, the fact that the same judge was deciding in the lower and in the higher court on the extension of the applicant's detention was contrary to the domestic law. 47. The court therefore concludes that during the period starting with the defective decision of 16 September 2002 and ending on 15 January 2003, when the decision “in accordance with a procedure prescribed by law” was given, the applicant's detention was unlawful (see paragraph 46 above). It follows that the requirement under Article 5 § 1 to comply with a procedure prescribed by law was not observed and for that reason there has been a violation of the provision. (b) Article 5 § 4 of the Convention 48. The Court does not consider it necessary to examine separately the complaint about the impartiality of the court under Article 5 § 4 in view of its finding (see paragraph 47 above) that the applicant's detention was unlawful between 16 September 2002 and 15 January 2003. II. ALLEGED VIOLATION OF ARTICLE 5 § 3 OF THE CONVENTION 49. The applicant complained that the length of his detention on remand had been excessive. He relied on Article 5 § 3 of the Convention, which, in so far as relevant, reads as follows: “Everyone arrested or detained in accordance with the provisions of paragraph 1 (c) of this Article shall be ... entitled to trial within a reasonable time or to release pending trial. Release may be conditioned by guarantees to appear for trial.” 50. The Government contested that argument. A. Admissibility 51. The Court notes that this complaint is not manifestly ill-founded within the meaning of Article 35 § 3 of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible. B. Merits 1. Period to be taken into consideration 52. The applicant's detention started on 23 August 2000, when he was arrested on suspicion of having committed several offences of drug trafficking and leading an organised armed criminal gang. On 7 March 2003 the Jelenia Gora Regional Court convicted him as charged. 53. As from that date he was detained “after conviction by a competent court”, within the meaning of Article 5 § 1 (a) and, consequently, that period of his detention falls outside the scope of Article 5 § 3 (Kudła v. Poland [GC], no. 30210/96, § 104, ECHR 2000‑XI). 54. Accordingly, the period to be taken into consideration amounts to two years, six months and thirteen days. 2. The parties' submissions (a) The applicant 55. The applicant argued that the length of his pre-trial detention had been unreasonable. He stressed that the authorities had failed to exercise all due diligence when dealing with his case. (b) The Government 56. The Government first presented some statistical data, indicating that in the years 2000-2005 the number of indictments and convictions in cases concerning organised crime had increased both in absolute terms and in relation to other crimes. In 2004 there were 617 indictments in such cases and 220 persons were convicted. They argued that in organised crime cases the authorities were faced with particular problems relating to the taking and assessment of evidence and various logistical issues. 57. With reference to the present case, the Government argued that the applicant's detention had not been unreasonably lengthy. They submitted that the courts had given relevant and sufficient reasons for holding the applicant in custody for the entire period in question. 58. They stressed that the applicant's detention had been justified by the strong suspicion that he had committed the offences with which he had been charged, the fact that the seriousness of the charges against him attracted a heavy sentence and the complexity of the case. They further argued that the applicant's detention had been justified in order to secure the proper conduct of the proceedings, as there had been a risk that he would tamper with evidence. This risk was increased by the fact that the charges against the applicant concerned numerous offences committed by an organised criminal group, that he had been accused of being the leader of the group and that he had attempted to threaten witnesses. 59. Lastly, they pointed out that the applicant's detention had been reviewed at regular intervals and the domestic authorities had displayed adequate diligence in dealing with his case. 3. The Court's assessment (a) General principles 60. The general principles regarding the right “to trial within a reasonable time or to release pending trial”, as guaranteed by Article 5 § 3 of the Convention, have been stated in a number of its previous judgments (see, among many other authorities, Kudła v. Poland, cited above, § 110 et seq, and McKay v. the United Kingdom [GC], no. 543/03, §§ 41-44, ECHR 2006-..., with further references). (b) Application of the above principles in the present case 61. In their detention decisions, the authorities, in addition to the reasonable suspicion against the applicant, relied principally on four grounds, namely (1) the serious nature of the offences with which he had been charged, (2) the complexity of the case, (3) the severity of the penalty to which he was liable and (4) the risk that he might tamper with evidence. As regards the latter, they relied on the fact that the applicant had attempted to intimidate some witnesses (see paragraphs 5, 7, 10 and 13 above). 62. The applicant was charged with numerous counts of drug smuggling committed in an organised and armed criminal group (see paragraph 12 above). In the Court's view, the fact that the case concerned a member of such a criminal group should be taken into account in assessing compliance with Article 5 § 3 (see Bąk v. Poland, no. 7870/04, § 57, 16 January 2007). 63. The Court accepts that the reasonable suspicion against the applicant of having committed serious offences could initially warrant his detention. Also, the need to obtain voluminous evidence constituted valid grounds for his initial detention. 64. However, with the passage of time, those grounds became less and less relevant. The Court must then establish whether the other grounds adduced by the courts – namely, the severity of the anticipated sentence and the risk that the applicant would tamper with evidence, were “relevant” and “sufficient” (see Kudła, cited above, § 111). 65. According to the authorities, the likelihood of a severe sentence being imposed on the applicant created a presumption that he would obstruct the proceedings. However, the Court would reiterate that, while the severity of the sentence faced is a relevant element in the assessment of the risk of absconding or re-offending, the gravity of the charges cannot by itself justify long periods of detention on remand (see, for instance, Ilijkov v. Bulgaria, no. 33977/96, §§ 80-81, 26 July 2001). 66. As regards the risk of pressure being brought to bear on witnesses or of the obstruction of the proceedings by other unlawful means, the Court notes that at the initial stages of the proceedings the judicial authorities presumed that such risks existed on the ground that the applicant had been the leader of an organised criminal group. Moreover, the Court notes that the applicant made attempts to intimidate certain witnesses during the proceedings (see paragraphs 5 and 7 above). 67. In this respect, taking into account the particular circumstances of the instant case, the Court considers that the severity of the likely penalty taken in conjunction with the risk flowing from the nature of the applicant's criminal activities justified holding him in custody for the relevant period. 68. It remains for the Court to ascertain whether the authorities, in dealing with the applicant's case, displayed the diligence required under Article 5 § 3 (see McKay, cited above, § 44). In this regard, it would observe that the investigation was completed by the prosecution authorities within a short period of time. The Court notes that it took the trial court three and a half months to prepare the case for the first hearing. Moreover, the hearings were held at regular intervals (see paragraphs 15 and 17 above). Lastly, the Court notes that the criminal case at issue was a complex one on account of the number of co-accused and the charges against them. A significant amount of evidence had to be examined in the course of the proceedings. The Court therefore concludes that the length of the investigation and the trial was justified by the exceptional complexity of the case. For these reasons, the Court considers that the domestic authorities handled the applicant's case with acceptable expedition. In the view of the foregoing, the Court concludes that there has been no violation of Article 5 § 3 of the Convention. III. ALLEGED VIOLATION OF ARTICLE 5 § 4 OF THE CONVENTION ON ACCOUNT OF THE LACK OF EQUALITY OF ARMS 69. The applicant complained about the procedure relating to the extension of his pre-trial detention. In particular, he alleged that neither he nor his lawyer had been notified of the court sessions at which his detention had been extended. He submitted that they had been prevented from attending them. 70. This complaint falls to be examined under Article 5 § 4 of the Convention, which reads as follows: “Everyone who is deprived of his liberty by arrest or detention shall be entitled to take proceedings by which the lawfulness of his detention shall be decided speedily by a court and his release ordered if the detention is not lawful.” 71. The Government contested the applicant's submissions and held that they were untrue. They submitted that as it transpired from the court files at their disposal, the applicant's lawyer had been notified of all the courts' sessions at which his detention had been extended and the sessions at which the appeals against a decision to impose or to extend his detention were to be considered. He had been entitled to take part in them. The lawyer had been duly summoned to those sessions, although he had been absent from some of them. The Government maintained that, taking into consideration all the proceedings for the review of the lawfulness of the applicant's pre‑trial detention, the principles guaranteed in Article 5 § 4 of the Convention had been respected in the present case. 72. The procedure for the extension of the applicant's pre‑trial detention during the period under consideration was based on Article 249 § 5 of the Code of Criminal Procedure, which requires the domestic courts to inform the lawyer of a detained person of the date and time of court sessions at which a decision is to be taken concerning extension of detention on remand, or an appeal against a decision to impose or to extend detention on remand is to be considered. It is open to the lawyer to attend such sessions. In this connection the Court observes that in the present case there is no evidence that the courts departed from the normal procedure and that the applicant's lawyer was not duly summoned to the court sessions. Moreover, the applicant has not advanced any argument that his defence, as assured by his lawyer or at any other stage, was inadequate. 73. In view of the above, the Court is of the opinion that the proceedings in which the extension of the applicant's detention was examined satisfied the requirements of Article 5 § 4 (see Telecki v. Poland, (dec.), no. 56552/00, 3 July 2003, and Celejewski, cited above). 74. It follows that this complaint must be rejected as being manifestly ill‑founded pursuant to Article 35 §§ 3 and 4 of the Convention. IV. ALLEGED VIOLATION OF ARTICLE 8 OF THE CONVENTION 75. The Court raised of its own motion an issue under Article 8 of the Convention on account of the fact that the applicant's correspondence with the Court had been censored. This provision, in its relevant part, reads: “1. Everyone has the right to respect for ... his correspondence. 2. There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.” 76. The Government contested that argument. A. Admissibility 1. The Government's preliminary objection on exhaustion of domestic remedies 77. The Government submitted that the applicant had not exhausted all available domestic remedies. He had failed to bring an action under Article 24 § 2, in conjunction with Article 448 of the Civil Code. These provisions would have allowed him to assert that by censoring his correspondence the authorities had breached his personal rights protected by the Civil Code and to make a claim in respect of non-pecuniary damage. 78. In this connection, the Government relied on the Warsaw Regional Court's judgment of 27 November 2006 in which a prisoner had been awarded 5,000 Polish zlotys (PLN) in damages from the State Treasury for a breach of the confidentiality of his correspondence with the Central Board of the Prison Service and the Central Electoral Office. The Regional Court held that the confidentiality of correspondence was a personal right protected under Article 23 of the Civil Code whose breach could entitle the claimant to an award in respect of non-pecuniary damage. Furthermore, the Government relied on the Srem District Court judgment of 21 December 2005 which was upheld in part by the Poznan Regional Court judgment of 19 May 2006. In that case a detainee had been awarded PLN 1,000 in damages from the State Treasury for the opening of a letter from the European Court of Human Rights by the authorities of the Detention Centre. 79. The applicant did not comment. 2. The Court's assessment 80. The Court notes that the complaint under Article 8 of the Convention concerning the alleged censorship of the applicant's correspondence was raised of its own motion. The letters at issue were sent by the applicant to the Court and he could not have been aware that they had been censored by the authorities. In those circumstances, the applicant cannot be required to bring any domestic proceedings to obtain redress for the alleged breach of his right to respect for his correspondence. 81. For this reasons, the Government's plea of inadmissibility on the ground of non-exhaustion of domestic remedies must be dismissed. 3. Conclusion as to admissibility 82. The Court notes that this complaint is not manifestly ill-founded within the meaning of Article 35 § 3 of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible. B. Merits 1. Existence of an interference 83. The Court notes that five envelopes in which the applicant sent his letters to the Court in 2002 bear red stamps reading “censored” (cenzurowano), with no signatures. It appears that the envelopes had been cut open and subsequently resealed with adhesive tape (see paragraph 24 above). 84. The Court has held on many occasions that as long as the Polish authorities continue the practice of marking detainees' letters with the “censored” stamp, the Court has no alternative but to presume that those letters have been opened and their contents read (see Matwiejczuk v. Poland, no. 37641/97, § 99, 2 December 2003; Pisk-Piskowski v. Poland, no. 92/03, § 26, 14 June 2005; and Michta cited above, § 58). It follows that in respect of all of the applicant's letters there was an “interference” with his right to respect for his correspondence under Article 8. 2. Whether the interference was “in accordance with the law” 85. The Government did not indicate a concrete legal basis in the domestic law for the impugned interference. The Court notes that the interference took place in May 2002 when the applicant had been detained pending trial. 86. The Court observes that, according to Article 214 of the Code of Execution of Criminal Sentences, persons detained on remand should enjoy the same rights as those convicted by a final judgment. Accordingly, the prohibition on censorship of correspondence with the European Court of Human Rights contained in Article 103 of the same Code, which expressly relates to convicted persons, was also applicable to the applicant (see Michta, cited above, and Kwiek v. Poland, no. 51895/99, § 44, 30 May 2006). Thus, the interference with the applicant's correspondence with the Court was not “in accordance with the law“. 87. Having regard to that finding, the Court does not consider it necessary to ascertain whether the other requirements of paragraph 2 of Article 8 were complied with. Consequently, the Court finds that there has been a violation of Article 8 of the Convention as regards the applicant's letters addressed to the Court. V. OTHER ALLEGED VIOLATIONS OF THE CONVENTION A. Ill treatment in detention 88. The applicant complained under Article 3 of the Convention about degrading treatment during his detention, in particular that he was detained in small and crowded cells, forced to share them with smokers and not allowed to take off his handcuffs during breaks in hearings for the purpose of consuming his meals. 89. The Court notes that despite extensive correspondence, the applicant did not produce any prima facie evidence confirming any of the above allegations. It follows that this part of the application is manifestly ill‑founded within the meaning of Article 35 § 3 of the Convention and must be rejected in accordance with Article 35 § 4. B. The unfairness of the applicant's detention 90. Without invoking any provisions of the Convention, the applicant complained in substance that his detention had been in breach of Article 5 § 1 of the Convention. He also raised a complaint that he had been unlawfully detained between 1 and 2 October 2001. 91. The Court notes that the applicant's detention was based on Article 249 § 1 of the 1997 Code of Criminal Procedure. In this case the applicant was detained on a reasonable suspicion of having committed a criminal offence as part of an organised armed criminal gang. The decision to place him in custody had a legal basis and was issued by the appropriate judicial authority. There is nothing to suggest that the legal basis for his detention was not clearly defined or lacked the necessary foreseeability required under the Convention. It follows that in that sense, the applicant's detention was “lawful” within the meaning of Article 5 § 1 of the Convention. 92. As regards the complaint that he was unlawfully detained between 1 and 2 October 2001, it should be noted that the applicant's detention was extended before the expiration of a previous detention order. 93. It follows that these complaints are inadmissible as being manifestly ill-founded within the meaning of Article 35 § 3 of the Convention and must be rejected pursuant to paragraph 4 of that Article. C. Unfairness of the criminal proceedings 94. The applicant also complained under Article 6 of the Convention about the outcome of and procedural shortcomings in the criminal proceedings against him, in particular that the first-instance hearing had not been restarted in August 2002 after his procedural objection made in accordance with provisions of the Code of Criminal Procedure. 95. The first complaint is limited to challenging the result of the proceedings. Assessing the circumstances of the case as a whole, the Court finds no indication that the impugned proceedings were conducted unfairly. It follows that this part of the application is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 and 4 of the Convention. 96. As far as the applicant complained about the failure to restart the first-instance hearing in August 2002, the issue was not raised in the cassation appeal filed by his lawyer. Accordingly, this complaint must be rejected under Article 35 §§ 1 and 4 of the Convention for non-exhaustion of domestic remedies. D. Length of the proceedings 97. Further, under Article 6 of the Convention, the applicant complained about the length of the criminal proceedings. 98. However, the Court observes that the applicant failed to avail himself of any of the following remedies provided for by Polish law. When the proceedings were pending he could have made a complaint under sections 5 and 18 of the Law of 17 June 2004 on complaints about a breach of the right to a trial within a reasonable time (Ustawa o skardze na naruszenie prawa strony do rozpoznania sprawy w postępowaniu sądowym bez nieuzasadnionej zwłoki) (“the 2004 Act”). After the termination of the trial, he could have brought a civil action under Article 417 of the Civil Code read together with section 16 of the above-mentioned Law (as to the effectiveness of the latter remedy, see Krasuski v. Poland, judgment of 14 June 2005, no. 61444/00, § 72, ECHR 2005‑V (extracts)). It follows that this complaint must be rejected under Article 35 §§ 1 and 4 of the Convention for non-exhaustion of domestic remedies. E. Ban on visits in detention 99. Lastly, the applicant complained under Article 8 of the Convention that during his detention he had not been allowed to maintain personal contact with his family for fifteen months and that his extended detention had put a severe strain on him and his family. 100. The Court reiterates that detention, like any other measure depriving a person of his liberty, entails inherent limitations on his private and family life. However, it is an essential part of a detainee's right to respect for family life that the authorities enable him or, if need be, help him to maintain contact with his close family (see, mutatis mutandis, Messina v. Italy (no.2) no. 25498/94, § 61, 28 September 2000). 101. In the present case the applicant failed to produce any prima facie evidence to substantiate the alleged limitations put on the number of family visits, supervision over those visits or their subjection to a special prison regime or special visiting arrangements. It follows that this part of the application is manifestly ill-founded within the meaning of Article 35 § 3 of the Convention and must be rejected in accordance with Article 35 § 4. VI. APPLICATION OF ARTICLE 41 OF THE CONVENTION 102. Article 41 of the Convention provides: “If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.” A. Damage 103. The applicant submitted in his observations that he wished to uphold his earlier claims both for pecuniary and non-pecuniary damage. In his earlier submissions he had claimed 5,000,000 United States dollars (USD). 104. The Government contested the claim and requested the Court, should it find a violation of the Convention in the present case, to hold that the finding of a violation in itself provides sufficient just satisfaction. 105. The Court does not discern any causal link between the violation found and the pecuniary damage alleged; it therefore rejects that claim. On the other hand, it considers that the applicant has suffered non-pecuniary damage which is not sufficiently compensated by the finding of a violation of the Convention. Considering the circumstances of the case and making its assessment on an equitable basis, the Court awards the applicant EUR 1,500 under this head. B. Costs and expenses 106. The applicant submitted no claim for costs and expenses. FOR THESE REASONS, THE COURT UNANIMOUSLY 1. Declares the complaints concerning the length of the applicant's detention, the lawfulness of the decision reviewing his detention, non‑observance of the principle of the impartiality of the court reviewing his detention on 16 September 2002 and censorship of correspondence admissible and the remainder of the application inadmissible; 2. Holds that there has been a violation of Article 5 § 1 of the Convention in the period between 16 September 2002 and 15 January 2003; 3. Holds that it is not necessary to examine separately the complaint under Article 5 § 4 of the Convention about the impartiality of the court reviewing the applicant's detention; 4. Holds that there has been no violation of Article 5 § 3 of the Convention; 5. Holds that there has been a violation of Article 8 of the Convention; 6. Holds (a) that the respondent State is to pay the applicant, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, EUR 1,500 (one thousand five hundred euros) in respect of non-pecuniary damage to be converted into Polish zlotys at the rate applicable at the date of settlement, plus any tax that may be chargeable; (b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amount at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points; 7. Dismisses the remainder of the applicant's claim for just satisfaction. Done in English, and notified in writing on 27 October 2009, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. Fatoş AracıNicolas BratzaDeputy RegistrarPresident

Opinion of Mr Advocate General Van Gerven delivered on 28 January 1992. - J. M. Mulder and others and Otto Heinemann v Council of the European Communities and Commission of the European Communities. - Additional levy on milk - Non-contractual liability. - Joined cases C-104/89 and C-37/90. European Court reports 1992 Page I-03061 Swedish special edition Page I-00055 Finnish special edition Page I-00099 Opinion of the Advocate-General ++++ Mr President, Members of the Court, 1. The applicants in the joined cases which I am now to consider are farmers who, in accordance with undertakings given pursuant to Council Regulation (EEC) No 1078/77 of 17 May 1977, (1) delivered no milk or dairy products during the reference year that their Member States adopted for the application of the additional levy introduced by Council Regulations Nos 856/84 (2) and 857/84 (3) of 31 March 1984 (hereinafter referred to as "the levy scheme"). As a result, they received no reference quantity, that is to say, a quantity exempted from the additional levy by virtue of Article 2 of Regulation No 857/84. Pursuant to Article 178 and the second paragraph of Article 215 of the EEC Treaty, the applicants claim that the European Economic Community, represented by the Council and the Commission, should be ordered to pay compensation for the damage which they have sustained and are still to sustain as a result. These cases are the first two applications of a great number ° at present more than one hundred ° with that object which have been received at the Court. The Court has suspended the proceedings in the other cases until judgment has been given in these proceedings. 1. The levy scheme and the Court' s case-law 2. The applicants' actions follow on from the Court' s judgments of 28 April 1988 in Mulder (4) and von Deetzen, (5) which were concerned with the application of Regulation No 857/84 to producers who, pursuant to a non-marketing undertaking given under Regulation No 1078/77, had not delivered any milk during the reference year adopted by the Member State concerned. Regulation No 1078/77, which has since been repealed, provided for two types of premium, namely a non-marketing premium and a conversion premium. Only the former is relevant to these proceedings. The non-marketing premium was granted on request to any producer undertaking not to dispose of milk or milk products from his holding whether for a consideration or free of charge for a period of five years. For the sake of brevity I shall refer to producers who took advantage of the scheme introduced by Regulation No 1078/77 as "non-marketers". 3. In the judgment in Mulder the Court answered two questions which were referred by the College van Beroep voor het Bedrijfsleven (administrative court of last instance in matters of trade and industry) for a preliminary ruling. In its first question, the national court asked whether in establishing the reference quantities referred to in Article 2 of Regulation No 857/84 Member States might not take account of the specific situation of non-marketers. The Court stated in reply that the Member States might take account of the special circumstances of non-marketers "only in so far as each producer fulfils the specific conditions laid down in Regulation No 857/84 and if the Member States have reference quantities available for that purpose". The second question in Mulder, which was also raised in von Deetzen' s case, was whether or not in the light of that interpretation Regulation No 857/84 was valid. I shall set out in extenso the reasoning followed by the Court in answering that question (paragraphs 23 to 28 of the judgment in Mulder and paragraphs 12 to 17 of that in von Deetzen): "It must be conceded, as the Netherlands Government and the Commission have correctly observed, that a producer who has voluntarily ceased production for a certain period cannot legitimately expect to be able to resume production under the same conditions as those which previously applied and not to be subject to any rules of market or structural policy adopted in the meantime. The fact remains that where such a producer, as in the present case, has been encouraged by a Community measure to suspend marketing for a limited period in the general interest and against payment of a premium he may legitimately expect not to be subject, upon the expiry of his undertaking, to restrictions which specifically affect him precisely because he availed himself of the possibilities offered by the Community provisions. However, the regulations on the additional levy on milk give rise to such restrictions for producers who, pursuant to an undertaking entered into under Regulation No 1078/77, did not deliver milk during the reference year. As stated in the reply to the first question, those producers may in fact be denied a reference quantity under the new system precisely because of that undertaking if they do not fulfil the specific conditions laid down in Regulation No 857/84 or if the Member States have no reference quantities available. Contrary to the Commission' s contention, total and continuous exclusion of that kind for the entire period of application of the regulations on the additional levy, preventing the producers concerned from resuming the marketing of milk at the end of the five-year period, was not an occurrence which those producers could have foreseen when they entered into an undertaking, for a limited period, not to deliver milk. There is nothing in the provisions of Regulation No 1078/77 or in its preamble to show that the non-marketing undertaking entered into under that regulation might, upon its expiry, entail a bar to resumption of the activity in question. Such an effect therefore frustrates those producers' legitimate expectation that the effects of the system to which they had rendered themselves subject would be limited. It follows that the regulations on the additional levy on milk were adopted in breach of the principle of protection of legitimate expectations. Those regulations must therefore be declared invalid on that ground, and it is unnecessary to consider the other arguments as to their invalidity put forward in the course of the proceedings. The reply to the second question submitted must therefore be that Council Regulation (EEC) No 857/84 of 31 March 1984, as supplemented by Commission Regulation (EEC) No 1371/84 of 16 May 1984, is invalid in so far as it does not provide for the allocation of a reference quantity to producers who, pursuant to an undertaking entered into under Council Regulation (EEC) No 1078/77 of 17 May 1977, did not deliver milk during the reference year adopted by the Member State concerned." 4. Approximately one year after the judgments in Mulder and von Deetzen, the Council, by means of Regulation No 764/89, (6) added an Article 3a to Regulation No 857/84 providing for the grant of provisional special reference quantities to non-marketers. The grant of such reference quantities was subject to certain conditions with a view to ensuring, in the words of the second recital in the preamble to the new regulation, that the producers concerned "intend and are really able to resume milk production and find it impossible to obtain a reference quantity pursuant to Article 2 of Regulation (EEC) No 857/84". The provisional special reference quantity is equal to 60% of the quantity of milk delivered by the producer concerned during the twelve calendar months preceding the month in which the application for the non-marketing premium was made. This reference quantity is to be allocated to the producer definitively if, within two years from 29 March 1989, the producer can prove that he has actually resumed deliveries (7) and that the deliveries have attained during the previous twelve months a level equal to or greater than 80% of the provisional reference quantity. If the holding is sold or leased before 1 April 1992, the special reference quantity will be returned to the Community reserve. 5. In order to make the allocation of the special reference quantity provided for in Article 3a possible, the Council proceeded as follows. In order to achieve the objective of production control, it first reduced the guaranteed total quantity of each Member State. (8) It compensated for the impact of the reduction on producers' individual reference quantities by decreasing the rate of withdrawal introduced by Regulation No 775/87 (9) from 5.5% to 4.5%. (10) By Regulation No 3881/89 (11) the Council increased the Community reserve referred to in Article 5c(4) of Regulation No 804/68 (12) to 2 082 887.750 tonnes for 1989-1990 (the corresponding figure for 1988-1989 was 443 000 tonnes), (13) of which 600 000 tonnes was earmarked for the allocation by the Member States of the special reference quantities provided for in Article 3a of Regulation No 857/84. (14) 6. In the judgments given on 11 December 1990 in the Spagl (15) and Pastaetter (16) cases the Court answered the question whether the 60% rule laid down in Article 3a(2) of Regulation No 857/84 was valid. On the one hand, the Court held that the Community legislature was entitled to apply a reduction coefficient to the volume of milk delivered by the producers concerned, in order to ensure that they were not accorded an undue advantage by comparison with the producers who had continued to deliver milk during the reference year. On the other hand, it held that, in comparison with the percentages by which the reference quantities of the latter producers had been reduced ° which in no case exceeded 17.5% °, the reduction coefficient might not be fixed at such a high level as specifically to affect non-marketers by very reason of the non-marketing undertaking which they had given. The Court took the view that a 40% reduction was in breach of the principle of protection of legitimate expectations. Accordingly, it declared Article 3a(2) of Regulation No 857/84 invalid. (17) 7. By Regulation No 1639/91 of 13 June 1991 (18) the Council amended the Article 3a(2) which the Court had declared invalid, replacing it by a provision of which the first subparagraph reads as follows: "The special reference quantity shall be determined by the Member State in accordance with objective criteria, by deducting from the quantity in respect of which the premium entitlement under Regulation (EEC) No 1078/77 has been preserved or acquired a percentage representative of all the abatements applied to the reference quantities established in accordance with Article 2, including in any case a basic reduction of 4.5%, or Article 6." In the second recital in the preamble to that regulation the Council stated that a greater increase in the Community reserve could not be envisaged for the allocation of new special reference quantities without prejudicing the equilibrium of the milk market. The Council added that: "therefore, in order to grant new special reference quantities to producers having given a non-marketing or conversion undertaking, the possibility of reducing the reference quantities for other producers should be provided for, as suggested by the Court of Justice; ... provision should therefore be made to increase national reserves and Articles 3 and 5 of Regulation (EEC) No 857/84 should be amended to this end". 2. The applicants 8. The applicants in Case C-104/89, Messrs Mulder, Brinkhoff, Muskens and Twijnstra, are dairy farmers resident in the Netherlands who gave five-year non-marketing undertakings. The premiums which they received in return were calculated on the basis of the following production quantities respectively: 463 566 kg, 296 507 kg, 300 340 kg and 591 905 kg. None of the applicants delivered any milk in 1983, the reference year adopted by the Netherlands. Mr Mulder' s undertaking expired on 30 September 1984, Mr Brinkhoff' s on 4 May 1989, Mr Muskens' s on 21 November 1984 and Mr Twijnstra' s on 9 April 1985. Before their undertakings expired, the applicants applied to the competent Netherlands authority for a reference quantity. Their applications were turned down. They then appealed to the College van Beroep voor het Bedrijfsleven. In the course of the proceedings brought by Mr Mulder, a number of questions were referred to the Court of Justice for a preliminary ruling. They were answered in the judgment of 28 April 1988. On 30 November 1988 the College van Beroep, acting on the basis of that judgment, annulled the decision of the Netherlands authorities refusing to grant Mr Mulder a reference quantity. Mr Mulder' s claim for damages was, however, dismissed on the ground that: "the authority which adopted the Order had no power to take in that Order a specific measure in respect of producers such as the applicants which deviated from the provisions of Regulation No 857/84. That power was vested in the Council of the European Communities when it adopted the regulation. It follows from the judgment that there was a legal obligation on the Council itself to take such a measure. Consequently, since the contested decision was taken within the limits ° laid down by Community law ° of the Order and the defendant, as held above, was not empowered to step outside those limits, no obligation can arise on the part of the defendant to pay compensation for the damage sustained by the applicant." By judgments of 10 May 1989 the College van Beroep reached the same decision regarding the actions brought by Messrs Brinkhoff, Muskens and Twijnstra for the annulment of the decisions refusing to grant them reference quantities. Following the Court' s judgments in Mulder and von Deetzen ° but before Regulation No 764/89 was issued ° Messrs Mulder, Brinkhoff and Twijnstra resumed milk production (on 10 July 1988, 3 February 1989 and 1 May 1988, respectively). They were not granted provisional special reference quantities, in the amounts of 278 140 kg, 176 481 kg and 245 653 kg respectively, until August 1989, pursuant to the Netherlands legislation enacted in order to implement Article 3a of Regulation No 857/84 which had been adopted in the meantime. Mr Muskens, for his part, deferred resumption of milk production until winter 1989 following the allocation of a provisional special reference quantity of 180 204 kg in late July that year. 9. The applicant in Case C-37/90, Mr Heinemann, a dairy farmer resident in the Federal Republic of Germany, also entered into a non-marketing undertaking pursuant to Regulation No 1078/77. His premium was calculated on the basis of a production quantity of 39 102 kg. In accordance with the undertaking which he gave, he delivered no milk during 1983, the reference year adopted by Germany. Mr Heinemann' s undertaking expired on 20 November 1984. Before the undertaking expired, Mr Heinemann applied to the Landwirtschaftskammer (chamber of agriculture) Hannover for a certificate on the basis of which he could apply to a dairy for an individual reference quantity. The Landwirtschaftskammer refused to issue him such a certificate and Mr Heinemann challenged that decision in the Verwaltungsgericht (Administrative Court) Hannover. When in July 1989 the Landwirtschaftskammer did issue such a certificate granting him a provisional special 60% reference quantity under the German legislation adopted pursuant to Article 3a, which had been adopted in the meantime, there was no longer any reason for those proceedings. In December 1985 Mr Heinemann had also applied to Hauptzollamt (Principal Customs Office) Hannover to grant him a reference quantity of its own motion, but his request was refused. Mr Heinemann contested that decision by bringing proceedings in the Finanzgericht (Finance Court) Hannover. As he has since been allocated a provisional special reference quantity of 22 023 kg pursuant to the 60% rule, those proceedings can only relate to the refusal to grant him a reference quantity of 100%. In August 1989 Mr Heinemann resumed deliveries of milk. 3. The admissibility of the applications 10. The Council and the Commission contest the admissibility of the applications brought before the Court. Referring to the Court' s judgment in Krohn (19) they argue that a claim based on non-contractual liability on the part of the Community is admissible only if the decision adversely affecting the applicant can be attributed to a Community institution. They claim that in the cases before the Court the refusal to allocate a reference quantity must, however, be attributed to the relevant national authorities, since Articles 3, 4 and 4a of Regulation No 857/84 give the national authorities the power to allocate special or additional reference quantities to producers such as the applicants. 11. I agree with the applicants that that objection of inadmissibility must be rejected. In Krohn (paragraphs 18 and 19) the Court stated as follows: "The Court wishes to point out that the combined provisions of Articles 178 and 215 of the Treaty only give jurisdiction to the Court to award compensation for damage caused by the Community institutions or by their servants in the performance of their duties, or in other words for damage capable of giving rise to non-contractual liability on the part of the Community. Damage caused by national institutions, on the other hand, can only give rise to liability on the part of those institutions, and the national courts retain sole jurisdiction to order compensation for such damage. Where, as in this case, the decision adversely affecting the applicant was adopted by a national body acting in order to ensure the implementation of Community rules, it is necessary, in order to establish the jurisdiction of the Court, to determine whether the unlawful conduct alleged in support of the application for compensation is in fact the responsibility of a Community institution and cannot be attributed to the national body." On the basis of that reasoning the Court concluded in that case that the Commission and not the national authority was responsible for the unlawful conduct which had been established, on the ground that the national authority was bound to comply with the Commission' s instructions (paragraph 23). (20) In the present cases, too, it must be held, as will be shown below, that the measures adversely affecting the applicants must be attributed to the Community institutions. 12. In support of their action for damages against the Community institutions the applicants rely in the first place on the invalidity of Regulation No 857/84 as held by the Court in Mulder and von Deetzen. The Court considered that that regulation was invalid on the ground that, because it did not provide for the allocation of a reference quantity to non-marketers, it frustrated that class of producers' legitimate expectations that the effects of the non-marketing undertaking which they had entered into would be temporary. As the Court stated in von Deetzen No 2 (paragraph 21), non-marketers were "legitimately entitled to expect to be able to resume the marketing of milk at the end of their non-marketing or conversion period, and to carry on that activity under conditions that involved no discrimination between them and other milk producers". It can be inferred from that case-law (as the College van Beroep did; see section 8 above) that the obligation to comply with the principle of protection of legitimate expectations is incumbent on the Community legislature, and that, under that obligation, it was under a duty to give non-marketers such an entitlement to a reference quantity that they were not disadvantaged, compared with milk producers referred to in Article 2 of Regulation No 857/84, precisely because they had entered into a non-marketing undertaking. If the Community legislature had properly complied with that obligation and granted non-marketers a right to a reference quantity, the competent authorities in the Netherlands and in the Federal Republic of Germany would have been unable to refuse to grant the applicants a reference quantity. Consequently, the refusal must be attributed to the Community legislature and not to the national authorities. The argument which the institutions derive from Articles 3, 4 and 4a of Regulation No 857/84 is unfounded, since those provisions give the Member States merely the possibility of allocating special or additional reference quantities to certain categories of producer. Furthermore, that possibility is open only in so far as the specific conditions set out in those provisions are fulfilled (and not all non-marketers meet those conditions) and the Member States have sufficient reference quantities available. Consequently, the exception of inadmissibility cannot be upheld. 13. The institutions also rely on other pleas of inadmissibility. In their defences in Case C-104/89, for instance, the Council and the Commission argued that the application did not satisfy the requirements of Article 38 of the Rules of Procedure. They maintained that it did not set out the factual grounds necessary in order to found a claim for non-contractual liability on the part of the Community. In their rejoinders they dropped that plea. The Commission entered a further plea of inadmissibility in connection with Article 38 of the Rules of Procedure regarding more specifically the alleged damage suffered by the applicant in Case C-37/90 as from 1989 and the damage which the applicants in Case C-104/89 claim they will sustain in the future. There is no need for me to consider that plea of inadmissibility, since, as I shall explain (in sections 34, 35 and 36), I have concluded that the applicants' action must in any event be dismissed as regards all damage which allegedly arose after a reference quantity was allocated in accordance with the 60% rule. 4. Assessment of the Community' s liability 4.1. The requirements for liability applied by the Court in connection with legislative measures 14. As the Court has consistently held, "the liability of the Community on account of its legislative powers depends on the coincidence of a set of conditions as regards the unlawfulness of the act of the institution, the fact of damage and the existence of a direct link in the chain of causality between the act and the damage complained of". (21) The requirements for a direct link in the chain of causality and for actual damage and also the problems arising in connection with the assessment of the damage will be discussed later (sections 37, 38 and 39 and 40 to 53 inclusive). I shall first consider the requirement for the legislative measures to have been unlawful. According to equally well-established case-law of the Court, where the damage alleged, as in these cases, is the result of a legislative measure involving economic-policy choices, the fact that the measure is unlawful is not sufficient in itself to cause the Community to incur liability. The Community can be held liable in respect of such a measure only if there has been a sufficiently serious breach of a superior rule of law for the protection of individuals, which "in the context of Community provisions in which one of the chief features is the exercise of a wid e discretion indispensable for the implementation of the common agricultural policy" means that "the Community can incur liability only in exceptional cases, namely where the institution manifestly and gravely disregarded the limits on the exercise of its powers". (22) (23) 15. In my view, it appears from this wording ° although a clear pronouncement is warranted (24) ° that the expression "manifestly and gravely disregarded the limits on the exercise of its powers" qualifies the words "a sufficiently serious breach". (25) It indicates more specifically that in the case of legislative measures carried out pursuant to a broad discretion the public authority is allowed a certain margin of error. Only where the public authority' s error is inexcusable (26), that is to say where it could reasonably not have committed it (27), have powers been manifestly and gravely disregarded and there therefore has been a sufficiently serious breach (of a superior rule of law for the protection of individuals). 16. The Court' s case-law fleshes out the criterion "manifest and grave disregard of the limits on powers" and therefore also the requirement for there to have been a "sufficiently serious breach". It appears from the case-law that that criterion is made up of two components: on the one hand, a component related to the type and seriousness of the breach, in other words related to unlawfulness; on the oth er, a component relating to the type of the damage caused thereby. More specifically, in the judgments of 4 October 1979 in the "Quellmehl" and "Maize Gritz" cases, (28) the Court invoked the following circumstances in deciding that the Council had manifestly and gravely disregarded the limits on its powers through the exercise of a wide discretionary power essential for the implementation of the common agricultural policy: (i) the particular importance of the principle infringed by the regulation (in those cases, the principle of equality) and hence the (objective) seriousness of the breach; (ii) the fact that the disregard of that principle affected a limited and clearly defined group of commercial operators; (iii) the fact that the damage alleged by the applicants went beyond the bounds of the economic risks inherent in the operators' activities in the sector concerned; (iv) the fact that the principle in question was infringed without sufficient justification (which points to the inexcusable nature of the error made by the authority: see section 15 above). Accordingly, the circumstances which, according to that line of cases, point to the existence of a manifest, grave disregard of the limits of a discretionary power or of a sufficiently serious breach of a superior rule of law (which means the same thing) include both circumstances relating to the serious (i) and unjustifiable or inexcusable (iv) nature of the breach, which are thus concerned more specifically with the unlawful nature of the act, and circumstances relating to the group adversely affected (ii) and to whether or not the adverse effect exceeded a normal risk (iii), which therefore are concerned more specifically with the damage caused by the act. 17. As regards the unacceptable or inexcusable character of the breach, the judgment of 26 June 1990 in Sofrimport (29) contains an important pointer for the present cases. That case, like these proceedings, was concerned with regulations which the Court had declared invalid for infringing the principle of protection of legitimate expectations and which had caused the applicant undertaking to sustain damage in so far as they made it impossible for it to carry on a particular commercial activity (importation of dessert apples). In ruling on the issue of the liability of the Community, the Court held that there had been a breach of a superior rule of law (paragraph 26), accepted that the breach was sufficiently serious (paragraph 27) and held that the damage alleged by the applicant undertaking went beyond the limits of the economic risk inherent in the business at issue (paragraph 28). The Court did not go into the requirement that the breach must have affected a limited and clearly defined group of commercial operators, because ° I presume ° that condition was plainly satisfied. As far as the present cases are concerned, what is interesting above all is the way in which the Court (in paragraph 27) inferred the existence of a sufficiently serious breach from the unacceptable nature of the breach of the Community provision that gave rise to a legitimate expectation: "by failing completely to take account of the position of traders such as Sofrimport, without invoking any overriding public interest (in French: 'sans faire état d' un intérêt public péremptoire' ), the Commission committed a sufficiently serious breach of Article 3(3) of Regulation No 2707/72". (30) The Court considers therefore that the requirement of a sufficiently serious breach is satisfied where an institution fails completely to take account of the specific situation of particular traders without its being possible to invoke any overriding public interest by way of justification. (31) 18. It is also appropriate to refer to previous cases decided by the Court in connection with the kind of damage, in particular the judgment in HNL v Commission. (32) In that case the Court stated (in paragraph 6) that: "individuals may be required, in the sectors coming within the economic policy of the Community, to accept within reasonable limits certain harmful effects on their economic interests as a result of a legislative measure without being able to obtain compensation from public funds even if that measure has been declared null and void". In that case, the Court concluded therefore that the Community could not be held liable, because the regulation which had been declared void could not be regarded as having caused damage going beyond the bounds of the normal economic risks inherent in the operators' activities in the sector concerned, partly in view of its limited impact on the price of feeding-stuffs. More specifically, according to subsequent cases the Court regards as damage going beyond such bounds and hence qualifying for compensation damage which is unforeseeable. For instance, in the judgment in Biovilac (33) (paragraph 29) the Court held that "the foreseeability of the risks inherent in the market conditions ... excludes the possibility of any recompense for the loss of competitiveness which [the applicant] has suffered". Again, in the Grands Moulins de Paris case (cited above; see paragraph 21 of the judgment) the Court inferred from the finding that the "legislative trend was foreseeable and the applicant had been aware of it for some time" that the alleged damage "could not be regarded as going beyond the bounds of the economic risks inherent in applicant' s business". 4.2. Liability on account of the Court' s declaration that Regulation No 857/84 is invalid 19. In the light of the case-law which has just been discussed, I shall now consider ° having regard to the Court' s decision relating to the invalidity of Regulation No 857/84, first in Mulder' s and von Deetzen' s cases and then in Spagl' s and Pastaetter' s cases ° the question whether there was a sufficiently serious breach of a superior rule of law for the protection of individuals. In accordance with that case-law I shall consider the following four points, namely whether (i) there was a breach of a superior rule of law for the protection of individuals; (ii) the breach was serious and unjustifiable, that is to say, inexcusable; (iii) a limited and clearly defined group of commercial operators were adversely affected by the breach; (iv) the alleged damage went beyond the bounds of the economic risks inherent in activities in the milk sector. 4.2.1. Liability as a result of the judgments in Mulder and von Deetzen declaring the regulation invalid (i) Breach of a superior rule of law for the protection of the individual 20. In Mulder (paragraph 26) and von Deetzen (paragraph 15), the Court declared Regulation No 857/84 partially invalid on the ground that it frustrated the legitimate expectation of non-marketers, having regard to the provisions of Regulation No 1078/77, that the effects of the scheme would be temporary. The Court accordingly held that the Council had created a situation which was such as to arouse expectations in individuals in a system from which they derived certain rights, and that, by frustrating those expectations, the Council had acted contrary to the principle of protection of legitimate expectations. In the aforementioned judgments in CNTA and Sofrimport the Court has already held that that principle, in conjunction with provisions of Community law from which individuals may derive rights, constitutes a superior rule of law for the protection of individuals the breach of which may cause the Community to incur liability. Moreover this is not contested by the institutions. For completeness' sake I would further point out that in his Opinion in Mulder' s case Advocate General Sir Gordon Slynn concluded that Regulation No 857/84 also offended against another superior rule of law for the protection of individuals, namely the prohibition of discrimination. In any event, the Court held that it did not have to consider other possible grounds for invalidity as it had already established that there had been a breach of the principle of protection of legitimate expectations. However, it appears from the passage quoted (in section 12 above) from von Deetzen No 2 that the Court does in fact take the view that Regulation No 857/84 was contrary to the prohibition of discrimination, on the ground that it did not allow the non-marketers to resume deliveries "under conditions that involved no discrimination between them and other milk producers". (ii) Serious and inexcusable nature of the breach of the principle of protection of legitimate expectations 21. The Council and the Commission argue that the invalidity of Regulation No 857/84 as held by the Court in Mulder and von Deetzen cannot be regarded as a sufficiently serious breach. They point out that Regulation No 1078/77 came into being in a market situation characterized by substantial and increasing milk surpluses. As appears from the first recital in the preamble to the regulation, the Community legislature considered it worthwhile in the circumstances to encourage the trend among farmers to cease milk production through the grant of a premium. 90% of non-marketers, the applicants included, opted to take advantage of the system of the non-marketing premiums (34) and committed themselves to marketing no milk or milk products for a period of five years. The Council and Commission further argue that the intention behind the non-marketing premium was to give mainly weak farms the chance to give up milk production definitively on acceptable terms. In view of the type of persons interested in the non-marketing premium ° chiefly elderly persons, persons with no successor, physically handicapped persons or persons with barely viable or downright unviable farms ° and also the fact that the amount of the premium was significantly lower than the profit which a structurally sound farm could normally expect to make from milk production, the institutions argue that in 1984 when the levy scheme was introduced they were entitled to assume, absolutely reasonably, that producers who had received a non-marketing premium would no longer wish to resume milk production after an interruption of five years. Also according to the Council and the Commission, the Community legislature was conscious that not all producers would be granted a reference quantity under Article 2 of Regulation No 857/84. For that very reason Articles 3, 4 and 4a (the latter having been added by Regulation No 590/85 (35)) made it possible for Member States to grant a special or an extra reference quantity in particular situations. In the light of the judgments in Mulder and von Deetzen, the Council and the Commission accept the charge that they did not expressly mention non-marketers as being a category of producers to whom Member States might grant a special reference quantity. They argue, however, that, since it was improbable that many non-marketers would resume production and since the Member States had been empowered to assist producers in certain specific situations, negligence or an oversight capable of being regarded as being a sufficiently serious breach was not involved here. What is more, the Council adds, non-marketers could always have obtained a reference quantity by purchasing or leasing a farm or part of a farm. 22. I do not agree. As can be seen from the passage cited above (section 17) from Sofrimport, to fail completely to take account of the particular situation of traders, without invoking any overriding public interest, constitutes a serious, inexcusable breach. In my view, such a situation seems to obtain in this instance also: (1) the institutions knew, or were in a position to know, that a not insignificant number of non-marketers would resume production and hence would be in a special situation; (2) they failed to take sufficient measures to cope with that special situation; (3) they are unable to invoke any overriding public interest by way of justification. I shall now explain each of these points. 23. First, the institutions knew, or were in a position to know, that a not insignificant number of non-marketers would wish to resume production after the expiry of their non-marketing undertakings. Although it can be accepted, as the institutions maintain, that one of the aims (36) of Regulation No 1078/77 was to encourage a number of producers to cease milk production early and for good, the institutions knew, or in any case were in a position to know, that the means which had been chosen, that is to say the grant of a premium to persons undertaking temporarily to give up the production of milk and dairy products, was not capable of achieving that aim in all cases. 24. Secondly, Regulation No 857/84 made no provision for measures to deal sufficiently certainly with the non-marketers' special situation, of which the institutions were, or should have been, aware. The possibility of procuring a reference quantity by purchasing or leasing a farm certainly does not deal with the non-marketers' special situation. That possibility ° which is not reserved specifically for non-marketers ° requires an unforeseen financial effort that is unjustified on the part of producers who are entitled to resume milk production. Neither are Articles 3, 4 and 4a of Regulation No 857/84 appropriate to secure non-marketers' rights, since they merely empower and do not oblige the Member States to grant a special or an extra reference quantity under certain conditions. Moreover, those provisions cannot assist, or at best can only partly assist, non-marketers wishing to resume milk deliveries: ° the first subparagraph of Article 3(1) of Regulation No 857/84 can help non-marketers to obtain a specific reference quantity only if they lodged a milk production development plan pursuant to Directive 72/159/EEC (37) during the currency of the non-marketing undertaking; ° on the basis of Article 3(2) of Regulation No 857/84 a specific reference quantity can be granted only to young farmers who set up after 31 December 1980; ° Article 4(1) of Regulation No 857/84 offers non-marketers no solution whatsoever, since it merely provides for the grant of additional reference quantities and therefore assumes that a basic reference quantity has already been granted under other provisions of the regulation; ° neither is Article 4a of Regulation No 857/84 appropriate to assist the non-marketers. It authorizes the Member States to allocate non-utilized reference quantities. Whether there are any non-utilized reference quantities can be determined only after the event. Non-marketers could not reasonably be expected to resume production without knowing beforehand the reference quantity to the extent of which they might deliver milk without having to pay a levy. 25. In their defences, the institutions attach particular importance to the second subparagraph of Article 3(1) of Regulation No 857/84. That provision authorizes the Member States to grant a special reference quantity to producers who have carried out investment even without a development plan. It is indeed broadly worded and permits a special reference quantity to be granted to non-marketers who, like the applicants in these proceedings, invested in dairy cattle with a view to resuming milk production. Despite this, I take the view that the institutions were not entitled to assume that the Member States would actually take advantage of that possibility (again, it was not an obligation) in order to enable the non-marketers to resume milk deliveries. (38) Article 5 of Regulation No 857/84 provides that Member States may grant specific or additional reference quantities only within their guaranteed quantity limit. A Member State taking advantage of one of the possibilities provided for in Articles 3 and 4 of Regulation No 857/84 (on behalf, for instance, of non-marketers) must therefore also, as required by Article 2(3) of the regulation, adapt the reference quantities of those producers who did in fact deliver milk in the course of the reference year. To my mind, the Member States could not be expected to impose on those producers such an effort of solidarity vis-à-vis non-marketers because the Community legislature itself had not made specific provision for them. Is it not significant in this regard that in 1989 (that is to say, after the judgments in Mulder and von Deetzen) the Council itself took the initiative of increasing the Community reserve by 600 000 tonnes in order to enable the Member States to grant non-marketers a special reference quantity of 60% of their former production (see section 5 above)? The Council manifestly assumed that in the absence of such an increase the Member States could not be expected to release reference quantities for non-marketers within their guaranteed quantity limits. 26. Thirdly and lastly, the institutions cannot invoke any overriding grounds of public interest in order to justify the failure to accommodate in Regulation No 857/84 the special situation of non-marketers who wished to resume milk production. Of course, I do not deny that the levy system itself pursues an important aim in the public interest. Nevertheless, I can see no reason ° and have searched in vain for justification in the statement of reasons of the system introduced in 1984 ° for the Community legislature' s failure to take any account at all of the non-marketers' special situation. (iii) A limited and clearly defined group of producers are adversely affected by the breach 27. According to the Council and the Commission, the breach did not affect a "limited and clearly defined group of commercial operators". To that end they refer to the Court' s statement in Ireks-Arkady (paragraph 11) and Interquell (paragraph 14) to the effect that only a small number (namely 18) quellmehl producers were affected and hence that requirement was satisfied. They further point out that in HNL (paragraph 7) the Court stated that the regulation which had been declared invalid "affected very wide categories of traders, in other words all buyers of compound feeding-stuffs containing protein". In their view, that was one of the reasons why in that case the Court did not hold the Community liable. The Council and the Commission observe that in all 122 787 dairy farmers took advantage of the premium system introduced by Regulation No 1078/77. They acknowledge that the number of non-marketers entitled to claim compensation is not necessarily the same, but point out that neither may that number be reduced to the number of non-marketers who applied for a provisional special reference quantity of 60% of their former production pursuant to Regulation No 764/89. (39) Other non-marketers, that is to say non-marketers who abandoned their plans to resume milk production sometime between the time when their non-marketing undertakings expired and the time when a provisional special 60% reference quantity could be applied for, may well be entitled to claim compensation. The applicants argue in the reply that in HNL the Court took the size of the group affected into account because as a result the "effects [of the regulation which was declared invalid] on individual undertakings were considerably lessened". They infer from this that the Court did not wish to attach importance to the large number of persons affected per se, but rather saw it as an indication for assessing the extent of the damage sustained individually by the persons affected. They further consider that, compared with the total number of dairy farmers in the Community, the number of non-marketers constitutes a limited and clearly defined group. 28. A "clearly defined group" and a "limited group" (in terms of numbers) are two different criteria. The fact that the group concerned must be "clearly defined" in order for the Community to be able to be held liable means that the number of persons affected must be capable of being determined at the time when the ruling is given on the compensation. That requirement is met in this instance. In that regard, it is important to point out in the first place that the circle of potential persons affected is established a priori. Only non-marketers are eligible for compensation. Their number and identity are known. In HNL, where the Court rejected the claims for compensation, the situation was different. The Court referred in that judgment to the very large categories of traders affected, "in other words, all buyers of compound feeding-stuffs containing protein" namely essentially all poultry farmers and egg producers. In the present cases, not all non-marketers can actually be regarded as having been adversely affected, but only those who, on the expiry of their non-marketing undertaking, had not definitively abandoned milk production and suffered damage as a result because Regulation No 857/84 prevented them from resuming production. Admittedly, the number of those non-marketers is not definitely fixed, since whether they are entitled to compensation depends on proof that they had not yet ended milk production when their non-marketing undertakings expired. However, their number is certainly capable of being determined on the basis of such proof, as will be explained later (in section 30). 29. As far as the criterion of the "limited group" is concerned, I can find no support in the case-law of the Court for making the Community' s liability depend on the (absolute) number of persons adversely affected. Even apart from the fact that it would be impossible for the Court to set a figure on that number, the words "limited group" should be construed as referring to a group of undertakings on which the unlawful act imposed a specific disadvantage, in comparison with other groups of undertakings, which those other groups did not have to bear. That condition is clearly satisfied in the present cases: compared with milk producers who did not interrupt their milk production, the non-marketers concerned were affected by the levy system specifically ° and, moreover, seriously ° since they alone were prevented by the contested rules from producing milk and, as a result, could not resume milk deliveries. In HNL, the position in that respect was also different. The Court determined that the effect of the unlawful measure at issue in that case on the individual undertakings concerned was small, since the price increase caused by the measure was definitely modest and the resultant burden was spread over the whole economic sector, since essentially all poultry farmers and egg producers were affected. 30. In connection with the determinacy and the number of persons adversely affected, I would, moreover, qualify the institutions' view that the number of non-marketers who are entitled to claim compensation is much in excess of those who applied for a special 60% reference quantity. Whether non-marketers suffered damage as a result of the failure to grant them a special reference quantity depends on whether, at time when their non-marketing undertakings expired, they had already abandoned for good the intention to resume milk production. If they had, they cannot claim that they had to stop production owing to Regulation No 857/84 and therefore can lay no claim to compensation. Admittedly, it cannot be inferred with certainty from the fact that a non-marketer did not apply for a 60% reference quantity in 1989 ° even though it was open for him to do so ° that he had already stopped milk production at the end of his non-marketing period. Nevertheless, that fact is a serious indication that that is the case and therefore justifies reversing the burden of proof. As a result, non-marketers who did not apply for a 60% reference quantity can argue that, when the non-marketing undertaking expired, they were still minded to resume milk production but that they subsequently abandoned that plan. In order to be able to argue that, they must provide concrete proof that they actually made an effort towards or after the end of the non-marketing period to obtain a reference quantity. I would further point out that some non-marketers applied for a provisional 60% reference quantity but did not receive it, because they did not satisfy the criteria laid down in Regulation No 764/89, which were designed to make sure that the non-marketers in question intended and were really able to resume milk production and found it impossible to obtain a reference quantity pursuant to Article 2 of Regulation No 857/84 (see Article 3a(1) of Regulation No 857/84 and the second recital in the preamble to Regulation No 764/89). As regards those operators, the institutions may assume, unless evidence is adduced to the contrary, that those operators would not have been eligible for the grant of a special reference quantity for non-marketers if Regulation No 857/84 had provided for one and that they are therefore not entitled to compensation. (iv) The alleged damage went beyond the bounds of the economic risks inherent in activities in the milk sector 31. The Council and the Commission maintain that the criterion applied by the Court in the quellmehl and maize gritz cases that the damage alleged by the applicants should have gone beyond the bounds of the normal economic risks inherent in the operators' activities in the sector concerned is not satisfied in the present cases. Each of the institutions sets forth a number of arguments. The Council asks whether the later grant of a reference quantity pursuant to Article 3a of Regulation No 857/84, which was added by Regulation No 764/89 (and subsequently amended by Regulation No 1639/91), does not in itself constitute sufficient compensation, in view of the monetary value which such a reference quantity represents. That argument cannot be accepted. The monetary value undoubtedly possessed by a reference quantity is the present value of the future earnings which can be obtained from milk production by virtue of the quantity granted. I cannot see how this value, which relates to future earnings ° and which in any event is not peculiar to the reference quantities granted (ex post) to non-marketers °, can constitute compensation for past loss of earnings resulting from the failure to grant a reference quantity. For its part, the Commission adds that the applicant in Case C-37/90 was not compelled by events to enter into a non-marketing undertaking and that during the non-marketing period instead of producing milk he fattened bullocks. Those arguments cannot be accepted either. It is irrelevant whether or not a producer was compelled by events to enter into a non-marketing undertaking, just as it is irrelevant what activities he carried out during the non-marketing period. In so far as replacement activities were carried on after the expiry of that period, an argument may, however, be inferred therefrom with regard to the limitation of the damage sustained, a question which I shall be considering later (in section 49). 32. The Commission further argues that, in view of the large amount of intervention and adjustments in the milk sector, carrying on an activity in that sector entails not only the general risks to which every economic operator is subject, but also specific risks peculiar to activities in that sector. As a result, the alleged damage does not qualify for compensation. That argument goes to the heart of the precondition for establishing liability which is now under discussion. Above (in section 18) I pointed out that that precondition is met if the persons adversely affected suffered unforeseeable damage. As far as the present cases are concerned, it is established that the levy system placed the applicants in an unforeseeable situation, since in Mulder (paragraph 26) and von Deetzen (paragraph 15) the Court declared that: "total and continuous exclusion of that kind for the entire period of application of the regulations on the additional levy, preventing the producers concerned from resuming the marketing of milk at the end of the five-year period, was not an occurrence which those producers could have foreseen when they entered into an undertaking, for a limited period, not to deliver milk". 33. In view of the foregoing, it must be concluded that the invalidity of Regulation No 857/84 as found by the Court in Mulder' s and von Deetzen' s cases is such as to cause the Community to incur liability for the damage suffered by the applicants. 4.2.2. (No) liability as a result of the declaration of invalidity in the Spagl and Pastaetter cases 34. In Spagl and Pastaetter and subsequently also in von Deetzen (No 2) the Court declared that Article 3a(2) of Regulation No 857/84, as amended by Regulation No 764/89, was invalid in so far as it restricted the special reference quantity provided for in that provision to 60% of the quantity of milk delivered by the producer during the twelve calendar months preceding the month in which the application for the premium was made. I consider that the declarations of invalidity in the Spagl and Pastaetter cases, unlike the invalidity found in the Mulder and von Deetzen cases, cannot cause the Community to incur liability. Admittedly, the Court also held in Spagl (paragraph 29) and in Pastaetter (paragraph 20) that the restriction was void for breach of the principle of protection of legitimate expectations and therefore in breach of a superior rule of law. However, it appears to me that the Community legislature' s decision to restrict to 60% the reference quantity to be granted to non-marketers cannot be regarded as a manifest and serious misjudgment of its powers and therefore does not constitute a sufficiently serious breach of the principle of legitimate expectations. 35. The fixing of the 60% rule is the outcome of the policy choices which the Community legislature made with regard to the way in which account is be taken of the non-marketers' special situation. Following the judgments in Mulder and von Deetzen it was plain to the Community legislature that the non-marketers in question could invoke an entitlement to the allocation of a reference quantity (see the third recital in the preamble to Regulation No 764/89). However, it also had to take account of "the overriding necessity of not jeopardizing the fragile stability that currently obtains in the milk products sector" (fifth recital in the preamble to Regulation No 764/89) and of the interests of other producers and of the disadvantage at which they would be put if the reference quantities allocated to them had to be reduced in order to enable a reference quantity to be granted to the non-marketers. The balancing of these interests led the Community legislature to increase the Community reserve by 600 000 tonnes for the benefit of the non-marketers and to decrease commensurately the total guaranteed quantity of each Member State, whilst offsetting the impact of that cut on individual reference quantities by decreasing the rate of withdrawal introduced by Regulation No 775/87 (see section 5 above). The limitation of the reference quantity to be allocated to non-marketers to 60% ° which is very different from their being completely excluded from having a reference quantity ° remains in my view within the scope of the broad discretion which the Community legislature has in this sphere and cannot therefore be regarded as being a sufficiently serious breach, even though it turned out that the 60% rule was invalid. My conviction is reinforced by the fact that it appears from Mr Advocate General Jacobs' Opinion in the Spagl and Pastaetter cases (in particular at paragraph 40) that the Court' s judgments in Mulder and von Deetzen can also be understood as meaning that, whilst it is true that non-marketers may not be excluded from milk production, the principle of protection of legitimate expectations does not preclude a limitation of the reference quantity at a level such that production may be resumed. In any event, in Sofrimport (paragraph 27), too, the Court attached importance to the fact that there was a complete failure to take account of the special position of the trader concerned and concluded that there had therefore been a sufficiently serious breach of the principle of protection of legitimate expectations. 36. I therefore conclude that the adoption by the Community legislature of the 60% rule in Article 3a(2) of Regulation No 857/84 did not constitute a sufficiently serious breach of the principle of protection of legitimate expectations. Consequently, the Community cannot be held liable on account of the declarations of invalidity in Spagl and Pastaetter and the applicants' action must be dismissed as regards the damage which they maintain they sustained as a result of that invalidity. Neither can the Community be held liable for the damage which the applicants maintain that they are still to suffer following the grant of an additional reference quantity pursuant to Article 3a(2) as amended by Regulation No 1639/91, since the arrangements introduced by that regulation go even further towards accommodating the non-marketers' special situation than the arrangements introduced by Regulation No 764/89 and do not manifestly and seriously disregard the Council' s discretion with regard to the size of the percentage reduction, as that discretion was established in Spagl and Pastaetter (see section 6 above). 4.3. The existence of damage and the causal link 37. The applicants claim that they could not carry on their occupation as dairy farmers from the time when their non-marketing undertaking expired until the time when they resumed milk deliveries to the extent of the 60% reference quantity which they were granted. During that period they were not entitled to receive a reference quantity as a result of Regulation No 857/84 and therefore, owing to the magnitude of the additional levy, obtained no income from the normal exercise of their occupation. They therefore had to resort to other ° in some cases, loss-making ° agricultural activities. In order to qualify for compensation the damage must be certain and not be based merely on suppositions. The loss of profit invoked by the applicants satisfies that requirement. Admittedly, in Kampffmeyer (40) the Court showed some reluctance with regard to damage in the form of loss of profit "based on facts of an essentially speculative nature". The loss of profit at issue here is, however, more than speculative. To begin with, the applicants applied for and obtained a provisional 60% reference quantity under Regulation No 764/89, and hence they do not come into the class of non-marketers which, in my view, may be assumed, until proof to the contrary is forthcoming, to have already stopped milk production when their non-marketing undertaking expired (see section 30 above). Moreover, in the normal course of events milk production within the ambit of the common agricultural policy yields a profit. The institutions do not contest this, nor do they contest that milk production without a reference quantity cannot be profitable. However, as has already been mentioned, they ask whether the later grant to the applicants of a reference quantity pursuant to the arrangements introduced after the event by Article 3a does not in itself constitute sufficient compensation on the ground that that reference quantity caused an increase to take place in the applicant' s assets. I have already discussed, and rejected, that argument above (in section 31). The institutions argue that there is no causal link between the relevant Community act and the alleged damage. In this connection, they rely, first, on the possibilities provided for in Articles 3, 4 and 4a whereby Member States may grant reference quantities in certain specific situations and, secondly, on the opportunities which were available to the applicants to take action themselves in order to limit the damage. It must be granted to the Community institutions that the causal link between an unlawful act and the damage sustained may be broken entirely or partially by conduct (wrongful or otherwise) on the part of a third party or the injured party himself. As regards the institutions' first argument, namely that the Member States could have granted a special or additional reference quantity pursuant to Articles 3, 4 and 4a of Regulation No 857/84, it must be pointed out, however, that the competent authorities in the Netherlands and the Federal Republic of Germany de facto did not grant any reference quantity to the applicants, because it was not possible to do so under the national implementing legislation in the circumstances in which the applicants found themselves. The institutions do not argue that the Netherlands or German implementing legislation conflicts with the levy scheme. However, they consider that the causal link was nevertheless broken because of those Member States' failure to grant non-marketers such as the applicants a reference quantity, although it was possible to do so more specifically under the second paragraph of Article 3(1) of Regulation No 857/84, which enables a reference quantity to be granted to producers who have invested in dairy cattle (see section 25 above). That argument is unfounded because it fails to appreciate the right which the Court recognized in Mulder and von Deetzen for non-marketers to be granted a non-discriminatory reference quantity. As has already been stated (in section 12), the obligation to grant such a reference quantity which corresponds to that right is not incumbent on the Member States but on the Community legislature itself. It follows that the inaction of the Member States cannot break the causal link between the damage and the unlawful conduct of the Community. As far as the second argument relied on by the institutions is concerned, it is sufficient to observe that the applicants did not fail to apply for a reference quantity, rather their efforts were fruitless (see sections 8 and 9 above). Whether the applicants were under a duty to limit the damage they suffered by engaging in replacement activities and, if so, whether failed to fulfil that duty will be considered later on in this Opinion (in section 49). 38. It appears from the foregoing that all the preconditions have been established for the Community to incur liability as a result of the declarations of invalidity in the judgments in Mulder and von Deetzen but that that is not the case as regards the declaration of invalidity in the Spagl and Pastaetter judgments. In the next part of this Opinion I shall therefore consider how the damage caused in connection with the first finding of invalidity only is to be assessed. 5. Assessment of the damage 39. As the starting point for assessing the damage, the applicants in Case C-104/89 assume that financially they must be put in the situation in which they would normally have been had they been able to resume milk deliveries immediately after the expiry of the non-marketing undertaking on terms which did not discriminate against them compared with the producers referred to in Article 2 of Regulation No 857/84. In my view, that seems to be a proper starting point, although its working out will involve a number of practical difficulties with which the Court has not yet been faced. The most significant difficulty is of course how to reconstruct the situation in which the applicants would have found themselves if deliveries had been resumed immediately. In order to avoid that difficulty the institutions suggest that, if they are held liable, the amount of the compensation payable should be calculated on the basis of the amounts of the premiums provided for in Regulation No 1078/77. Although that solution has the merit of simplicity, I consider that it must be rejected on the ground that the amounts of the premiums would not be suitable compensation for the damage. The Council and the Commission have themselves admitted that the amounts of the premiums provided for in Regulation No 1078/77 are significantly lower than the profit which a structurally sound farm can normally achieve from milk production (see section 21 above). In addition, Article 4 of Regulation No 1078/77 provided for tapering non-marketing premiums (the higher the production the lower the premium per 100 kilogrammes). Hence they are not related ° quite the contrary ° to the actual damage sustained by the applicants. 40. How, then, is the damage to be assessed? I consider that it is necessary to draw a distinction in this regard. First, the period to be taken into account for the purposes of calculating the damage has to be established together with the reference quantity which the applicants could normally have claimed during that period. It appears to me that the Court has sufficient information to rule definitively on these aspects now. Secondly, it is a question of calculating the profit which the applicants could normally have obtained during the period concerned on the basis of the reference quantity to which they were entitled, and which they lost as a result of the invalidity established by the judgments in Mulder and von Deetzen, while taking into account the replacement activities which they carried out during that period. Each of the parties has produced documents purporting to show how the loss of profit is to be calculated. However, those documents do not allow the Court to establish with sufficient certainty what compensation is due to each applicant. Consequently, it appears to me that the Court should be induced to rule on this point in an interlocutory judgment in which it should provide a few general indications while leaving it to the parties to assess the damage (more specifically, the loss of profit) by mutual agreement. In the event that they should fail to reach an agreement within, say, twelve months, it should be for the Court to settle in a final judgment those points on which no agreement has been reached. 5.1. The period and reference quantity to be taken into account in calculating the damage 5.1.1. The period to be taken into account 41. Since I have already reached the conclusion that the Community cannot be held liable for the damage which the applicants maintain they suffered and have still to suffer as a result of the unlawfulness of the 60% rule laid down in Article 3a(2) of Regulation No 857/84 as established in the judgments in Spagl and Pastaetter, the applicants are entitled to seek compensation only for the period during which they had no reference quantity at all, that is to say for the period between the expiry of their non-marketing undertakings and, in principle, the entry into force of Regulation No 764/89, Article 3a of which introduced the 60% rule. I say in principle, because some applicants (Mulder, Brinkhoff and Twijnstra) resumed milk deliveries even before Regulation No 764/89 entered into force. Since milk deliveries made before the grant of a 60% reference quantity pursuant to that regulation are free of levy in so far as they did not exceed the 60% level (see Article 3a(5) of Regulation No 857/84 as amended by Regulation No 764/89 and the seventh recital in the preamble to the latter regulation), in such cases the date when deliveries actually resumed should be taken as the end date. (41) 5.1.2. The reference quantity to be taken into account (i) Basis for the calculation 42. The starting point for determining the reference quantity which the applicants could normally have claimed during the period in question must be Article 2(1) of Regulation No 857/84, which provides that the reference quantity to be granted is to be equal to the quantity of milk delivered by the producer in 1981, plus 1%. However, under Article 2(2) the Member States were free to choose 1982 or 1983 as the reference year (in fact they all opted for 1983) provided that the quantity produced in that year was "weighted by a percentage established so as not to exceed the guaranteed quantity defined in Article 5c of Regulation (EEC) No 804/68". Article 2(3) further provides that the percentages referred to in Article 2(1) and (2) may be adapted by the Member States with a view to the grant of special or additional reference quantities pursuant to Articles 3 and 4 of Regulation No 857/84. (42) In Spagl (paragraph 21) and Pastaetter (paragraph 12) the Court accepted that in the case of non-marketers who did not deliver any milk during the reference year adopted by the Member States the reference quantity could be calculated on another footing, namely on the basis of the volume of deliveries which they made during a representative period preceding the non-marketing period. It is therefore uncontested that the basis for calculation provided for in Article 3a(2) of Regulation No 857/84 must be used as the starting point, in other words the volume of deliveries during the twelve calendar months preceding the month in which application was made for the non-marketing premium (called hereinafter "the non-marketers' reference year"). However, the applicants in Case C-104/89 maintain that that basic figure should be increased by 1%. I consider that they are right. For the purposes of determining the reference quantity the Community legislature took as its basis milk deliveries in 1981, plus 1% (see Article 2(1) of Regulation No 857/84 and the second recital in the preamble to that regulation). Since in the case of non-marketers the starting point must be milk deliveries during the non-marketers' reference year preceding 1981 ° which means that they cannot take advantage of increased productivity between that year and 1981 ° it would be particularly unreasonable and even discriminatory if they were additionally denied the 1% increase. (ii) The reduction coefficient 43. The Court expressly recognized in Spagl (paragraph 21) and Pastaetter (paragraph 12) that the Community legislature was entitled to apply to the basic figure for calculating the reference quantity to be allocated to non-marketers a "reduction coefficient designed to ensure that the category of producers concerned was not accorded an undue advantage by comparison with the producers who continued to deliver milk during the reference year". However, the Court considered that a reduction coefficient of 40% was too high, on the ground that it appeared from the information provided to the Court that in no case did the reduction coefficient applied in the Member States pursuant to Article 2 of Regulation No 857/84 (inclusive of the rate of withdrawal discussed in section 46) exceed 17.5%. In this way, the Court indicated how an appropriate reduction coefficient for non-marketers has to be determined, namely by applying a percentage which in the Member State of the producer concerned is representative of all the abatements which were applied there pursuant to Article 2 of Regulation No 857/84 to the reference quantity allocated to the producers referred to in that article. (43) As far as the period qualifying for compensation (section 42 above) is concerned, this means more specifically that the basic reference quantity for the applicants (namely their production in the non-marketers' reference year plus 1%) for each of the years in that period (corresponding to the first to the fifth year of application of the levy system (44)) is to be reduced by a percentage representative of the reduction coefficient which was applicable in each of those years in the Member State concerned. The applicants point out, however, that if non-marketers are not to suffer discrimination compared with producers referred to in Article 2, account must be taken of their particular situation. In that regard, they object that, on the lines of the Netherlands and German legislation (which was adopted after the Spagl and Pastaetter judgments in order to implement Regulation No 1639/91), account is taken of two specific reduction coefficients: the reduction coefficient which was applied in the first year to producers referred to in Article 2 and the rate of withdrawal introduced by Regulation No 775/87, which currently amounts to 4.5%. 44. The origin of the first objection lies in the fact that, as already mentioned, all the Member States opted for 1983 as the reference year, rather than for the volume produced in the (basic) reference year 1981, plus 1%. In order in those circumstances to avoid exceeding the guaranteed total quantity per Member State, the Member States had ° as expressly provided for in Article 2(2) of Regulation No 857/84 ° to reduce the individual reference quantities by a certain percentage. I agree with the applicants that when a representative reduction coefficient is determined for non-marketers no account may be taken of the percentage determined as described above in accordance with Article 2(2). That percentage compensates for the fact that the reference quantity of producers referred to in Article 2 was established on the basis of a reference year (1983) in which in most cases, in view of the steady rise in productivity in the sector, producers delivered more milk than they did in 1981. Since the basis applying to non-marketers is milk deliveries made during the non-marketers' reference year prior to 1981 (plus 1%), it would be unreasonable and discriminatory to apply to them the reduction coefficient determined pursuant to Article 2(2) of Regulation No 857/84, since that coefficient is designed to compensate for the advantage of the higher production achieved between 1981 and 1983, the later reference year adopted by the Member States. The foregoing does not, however, mean that the entire reduction coefficient which was applied in the relevant Member State pursuant to Article 2 of Regulation No 857/84 should be left out of account, but only the reduction referred to in paragraph 2 thereof, not the reductions laid down by the Member States pursuant to paragraph 3. The latter reductions are intended to make it possible to grant a special or additional reference quantity to producers in one of the special situations referred to in Articles 3 and 4 of the regulation. The applicants would be placed at an advantage in comparison with other producers if in determining the reference quantity to be granted to them no account were to be taken of such reduction coefficients, which were provided for on grounds of solidarity. 45. The applicants' second objection relates to the taking into account of the withdrawal of a uniform proportion of each reference quantity, as laid down by Regulation No 775/87. That withdrawal was not introduced until the fourth year of application of the levy scheme and may therefore not be taken into account when calculating the damage which the applicants suffered during the first three years of application of the scheme. However, as from the fourth year the reference quantity taken as the basis for calculating the damage may be reduced by the same percentage as was applied to producers referred to in Article 2, provided, however, that when the damage is assessed account is taken of the compensation which was received by those producers under Article 2 of Regulation No 775/87 in respect of the withdrawal. The non-marketers would also have received that compensation when the reference quantity to which they would normally have been entitled was withdrawn. 5.2. Assessment of the damage suffered by way of loss of profit 46. As I have already observed, this is a point on which, owing to the lack of sufficiently certain and precise evidence, the Court can for the time being provide only general indications with a view to the parties' reaching agreement. Such indications can relate only to the situation of the applicants in the present joined cases but may, nevertheless, be useful when assessing the compensation claims of other non-marketers who are in a similar situation. It is for the injured parties to prove the truth and extent of the damage suffered by way of loss of profit. I understand loss of profit to mean the profit which the applicants would have made from milk production had they been able to resume production at the proper time. The parties are in agreement about the starting point: account must be taken of the profit from the delivery of a quantity of milk ° equal to the reference quantity to which the applicants would have been entitled during the relevant period ° which corresponds to the profits made by milk producers with the same reference quantity during the same period and under circumstances similar to those in which the applicants would have been had they been producing. However, the parties are not in agreement about the amount of the profit expressed as a percentage of sales (that is to say, the reference quantity). The guideline to be used in order to determine loss of profit should be the normal course of events, having regard to the special circumstances. (45) This means that the basis for calculation to be employed is the profit which, according to reliable statistical data, is representative of the relevant Member State or region with specific characteristics in the relevant year in the case of a farm of the same size as the applicant' s. 47. As regards the calculation of loss of profits, there are two specific problems which the Court can resolve as of now. First, there is a problem raised by the institutions. According to them, it is not possible for the applicants to have actually produced, after the expiry of the non-marketing period, from young cows whose milk yield had not yet developed a quantity of milk equal to the reference quantity which they claim. The applicants state in the reply in response to this claim that they were in fact able to exploit the reference quantity in full since they purchased more mature cattle. That, after the expiry of the non-marketing undertaking, the applicants had to start up milk production afresh should, in the normal course of events, have had an impact on profitability during the starting period seems to me to be correct. Depending on the circumstances, this will be caused either by the lower yield of young cows (the Commission talks about young cows' productivity being 25% below that of more mature animals) or by the higher purchase price of more mature cows. It is for the institutions to adduce reliable general data in support of this defence argument. If the applicants consider that their actual circumstances differ from the normal course of events, they must provide sufficient proof that that is the case. 48. The second problem is concerned with setting income from replacement activities against lost profits. After their non-marketing undertakings expired all the applicants took up replacement activities when Regulation No 857/84 made it impossible for them to resume milk production. By so doing they undoubtedly acted in accordance with a general legal principle to the effect that the injured party must display ordinary vigilance in order as far as possible to contain the damage within reasonable limits. (46) The institutions consider, however, that the applicants did not make enough efforts to obtain adequate profits from the replacement activities. The applicants disagree, although it appears that the applicants in Case C-104/89 recorded operating losses in a large number of financial years during which they carried on replacement activities. They claim that the Community must also compensate them for those losses. Also as regards that dispute it is for the institutions to prove with the help of reliable statistical data what profit can be obtained in the relevant Member State or region with specific characteristics in the relevant year in the normal course of events on a farm with similar infrastructure to that of the applicant in the sector to which the replacement activity belongs. It is then again for the applicants to adduce counter-evidence supported by sufficient data and possibly to prove personal reasons (such as serious illness or other exceptional setbacks) which explain why the operating result which they achieved was lower than a normal operating result. The normal profit so determined ° even if the actual profit was lower ° should consequently be deducted from the amount of the proved loss of profits. (47) As for any operating losses incurred in the relevant period, they are not normally eligible for compensation on the ground that there is no causal link between those losses and the regulation which was declared invalid; in view of the fact that the replacement activities undertaken by the applicants are normally profitable, it must be assumed that any losses are to be attributable to factors for which the Community does not have to answer. (48) 49. I would make one final observation concerning the circle of persons entitled to claim compensation ° mainly only those non-marketers who applied for and obtained a provisional 60% reference quantity pursuant to Regulation No 764/89 (see section 30 above) ° with whom the institutions will have to reach agreement in the event that the Court decides that the Community is liable for the damage suffered as a result of the invalidity of Regulation No 857/84. In my view, there is nothing to prevent the institutions from drawing up an overall settlement which takes account of the standard types of injured party. Indeed this is appropriate in view of the need to treat in the same way injured parties who are in similar circumstances. It is open to individual injured parties to show by producing sufficient evidence, as has been emphasized above, that a different arrangement is justified for them on account of exceptional personal circumstances. 5.3. Interest due 5.3.1. Legal interest 50. The parties agree that if the Community is held liable to pay compensation, it will have to pay legal interest on the amount payable as from the day on which judgment is given. However, their opinions differ about the rate of interest. The applicants in Case C-104/89 claim 8%. The applicant in Case C-37/90 proposes 7%. The institutions put the rate of interest at 6%. The Court has repeatedly held, most recently in Sofrimport, that as a general rule the obligation to pay interest arise on the date on which judgment is given. However, at one time it set the rate without further explanation at 6% (in the quellmehl and maize gritz cases), at another at 8% (in the more recent Sofrimport case). In my view, the guideline should be the level of legal interest which is applied at the time when the Court gives its judgment in the Member State in which the applicants worked and in which they would therefore normally use or invest the compensation due to them. 5.3.2. Compensatory interest 51. In their application, the applicants in Case C-104/89 assessed the damage which they sustained allowing for an amount for interest not received for each year from 1984 to 1989. In their reply they claim compensatory interest only from 30 March 1989 (that is to say, from the date of the application) on the total amount of the damage which they allege they suffered up until the end of 1989. The applicant in Case C-37/90 has not applied for compensatory interest in this application or in his reply. At the hearing, however, he asked the Court to assess the damage allowing for compensatory interest. He observed that that unreceived interest constituted part of the damage sustained, since he had to pay interest on a bank loan which he had taken out. 52. It is for the Court to order the Community to pay compensation for the whole of the damage suffered by the applicants, which would therefore include compensatory interest in so far as the amount of compensation fixed by the parties by mutual agreement after the interlocutory judgment does not already take full account of the time which has elapsed until that date. For the reasons set out above (in section 51) that interest also must be calculated on the basis of the usual rate of interest in the applicants' Member State. Conclusion 53. For the reasons set out in the foregoing I propose that, before deciding further, the Court should: (1) declare that the European Economic Community must pay the applicants an amount commensurate with the damage which they sustained in the period between the expiry of the non-marketing undertaking which they entered into pursuant to Council Regulation No 1078/77 of 17 May 1977 and the grant to them of a provisional reference quantity pursuant to Article 3a of Council Regulation No 857/84 of 31 March 1984 (which was added by Council Regulation No 764/89 of 20 March 1989) or the time at which they resumed milk deliveries if they did so before the grant of the aforesaid reference quantity; (2) dismiss the remaining claims for compensation; (3) declare that, within 12 months of the delivery of the judgment, the parties are to provide the Court with a calculation of the amount of damage determined by mutual agreement which takes account of the fact that, for each year of the period referred to in paragraph 1, the applicants could have delivered a quantity of milk corresponding to the milk deliveries which they made during the year preceding the month in which they applied for the premium, plus 1%, which amount is to be diminished by a percentage representative of the reductions which the Member State concerned applied in each year of the aforementioned period to the reference quantity fixed in accordance with Article 2 of Regulation No 857/84 for the milk producers referred to in that article ° with the exception of the reduction connected with the adoption of a reference year later than 1981, but including the reduction resulting from the application of the rate of withdrawal introduced by Regulation No 775/87 °, and which further takes account, in assessing loss of profit, of the profit which, in the normal course of events and subject to the applicant' s proving exceptional circumstances, would have been made by a producer in comparable circumstances who received the same reference quantity as the applicants were entitled to, but less the normal income obtained by the applicants from their replacement activity, which is to be assessed in accordance with the same criterion and established by means of the same methods of proof; (4) declare that legal interest is due on the amount of compensation to be paid as from the date on which the judgment is given at the rate applying in the Member State concerned on that date, and possibly also compensatory interest at the usual rate applying in the Member State concerned, in so far as the amount of compensation to be paid does not already take fully into account the time which has elapsed up until then; (5) declare that if the parties fail to agree or to agree on all points within 12 months of the date on which the judgment is given, the parties must forward their calculations to the Court with a view to the settlement of the outstanding points in issue; (6) reserve the costs. (*) Original language: Dutch. (1) ° Council Regulation (EEC) No 1078/77 of 17 May 1977 introducing a system of premiums for the non-marketing of milk and milk products and for the conversion of dairy herds (OJ 1977 L 131, p. 1). (2) ° Council Regulation (EEC) No 856/84 of 31 March 1984 amending Regulation (EEC) No 804/68 on the common organization of the market in milk and milk products (OJ 1984 L 90, p. 10). (3) ° Council Regulation (EEC) No 857/84 of 31 March 1984 adopting general rules for the application of the levy referred to in Article 5c of Regulation (EEC) No 804/68 in the milk and milk products sector (OJ 1984 L 90, p. 13). (4) ° Case 120/86 Mulder v Minister van Landbouw en Visserij [1988] ECR 2321. (5) ° Case 170/86 von Deetzen v Hauptzollamt Hamburg-Jonas [1988] ECR 2355. (6) ° Council Regulation (EEC) No 764/89 of 20 March 1989 amending Regulation (EEC) No 857/84 adopting general rules for the application of the levy referred to in Article 5c of Regulation (EEC) No 804/68 in the milk and milk products sector (OJ 1989 L 84, p. 2). (7) ° Since none of the applicants sold the milk which he used to produce direct, I shall, for the sake of brevity, make no reference to the provisions of the levy scheme which deal with direct sale . (8) ° Council Regulation (EEC) No 3879/89 of 11 December 1989 amending Regulation (EEC) No 804/68 on the common organization of the market in milk and milk products (OJ 1989 L 378, p. 1). (9) ° Council Regulation (EEC) No 775/87 of 16 March 1987 temporarily withdrawing a proportion of the reference quantities mentioned in Article 5c(1) of Regulation (EEC) No 804/68 on the common organization of the market in milk and milk products (OJ 1987 L 78, p. 5). (10) ° Council Regulation (EEC) No 3882/89 of 11 December 1989 amending Regulation (EEC) No 775/87 temporarily withdrawing a proportion of the reference quantities mentioned in Article 5c(1) of Regulation (EEC) No 804/68 on the common organization of the market in milk and milk products (OJ 1989 L 378, p. 6). (11) ° Council Regulation (EEC) No 3881/89 of 11 December 1989 establishing, for the period 1 April 1989 to 31 March 1990, the Community reserve for the application of the levy referred to in Article 5c of Regulation (EEC) No 804/68 in the milk and milk products sector (OJ 1989 L 378, p. 5). (12) ° Regulation (EEC) No 804/68 of the Council of 27 June 1968 on the common organization of the market in milk and milk products (OJ, English Special Edition 1968(I), p. 176. (13) ° For the 1990-91 and 1991-92 periods see Council Regulation (EEC) No 1184/90 of 7 May 1990 (OJ 1990 L 119, p. 30) and Council Regulation (EEC) No 1636/91 of 13 June 1991 (OJ 1991 L 150, p. 35). (14) ° The balance of the increase in the Community reserve (1 039 885.740 tonnes) was intended for the producers referred to in Article 3b of Regulation No 857/84, a provision added by Council Regulation No 3880/89 of 11 December 1989 (OJ 1989 L 378, p. 3). (15) ° Case C-189/89 Spagl v Hauptzollamt Rosenheim [1990] ECR I-4539 . (16) ° Case C-217/89 Pastaetter v Hauptzollamt Bad Reichenhall [1990] ECR I-4585. (17) ° In the judgment of 22 October 1991 in Case C-44/89 von Deetzen [1991] ECR I-5119, (hereinafter referred to as von Deetzen No 2 ) the Court confirmed, by reference to the judgments in Spagl and Pastaetter, that Article 3a(2) of Regulation No 857/84 was invalid. (18) ° Council Regulation (EEC) No 1639/91 of 13 June 1991 amending Regulation (EEC) No 857/84 adopting general rules for the application of the levy referred to in Article 5c of Regulation (EEC) No 804/68 in the milk and milk products sector (OJ 1991 L 150, p. 35). (19) ° Judgment of 26 February 1986 in Case 175/84 Krohn v Commission [1986] ECR 753. (20) ° In contrast, in the judgment of 7 July 1987 in Joined Cases 89 and 91/86 L' Etoile commerciale and CNTA v Commission [1987] ECR 3005, in which the Court based itself on the same considerations (paragraphs 17 and 18) as I have quoted above, it was decided that the national authority bore the responsibility on the ground that in that case the Commission' s act was not at the root of the damage found (paragraph 19). (21) ° Judgment of 8 December 1987 in Case 50/86 Grands Moulins de Paris v EEC [1987] ECR 4833, paragraph 7. (22) ° Grands Moulins de Paris, paragraph 8. See also the judgment of 18 April 1991 in Case C-63/89 Assurances du Crédit v Council and Commission [1991] ECR I-1799, paragraph 12, and the judgment of 27 June 1991 of the Court of First Instance in Case T-120/89 Stahlwerke Peine-Salzgitter v Commission [1991] ECR II-279, which in paragraph 74 provides an extensive review of the case-law of the Court of Justice. (23) ° In my estimation, that case-law remains intact following the judgment of 17 November 1991 in Joined Cases C-6/90 and C-9/90 Francovich and Bonifaci [1991] ECR I-5357. Even if one shares the view taken by Mr Advocate General Mischo in his Opinion on those cases (see section 71 in particular) that the same requirements must apply in order for the Community to incur liability on account of legislative measures as apply in order for the Member States to incur liability in that area, it must be borne in mind that the situation in Francovich and Bonifaci was one in which the relevant Member State to attain a result clearly prescribed by a directive and hence had only a limited discretion. In contrast, the case-law discussed in this context applies to situations in which the (Community) legislature has a broad measure of discretion. (24) ° The case-law of the Court is not unambiguous. Sometimes the use of the word or gives the impression that alternative criteria are involved (see, for example, the judgment of 30 May 1989 in Case 20/88 Roquette frères v Commission [1989] ECR 1553, paragraph 26); at others the criteria are joined by and and therefore used conjunctively (see the judgment in Assurances du Crédit, cited above, paragraph 12). (25) ° See also F. Schockweiler, in collaboration with G. Wivenes and J.M. Godart, Le régime de la responsabilité extra-contractuelle du fait d' actes juridiques dans la Communauté européenne , Revue trimestrielle de droit européen, January-March 1990, p. 27, at p. 60. (26) ° In Peine-Salzgitter (see in particular paragraph 108), the Court of First Instance speaks of the Commission manifestly and gravely and therefore inexcusably" disregarding the limits of its powers. (27) ° See also my Opinion of 19 November 1991 in Joined Cases C-363 and C-364/88 Finsider and Falck v Commission, paragraph 25. (28) ° Judgments in Case 238/78 Ireks-Arkady v Council and Commission [1979] ECR 2955, paragraph 11, Joined Cases 241, 242 and 245 to 250/78 DGV v Council and Commission [1979] ECR 3017, paragraph 11, Joined Cases 261 and 262/78 Interquell Staerke-Chemie v Council and Commission [1979] ECR 3045, paragraph 14, and Joined Cases 64 and 113/76, 167 and 239/78, 27, 28 and 45/79 P. Dumortier Frères v Council [1979] ECR 3091, paragraph 11. (29) ° Case C-152/88 Sofrimport v Commission [1990] ECR I-2477. (30) ° See also the judgment of 14 May 1975 in Case 74/74 CNTA v Commission [1975] ECR 533, in which (paragraph 44) the Court declared as follows: In the absence of an overriding matter of public interest (in French: un intérêt public péremptoire ), the Commission has violated a superior rule of law, thus rendering the Community liable, by failing to include in Regulation No 189/72 transitional measures for the protection of the confidence which a trader might legitimately have had in the Community rules. (31) ° On the basis of the judgment in Amylum (Joined Cases 116/77 and 124/77 Amylum v Council and Commission [1979] ECR 3497, paragraph 19) the Council and the Commission argue that the Community may be held liable only if blame can be attributed to a Community institution and to arbitrary conduct. Arbitrary conduct is one of the least acceptable ways, but not therefore the only way, in which a public authority may seriously and manifestly disregard the limits of its powers. Furthermore, failure to take account of the specific situation of economic operations (in this case the non-marketers: sections 22-26 infra), without its being possible to invoke any overriding public interest comes close to amounting to arbitrary treatment of those operators. (32) ° Judgment of 25 May 1978 in Joined Cases 83 and 94/76, 4, 15 and 40/77 Bayerische HNL v Council and Commission [1978] ECR 1209. (33) ° Judgment of 6 December 1984 in Case 59/83 Biovilac v EEC [1984] ECR 4057. (34) ° The others opted for the conversion premium, which can be left out of account in the present cases. For more information about the system of premiums see the Special report of the Court of Auditors on the application of Regulations (EEC) No 1078/77 and (EEC) No 1041/78 introducing a system of premiums for the non-marketing of milk products and for the conversion of dairy herds (OJ 1983 C 278, p. 1). (35) ° Council Regulation (EEC) No 590/85 of 26 February 1985 amending Regulation (EEC) No 857/84 laying down general rules for the application of the levy referred to in Article 5c of Regulation (EEC) No 804/68 in the milk and milk products sector (OJ 1985 L 68, p. 1). (36) ° For more information about the aims of Regulation No 1078/77, see sections 1.1.3 and 1.1.4 of the Court of Auditors' report to which reference has already been made. (37) ° Council Directive 72/159/EEC of 17 April 1972 on the modernization of farms (OJ, English Special Edition 1972(II), p. 324). (38) ° It emerges from Spronk' s case how sparingly the possibility afforded by this provision has been taken up in the Netherlands. In its judgment of 12 July 1990 in that case (Case C-16/89 Spronk v Minister van Landbouw [1990] ECR I-3185) the Court held that the relevant Netherlands implementing provision was not contrary to Regulation No 857/84. (39) ° It appears from the answer given by Mr MacSharry on behalf of the Commission to Mr John Hulme (OJ 1990 C 93, p. 26) that 13 187 non-marketers applied for such a reference quantity. It does not appear from the case-file how many non-marketers actually obtained such a reference quantity. (40) ° Judgment in Joined Cases 5, 7 and 13 to 24/66 Kampffmeyer v Commission [1967] ECR 245, at 266. (41) ° I would point out again (see section 30 above) that, in my view, non-marketers who did not apply for a 60% reference quantity pursuant to Regulation No 764/89 should be deemed, in the absence of proof to the contrary, to have given up milk production for good during the currency of their non-marketing undertakings, with the result that normally they cannot argue that they suffered damage as a result of Regulation No 857/84. That presumption that they discontinued milk production does not operate in the present cases, since the applicants did in fact apply for and obtain a 60% reference quantity. (42) ° Regulation No 1639/91 amended Article 2(3) of Regulation No 857/84 so that the percentages in question may now also be adapted with a view to the grant of a special reference quantity to non-marketers pursuant to Article 3a of Regulation No 857/84. (43) ° The Council also took this view, as appears from the new version of Article 3a(2) of Regulation No 857/84 introduced by Regulation No 1639/91 (as set out in section 7 above). (44) ° The levy scheme was originally introduced for five successive periods of 12 months (see Article 5c(1) of Regulation No 804/68 as added by Regulation No 856/84). (45) ° To have regard to the normal course of events seems to be a general principle common to the legal systems of the Member States. See the references to Belgian, English, French, German, Netherlands and Swiss law in the Belgian standard work by J. Ronse, Schade en schadeloosstelling (onrechtmatige daad) , Algemene Praktische Rechtsverzameling, 1957, Nos 73 and 74. See more specifically the wording of § 252 of the German Buergerliches Gesetzbuch (Civil Code), which reads as follows: Der zu ersetzende Schaden umfasst auch den entgangenen Gewinn. Als entgangen gilt der Gewinn, welcher nach dem gewoehnlichen Laufe der Dinge oder nach den besonderen Umstaenden, insbesondere nach den getroffenen Anstalten und Vorkehrungen, mit Wahrscheinlichkeit erwartet werden konnte. [ The compensation shall also include lost profits. Profit is deemed to have been lost which could probably have been expected in the ordinary course of events, or according to the special circumstances, especially in the light of the preparations and arrangements made. (The German Civil Code, trans. by Forrester, Goren and Ilgen, North-Holland Publishing Co., Amsterdam.)] (46) ° The Court has recognized this principle in staff cases. More specifically, in the judgment in Case 58/75 Sergy v Commission [1976] 1139 (paragraphs 46 and 47) the Court held that a lack of ordinary vigilance was partly responsible for the damage suffered by the applicant and that that had to be taken into account when assessing the extent to which the defendant had to make good the damage. For a recent study in comparative law, see R. Kruithof, L' obligation de la partie lésée de restreindre la dommage , Revue critique de jurisprudence belge, 1989, p. 12 et seq., which includes numerous references to Belgian, English, French, German and Netherlands law. (47) ° If it should appear that the applicants obtained a higher profit than the normal profit from the replacement activities, that extra profit should not be deducted from the lost profits, since the Community should not derive an advantage from special efforts made by the applicants. (48) ° There may in fact be a causal connection between some losses and the regulation which was declared invalid, for example in the case of the loss alleged by some applicants in Case 104/89 on the sale of cows purchased in 1983 or 1984 with a view to the resumption of milk production, which was subsequently made impossible by Regulation No 857/84.

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1315 of 1972. Appeal by certificate from the judgment and order dated October 28, 1969 of the Delhi High Court at New Delhi in Letters Patent Appeal No. 93 of 1967. C. Chagla, S. K. Mehta and K. R. Nagaraja, for the appellant. D. Chawla, H. K. Puri and S. K. Dhingra, for the respondent. The Judgment of the Court was delivered by MATHEW, J. The appellant, Punjab National Bank Limited, is the owner of a building bearing municipal No. 5, Parliament Street, New Delhi. After companypletion of its companystruction, it was ,occupied on July 1, 1958. The building was number entered in the assessment list which was to be operative during the period from April 1, 1958 to March 31, 1959. On September 4, 1959, the New Delhi Municipal Committee, the respondent here, purporting to act under s. 67 of the Punjab Municipal Act, 191 1, hereinafter referred to as the Act, issued a numberice to the appellant stating This is to inform you that your building mentioned at the back of this letter has been companypleted and is in fact occupied from 1-7-1958 and ought to be assessed to House tax by amending the list for 1959-60 under section 67 of the Municipal Act, 1911 and this Committee has, vide resolution No. 30 dated 10-7-1959 proposed to amend the list for the year 1959-60 by inserting the said property on an annual value as given at the back of this letter. It is further proposed that the tax will take effect from 1-4-1959. Notice is hereby given to you under section 67 of the P. M. Act that the Committee will companysider the question of the amendment of the list and will hear objections in Meeting Room on 20th day of, November, 1959 at 10.00 A.M. The appellant objected to the amendment of the list and levy of the tax for the period in question but the objection was over-ruled, and the respondent passed a resolution companyfirming the proposed assessment on December 21, 1959. Thereafter the respondent sent a bill for the tax for the period. This was followed by a numberice of demand. The appellant filed a suit for permanent injunction restraining the respondent from enforcing the demand on the ground that the respondent had numberjurisdiction to include the building in the assessment list. The trial Court decreed the suit. The District Judge, on appeal, agreed with the view of the trial Court and dismissed the appeal. The second appeal filed against his decision was dismissed by a learned single judge of the High Court An appeal was filed against the judgment of the learned single Judge which came up before a Division Bench of the Court which referred the case to a larger Bench. The Bench, by a majority, set aside the order of the single Judge and dismissed the suit. This appeal, by certificate, is from this decision. The only point that arises for companysideration in this appeal is whether the respondent was entitled to include the building in the .assessment list which was operative for the period from April 1, 1959 to March 31, 1960, by amending it on November 20, 1959, and impose house tax on the building for the year 1959-60. Chapter V of the Act deals with taxation. Section 61 specifies the taxes which might be imposed by a Municipal Committee and one such tax is a tax payable by an owner of building and land. Section 62 lays down the procedure for imposition of the. taxes mentioned in s. 61. Section 63 deals with the procedure for assessment of tax on immovable property. It provides that the companymittee shall cause an assessment list of all buildings and lands on which any tax is imposed to be prepared. Section 64 provides that when the assessment list has be-en companypleted, the companymittee shall give public numberice thereof. Section 65 provides that the Committee shall, at the time of the publication of the assessment list, give public numberice of a time number less than one month thereafter, when it will proceed to revise the valuation, and assessment, and in all cases in which property is for the first time assessed. or the assessment thereof is enhanced, it shall also give numberice to the owner or occupier of the property. The Section further requires that all objections to the valuation shall be made before or at the time fixed in the numberice. Section 66 provides for the settlement of the list and it states Settlement of listi After the objections have been enquired into and the persons making them have been allowed an opportunity of being heard either in person or by authorized agent as they may think fit, and the revision of the valuation and assessment has been companypleted, the amendments made in the list shall be .authenticated by the signatures of number less than two members of the Committee who shall at the same time certify that numbervalid objections has been made to the valuation and assessment companytained in the list, except in the case in which amendments have been entered therein, and subject to such amendments as may thereafter be duly made, the tax so assessed shall be deemed to be the tax for the year companymencing on the first day of January or first day of April next ensuing as the Committee may determine, or in the case of a tax then imposed for the first time for the period between the date on which the tax companyes into force and such first day of January or April, as the case may be. The list when amended under this section shall be deposited in the companymittees office and shall there be open during office hours to all owners or occupiers of property companyprised therein or the authorized agents of such persons, and a public numberice that it is so open shall forthwith be published. Section 67 which provides for further amendment of the assessment list states The Committee may at any time amend the list by inserting the name of any person whose name ought to have been or ought to be inserted, or by inserting any property which ought to have been or ought to be inserted, or by altering the assessment on any property which has been erroneously valued or assessed through fraud, accident or mistake, whether on the part of the companymittee or of the assessee, or in the case of the tax payable by the occupier by a change in the tenancy, after giving numberice to any person affected by the amendment, of a time, number less than one month from the date of service, at which the amendment is to be made. Any person interested in any such amendment may tender his objection to the companymittee in writing before the time fixed in the numberice, or orally or in writing at that time, and shall be allowed an opportunity of being heard in support of the same in person, or by authorized agent, as he may think fit. Section 68 companyfers a discretion on the companymittee to prepare for the whole or any part of the municipality a new assessment list every year. The majority was of the view that the amendment of the assessment Est, though made on November 20, 1959, was operative from April 1, 1959, and that the building, was liable to be taxed for the year which companymenced from April 1, 1959, and ended on March 31, 1960. The majority overruled the argument of the appellant that the municipal companymittee had numberjurisdiction to amend the assessment list after the list was finalised on March 31, 1959. It was companytended for the appellant that when once the assessment list was finalized in accordance with the provisions of the Act, the companymittee had numberjurisdiction to amend it thereafter. We think that the companyclusion of the majority is companyrect. The assessment list for the year companymencing from April 1, 1959, had to be settled by March 31, 1959 at the latest this list was liable to be amended under s. 67 even after March 31, 1959, on any of the grounds mentioned in that section. Section 66 does number say that the amendment of the assessment list should have been made before March 31,. 1959. The expression subject to such amendment as may thereafter be duly made in s. 66 would indicate that the amendment of the list companyld be made even after March 31, 1959, as s. 67 provides for amendment of the list at anytime. And when the list was so amended, it shall be deemed to have been in force for the year which companymenced from April 1, 1959, an ended on March 31, 1960, and the tax assessed therein shall be deemed to be the tax for the financial year companymencing from April 1, 1959. In other words, it was number necessary that the assessment list should have been amended before March 31, 1959, in order that the municipal companymittee may impose house tax on the building for the period from April 1, 1959 to March 31, 1960. An amendment of the list under s. 67 was permissible on any of the grounds mentioned in the section even after March 31, .1959, as otherwise, the expression at any time would have numbermeaning. The words subject to such amendments as may thereafter be duly made in s. 66 postulate that a list finalized before 1st January or 1st April is Liable to be amended thereafter under s. 67. The building was certainly liable to be included in the assessment list which was finalized on March 31. 1959, but by some mistake it was number so included. The list was, therefore, liable to be amended under s. 67. That was done. When the list was amended, the tax assessed for the building shall be deemed to be the tax for it in the year which companymenced from April 1, 1959, and ended on March 31, 1960. We are number impressed by the argument of Mr. Chagla that the expression at any time in s. 67 means that the amendment of the assessment list companyld have been made only before March 31, 1959. We think that the purpose behind s. 67 was to enable the Municipal Committee to amend, the assessment list at any time on any of the grounds mentioned therein. Counsel referred to the decision in Ex-parte Norris. In Re Salder 1 in support of his 1 17 Q.B.D. 728. 14-L631Sup.CI/73 companytention that the words at any time in s. 67 must receive a narrow companystruction as otherwise there will be numberlimit of time for the amendment of the list. What happened in that case was that a secured creditor, having stated in his proof the value at which lie assessed his security, the trustee gave him written numberice that it was his intention to redeem the security so valued, and thereupon applied for and received from the Board of Trade the amount required for such redemption. Before any further step was taken the creditor applied to amend his valuation and proof, the security having increased in value. The Court held that number thing had occurred to prevent the amendment from being allowed. In so holding the Court had to companysider the argument based on rule 13 of the 2nd Schedule to the Bankruptcy Act, 1883, which provided that a creditor may amend the valuation and proof at any time. Lord Esher M. R., after stating that the Court has numberright to diminish the full force of the words at any time unless from the Act itself or the Rules it is possible to find some necessary implication to limit the force of the words, observed That they are to have some limitation cannot, I think, be doubted it cannot be that the right is to go on for ever. One necessary implication, at all events, I think is, that the right is at an end, if the trustee acting upon the valuation put upon the security by the creditor, has exercised the right given to him by the 12th rule, to redeem the security on payment to the creditor of the assessed value. It is impossible to suppose that, after the trustee has paid the amount of the valuation, and has thus on behalf of the general body of the creditors become the purchaser of the security, the creditor can undo all that. The respondent on the other hand submitted that the words at any time in s. 67 must be given the widest amplitude as the purpose of s. 67 is to rectify any omission in the list occasioned by the mistake, fraud, accident of the assessee or the Committee as the case may be, and reliance was placed on the decision in the Central Bank of India Ltd., Amritsar The Hardford Fire Insurance Co. Ltd. where this Court had to companystrue the expression This insurance may be terminated at any time at the request of the insured occurring in an insurance policy it was held that the words at any time can only mean at any time the party companycerned likes. We do number think that any universal rule can he laid down as to the meaning of the expression at any time. It all depends A.I.R. 1965 S.C. 1288. upon the companytext in which the expression occurs. We think that the expression at any time occurring in s. 67, when read in companyjunction with the word thereafter in s. 66 can only lead to the companyclusion that the amendment of the list in question was permissible even after March 31, 1959. The appellant companytended that the building was number included in the list which was operative for the period which companymenced from April 1, 1959 and ended on March 31, 1960. We have perused the assessment list produced before us and we are satisfied that the amendment was made by inserting the building in the list which was finalised on March 31, 1959, and which was operative for the period which companymenced from 1st April, 1959 and ended on 31st March, 1960.

OPINION OF ADVOCATE GENERAL MENGOZZI delivered on 17 November 2009 1(1) Case C‑451/08 Helmut Müller GmbH v Bundesanstalt für Immobilienaufgaben (Reference for a preliminary ruling from the Oberlandesgericht Düsseldorf (Germany)) (Public works contracts – Public works concessions – Sale of land by a public authority – Works to be carried out subsequently) 1. The present case, arising from a number of questions referred by the Oberlandesgericht Düsseldorf (Higher Regional Court, Düsseldorf) for a preliminary ruling, allows the Court to address once again the problem of the distinction between public works contracts and public authorities’ town planning activities. 2. To be more precise, the central point at issue in the case on which the referring court is required to rule is the sale of land by a public authority to a private person. Typically, a case of this kind may raise the question of possible State aid. (2) In the present case, however, that question does not seem to arise. On the contrary, the specific point at issue is the fact that the public authority decided to sell the land to the prospective buyer who, in the opinion of the local authorities responsible for town planning, presented the best and most interesting plans for the use of the land and the erection of buildings. The referring court asks whether the rules on public contracts and, more specifically, the rules on public works concessions apply in these circumstances. I – Legislative context 3. The provisions on which the Court is asked to deliver a ruling are contained in Directive 2004/18/EC (3) (hereinafter also referred to as ‘the Directive’). 4. Article 1 of the Directive provides: ‘1. For the purposes of this Directive, the definitions set out in paragraphs 2 to 15 shall apply. 2. (a) “Public contracts” are contracts for pecuniary interest concluded in writing between one or more economic operators and one or more contracting authorities and having as their object the execution of works, the supply of products or the provision of services within the meaning of this Directive. (b) “Public works contracts” are public contracts having as their object either the execution, or both the design and execution, of works related to one of the activities within the meaning of Annex I or a work, or the realisation, by whatever means, of a work corresponding to the requirements specified by the contracting authority. A “work” means the outcome of building or civil engineering works taken as a whole which is sufficient of itself to fulfil an economic or technical function. … 3. “Public works concession” is a contract of the same type as a public works contract except for the fact that the consideration for the works to be carried out consists either solely in the right to exploit the work or in this right together with payment. …’ II – The facts, the main proceedings, and the questions referred for a preliminary ruling 5. In October 2006, the Bundesanstalt für Immobilienaufgaben (the federal agency responsible for managing public property; ‘the Bundesanstalt’) published notices in the press and on the internet announcing its intention to sell land comprising approximately 24 hectares in the municipality of Wildeshausen. The land was occupied, inter alia, by barracks which were decommissioned early in 2007. 6. The notice published by the Bundesanstalt stated that the proposed use of the land must be agreed in advance with the municipality of Wildeshausen. 7. In May 2007, a survey commissioned by the Bundesanstalt estimated the value of the land to be EUR 2.33 million. 8. One company, Helmut Müller GmbH (‘Helmut Müller’), made an offer in November 2006 to buy the land for EUR 4 million on condition that the building plans for the area were drawn up in accordance with its designs. That proposal was not pursued. 9. In January 2007, the Bundesanstalt asked interested parties to make offers for the land without any definite building plan. In that context, Helmut Müller made an offer to buy the land for EUR 1 million. Another company, Gut Spascher Sand Immobilien GmbH (‘GSSI’), made an offer to buy the land for EUR 2.5 million. 10. The municipality of Wildeshausen subsequently asked the prospective buyers to submit their own plans for the use of the area. Those plans were then discussed with the municipal authorities in the presence of the Bundesanstalt. On 24 May 2007, the Wildeshausen town council expressed its own preference for the plan submitted by GSSI and said it was prepared to embark on the formal procedure of drawing up the building plans for the area on the basis of that plan. The town council explicitly stated in its decision that its preference was not to be regarded as binding with respect to local planning powers, which the town council reserved the right to exercise at its discretion. 11. On 6 June 2007, the Bundesanstalt sold the land to GSSI. The contract of sale does not mention the future use of the land. 12. Helmut Müller brought proceedings before the national courts, contesting the sale of the land and claiming in particular that the sale should have been conducted in accordance with the rules on public procurement. 13. The dispute is before the referring court, which has referred the following questions for a preliminary ruling: ‘(1) Is it a requirement, in order for there to be a public works contract under Article 1(2)(b) of … Directive 2004/18/EC …, that the works be physically carried out for the public contracting authority and bring it an immediate economic benefit? (2) In so far as, according to the definition of a public works contract in Article 1(2)(b) of Directive 2004/18/EC, the element of procurement is indispensable, is procurement to be regarded as having taken place, in accordance with the second variant of the provision, if the intended works for the public contracting authority fulfil a particular public purpose (for example the development of part of a town) and the public contracting authority has the legal right under the contract to ensure that the public purpose is achieved and that the necessary works will be available? (3) Does the concept of a public works contract in accordance with the first and second variants of Article 1(2)(b) of Directive 2004/18/EC require that the contractor be directly or indirectly obliged to provide the works. If so, must there be a legally enforceable obligation? (4) Does the concept of a public works contract in accordance with the third variant of Article 1(2)(b) of Directive 2004/18/EC require that the contractor be obliged to carry out works, or that works form the subject-matter of the contract? (5) Do contracts by which, through the requirements specified by the public contracting authority, it is intended to ensure that the works to be carried out for a particular public purpose be available, and by which (by contractual stipulation) the contracting body is given the legal power to ensure (in its own indirect interest) the availability of the works for the public purpose, fall within the third variant of Article 1(2)(b) of Directive 2004/18/EC? (6) Is the concept of “requirements specified by the contracting authority” in Article 1(2)(b) of Directive 2004/18/EC fulfilled, if the works are to be carried out in accordance with plans examined and approved by the public contracting authority? (7) Must there be held to be no public works concession under Article 1(3) of Directive 2004/18/EC, if the concessionaire is or will become the owner of the land on which the works are to be carried out, or the concession is granted for an indeterminate period? (8) Does Directive 2004/18/EC – with the legal consequence of an obligation on the public contracting authority to invite tenders – apply if a sale of land by a third party and the award of a public works contract take place at different times and on the conclusion of the land sale the public works contract has not yet been awarded, but at the last-mentioned time there was, on the part of the public authority, the intention to award such a contract? (9) Are separate but related transactions concerning a sale of land and a public works contract to be regarded from the point of view of the law on the awarding of contracts as a unity, if at the time the land sale contract was entered into the award of a public works contract was intended and the participants deliberately created a close connection between the contracts from a substantive – and possibly also temporal – point of view (see Case C‑29/04 Commission v Austria [2005] ECR I‑9705)?’ III – Preliminary observations A – The case-law of the referring court 14. Some clarification is required in order to understand the questions raised by the referring court. In particular, it should be observed that the national court itself makes it clear in the order for reference that the current case-law of the referring court (the Oberlandesgericht Düsseldorf) differs in some respects from most of the case-law and the legal literature on the law relating to the award of public contracts. 15. In particular, the referring court’s position is based on the assumption that the fact that a procedure is essentially a town planning procedure does not in principle preclude the application of the Community rules on public contracts. The national court refers in this connection to the Court’s judgments in Ordine degli Architetti and Others (4) and Commission v France. (5) 16. Secondly, the referring court deduces from the judgment in Auroux and Others (6) the principle that the application of the Community rules on public contracts is completely independent of whether the contracting authority intends to become the owner of the works to be constructed, or to take possession and make use of them at all. In other words, the Community rules on public contracts may apply regardless of whether there is an element of procurement of property by the contracting authority. In particular, the benefit pursued by the contracting authority may also be immaterial, consisting for example, as in the present case, in achieving specific urban development aims in respect of municipal land. (7) 17. On the basis of that case-law, the situation that is the subject of the main proceedings is interpreted by the referring court in the following terms. In its view, GSSI was awarded a public works concession, (8) to which the relevant provisions of Community law were applicable. (9) The fact that GSSI acquired a right of ownership in the property in question is not, in its view, inconsistent with that interpretation, since the concept of a ‘concession’ as defined in the Directive does not exclude concessions of indefinite duration or recognition of the concessionaire’s right to own the property that is the subject of the concession. 18. According to the referring court, the fact that the municipality of Wildeshausen, although it had expressed its own preference for the development scheme proposed by GSSI, was not formally bound to authorise that scheme does not call into question its interpretation of the events. In particular, the national court cites the Court’s judgment in Commission v Austria (‘Mödling’) (10) to support the claim that even an event which occurred after the award may, if it was actually decisive for the purposes of the award, have to be taken into account for the purposes of a legal assessment of the facts. Any other course might well compromise the effectiveness of provisions of Community law. 19. However, as I pointed out earlier, the referring court itself recognises that its interpretation of Community law, in the parts that are applicable in the present case, is by no means unanimously accepted. By its questions, the Oberlandesgericht Düsseldorf is therefore essentially asking the Court to determine whether or not that interpretation is correct. B – The differences between the various language versions of Article 1 of the Directive 20. In most of the languages, (11) Article 1 of the Directive identifies three different types of ‘public works contract’. These are, in particular: – the execution, possibly accompanied by the design, of building works (12) of the type specified in Annex I to the Directive (first variant); – the execution, possibly accompanied by the design, of awork (13) (second variant); – the realisation, by whatever means, of a work (14) corresponding to the requirements specified by the contracting authority (third variant). 21. The Directive adds that a ‘work’ (15) means the outcome of building or civil engineering works taken as a whole which is sufficient of itself to fulfil an economic or technical function. 22. It should be noted at once that there are some important differences between the language versions. 23. First, there are differences resulting from occasional inconsistencies in the terminology used in the three variants mentioned above: this is clear, in particular, when one looks at the terms employed in some of the language versions as indicated in the footnotes on the variants in question. 24. In addition, the German version exhibits two other significant differences. First, the third variant specifies that the activity in question is to be executed ‘by third parties’ (durch Dritte): that provision does not appear in the other language versions. (16) Secondly, the activity referred to in the third variant is not described as ‘a work’ (Bauwerk) but as ‘building activity’ (Bauleistung), with the result that the subsequent definition of ‘a work’ appears, in the German version, to apply only to the second variant and not to the third. (17) 25. The existence of these textual problems is a strong incentive for not attempting to find the ‘correct’ interpretation of provisions through a strictly literal analysis of the provisions in question, especially if that analysis is confined to a single language version. In fact, the only possible guides in seeking the meaning to be attributed to the provisions are systematic interpretation and teleological interpretation, combined with a good sense of interpretation. IV – Legal analysis A – Introduction: the concept of a public works contract 26. In order to give the fullest possible reply to the questions raised by the referring court, it is necessary, first, to identify the essential characteristics of a works contract. 27. It should be noted, first of all, that the concept is peculiar to Community law and the classification of a specific contract in the national law of a Member State is consequently irrelevant in this connection. (18) 28. As to the object of the contract, as we saw earlier, Directive 2004/18 identifies three basic types of contract. To summarise, it may be said that, under Article 1 of that Directive, the concept of a public works contract includes, on the one hand, the execution of specific works of the types listed in Annex I to the Directive and, on the other, the realisation of a work. In other words, the concept includes both construction activities, regardless of whether the outcome of the works constitutes a definite and/or finished property, and activities connected with the realisation, possibly by third parties, of specific ‘complete’ properties. Such a property, the ‘complete’ nature of which is identified by the Directive in the statement that it fulfils ‘an economic or technical function’, is normally defined as ‘a work’. 29. As regards the particular situations to be assessed, the question whether or not they fall within the ambit of Directive 2004/18 will naturally have to be examined case by case. However, I think that, generally speaking, the problem of whether the objective requirements for the application of the Directive are satisfied can be solved in most cases by adopting a flexible approach, based not on the threefold definition reflected in most language versions of Article 1 but rather on a twofold definition of works as expounded in the preceding point. 30. Regardless of the approach that is adopted, it must not however be forgotten that a characteristic element of all public works contracts is the element of construction. In other words, the activities in question must include the production of property. Indeed, the mere sale of existing property is explicitly excluded from the ambit of the Directive. (19) 31. Article 1 of the Directive explicitly defines other essential characteristics of a works contract. It is established that a works contract is a contract concluded in writing and for pecuniary interest. This entails a service provided by the contractor for the public authority for consideration, not necessarily in cash but certainly in terms of economic value. (20) 32. However, as we know, the Directive itself provides for an alternative to the ‘typical’ model in which the public authority pays (in the broad sense of the term, as we have seen) the builder for a work. In that alternative model, the public works concession model, ‘the consideration for the works to be carried out consists either solely in the right to exploit the work or in this right together with payment’. According to the referring court, the provisions on the award of public works concessions are applicable in the present case, since the public authority simply allows the person who is to carry out certain building works to enjoy the full benefit of the outcome of the building activity, in accordance with the provisions on the right of ownership. That problem will be discussed in detail later, notably in connection with the analysis of the seventh question. 33. A further observation is also required concerning the aim pursued by the public authorities in the works and/or work which they intend to execute. As the Court has had occasion to rule, the aim is irrelevant for the purposes of the applicability of the provisions of the Directive. (21) Thus, the only thing that matters is whether the objective requirements specified in the measure are satisfied. 34. Clearly, the reason why the Community rules pay no attention to the aims pursued by the public authorities in specific individual cases is that, as the recitals in the preamble to the Directive suggest, the principal objective of the Community rules on public contracts is to abolish restrictions on fundamental freedoms and to encourage genuine competition. (22) Thus, the point of view is that of the persons who may be interested in carrying out the works and, for those persons, the aim that the public authority intends to pursue is irrelevant. 35. These broad and ambitious aims must be borne in mind when interpreting the Directive but it should not be assumed that, by appealing to the purpose of the measure, its scope can be extended indefinitely. In particular, it should be noted that certain specific sectors in which it does not apply are mentioned in the Directive itself, notably in Articles 10 to 16. A purely ‘functional’ interpretation, based exclusively on the fundamental objectives of the Directive, is therefore not permissible. 36. A ‘functional’ interpretation, which the Commission in particular appears to support, raises the crucial problem of identifying the parameters on the basis of which the Directive is to apply. However, the Commission itself has stated that its principal concern is that certain persons may acquire a benefit without first being placed on an equal footing with other persons who may be interested in acquiring the benefit in question. In cases such as the present one, the benefit consists in the increase in the value of land resulting from the fact that the public authority has given permission for certain building activities to be carried out on it. So, on the Commission’s interpretation, any ‘increase in value’ of immovable property that is attributable to an activity of the public authorities should be subject to the provisions of the Directive. It is therefore clear that, if one takes that position, one may have to accept the hypothesis, however absurd, that all town planning activities are subject to the Directive since, by definition, provisions on the possible execution of building works substantially alter the value of the land in question. 37. In fact, no one actually takes that extreme position. However, it must be noted that it is the logical consequence of a purely functional interpretation of the Directive. 38. It is true, as we know, that in some areas the Court has adopted an openly ‘functional’ interpretation of the provisions of Community law. It has done so, in particular, in the context of the law on the award of public contracts, in connection with the concepts of a ‘contracting authority’ and a ‘body governed by public law’. (23) However, it should be noted in this connection, first, that on those occasions the functional interpretation was used to clarify the meaning of a specific concept, not to determine the general scope of the entire body of legislation on public contracts. Moreover, in the cases cited, the purpose of adopting the functional interpretation was essentially to avoid creating enormous gaps that would have provided wide scope for abuse: I refer, for example, to a case where the typical function of a body governed by public law was subsequently incorporated in the establishment of a company without affecting its status, (24) or where a public service (a broadcasting body, in this case) was not financed directly out of public resources but through fees payable by persons who possessed a receiver. (25) 39. I therefore consider that, on the contrary, the scope of the Directive should be identified by reference, first, to the objective requirements specified in the Directive itself. That does not, of course, mean that all ‘functional’ considerations are to be avoided. In fact, the objectives pursued by the Directive are clearly among the principal points of reference for the purposes of interpretation. (26) They cannot however constitute the only reference parameter, nor can they escape the legislature’s desire to define the scope of the measure. 40. I shall now proceed to examine the questions. In view of the logical connections between them, I shall start with the first, second, fifth and sixth questions. B – The first and second questions 41. By the first two questions, which can be taken together, the referring court asks the Court whether, in general, in order for there to be a public works contract within the meaning of Directive 2004/18, it is necessary that the object of the contract constitute property procured by the public authority, which is of immediate economic benefit to that authority. If the answer is in the affirmative, that is to say, if, in the words of the referring court, ‘the element of procurement is indispensable’, it seeks to ascertain whether or not that element can be discerned in the general pursuit of a public purpose alone, for example in a specific scheme for the urban development of municipal land. 1. The positions of the parties 42. The positions taken by the parties which submitted observations in the present proceedings cover a fairly wide spectrum. 43. On the one hand, the German Government, supported on this point by the Bundesanstalt and to a large extent by the Austrian Government, firmly maintains that the presence of the element of procurement is essential to a public works contract. Indeed, it affirms that the procurement need not necessarily be material and that an economic benefit to the public authority may suffice. In its view, however, the general pursuit of a public purpose, as in the present case, is not in itself sufficient. As to the Court’s judgment in Auroux and Others which, as we have seen, is a cornerstone of the position the national court is inclined to favour, the German Government observes that, in the case in which that decision was delivered, the question of immediate economic benefit to the public authority did not arise, so the Court did not consider it necessary to concentrate its attention on that point. However, in the German Government’s view, that should certainly not be interpreted as meaning that the economic benefit requirement is unnecessary: that requirement, although not explicitly stated, is implicit in the general system of the Directive. As to the arguments based on the need to ensure that the Directive is effective and to prevent the risk of abuse, according to the German Government, those considerations cannot justify applying the Directive covertly in areas other than those to which it normally applies. The need to prevent abuses in areas other than public contracts should be addressed by employing other legislative instruments, not Directive 2004/18. 44. The position adopted by the Commission, on the other hand, is diametrically opposed to that of the German Government. In particular, according to the Commission, the only decisive element for the purpose of the answer to be given to the referring court is the fact that the wording of the Directive does not require the public authority to procure anything from any other person in order for there to be a public works contract. In its view, therefore, to insist on the presence of the element of procurement would mean introducing a condition that is not required by the wording of the measure in question. 45. Lastly, the position taken by the Netherlands Government is midway between the two. In its view, although it is not essential – even in the light of the Court’s case-law – that the public authority procure the work, it must nevertheless have a direct economic interest in order for there to be a public works contract. In particular, that direct economic interest may, depending on the case, consist either in an economic benefit to the public authority or in what the Netherlands Government describes as a ‘risk of loss’ borne by that authority. In the Netherlands Government’s view, there is no such economic interest in the case submitted to the referring court for examination, or at least no interest that can be detected on the basis of the information supplied by the national court. 2. Assessment 46. In my view, the correct interpretation of Directive 2004/18 is midway between the two ‘extreme’ positions taken by the German Government and the Commission respectively. On the other hand, I do not fully share the Netherlands Government’s position, which seems to me to rely excessively on an economic element for the purpose of defining the concept of a public works contract. 47. It is important, in my view, for the purpose of replying to the question referred to the Court, to consider first the way in which the judgment in Auroux and Others should be interpreted. (27) As we know, in the case in which that decision was delivered, a municipal authority, without issuing an invitation to tender, had entrusted a second contracting authority with the execution of an urban development project. In that context, the second contracting authority, using funds provided in part by the municipality, was required to execute various building works, some of which were to be sold to third parties and some transferred to the municipal authority. The Court held that that transaction constituted a public works contract, regardless of whether or not it was anticipated that the first contracting authority, that is to say, the municipality, was or would become the owner of all or part of that work. (28) 48. It is true that, as the German Government observes, in that case there was no doubt that at least some of the works to be executed were of direct benefit to the municipal authority. However, it is also true that the somewhat broad wording that the Court chose to employ means, in my view, that there is no need to regard direct procurement for a public authority as a condition of a public works contract. 49. On the other hand, however, attention must be drawn to another feature of the facts at issue in that case: on that occasion, the municipal authority had paid a substantial sum of money and had been directly involved with the second contracting authority in securing the execution of the required works. 50. However necessary it may be to interpret the concept of a public works contract broadly in order to prevent possible abuses, the scope of that concept cannot, as I observed earlier, be extended indefinitely. (29) A ‘functional’ interpretation of this kind cannot completely disregard the limits to the scope of the Directive. While it is certainly true that the principal objective of the Directive on the award of public contracts is to encourage competition between undertakings and to open markets, it is also true that, in areas that are not within the scope of the Directive, that objective must be pursued by employing other appropriate legislative instruments, not by unduly extending the scope of the provisions on the award of public contracts. 51. It is therefore necessary to identify with some precision the limits to the scope of those provisions, which must represent absolute limits for the purpose of applying the provisions of the Directive. 52. In my view, it is possible from a full examination of the measure, bearing in mind the meaning that the Court has so far attributed to it, to deduce the fundamental principle that for a given activity to fall within the ambit of the law on public works contracts there must be a strong and direct link between the public authority and the work or works to be executed. That link normally follows from the fact that the work or works are executed on the public authority’s initiative. 53. Contrary to the view taken by the referring court, non-material and indirect benefit alone is not sufficient. Nor is the mere fact that the activity to be assessed is, generally, in the public interest sufficient. It should be noted that, in cases where a permit for the activity has to be issued by a public authority (which is normally the case with all building activities), the activity must obviously be in the public interest in order to obtain a permit, since the public interest is the reference parameter on which the public authorities grant permission. Unless the scope of the Directive is extended indefinitely, the general existence of a public interest which justifies permission to pursue the activity cannot therefore constitute the decisive criterion for determining which cases are to fall within it. In particular, it must be borne in mind that a building permit, that is to say, the typical expression of the authorities’ powers in the objective area of town planning, is usually confined to removing restrictions on a private initiative, not a public initiative. 54. I therefore take the view that by requiring that there be a direct link between the public authority and the work or works to be executed it is possible to reconcile the potential contradiction between the need to prevent abuses on the one hand and the need to avoid extending the scope of the Directive indefinitely on the other. In particular, that formula is completely consistent with the Court’s finding in Auroux and Others that the procurement of the works by the authority is not a necessary condition for the application of the provisions on public contracts. That judgment cannot however be used to justify an approach that dispenses altogether with a strong connection between the public authorities and the works to be executed: the very criterion of a direct link may, in my view, constitute an appropriate expression of that necessary connection. 55. That direct link is clearly discernible, first, in situations where the public authority immediately acquires ownership of the property to be produced. This is obviously the most typical case and most of the cases in which the Directive is applicable are covered by this reference model. There are also situations, similar to that typical situation, where the property to be produced is not procured by the public authority but is nevertheless of immediate economic benefit to that authority. This may be the case, for example, where the public authorities acquire a right in building property which, although not a right of ownership, nevertheless enables them to make use of the property, at least to some extent. 56. A second example of a direct link between the public authority and the work or works to be executed may, in my view, be identified in cases where the public authority employs public resources for the execution of the work and/or works. In most cases, these situations are clearly covered by the first example mentioned in the preceding point since, in the classic model of the use of public resources for the execution of work or works, that is to say, the contract model, the public authorities pay in order to acquire ownership of the property to be produced. Moreover, as we have seen, public resources may be used in the concession model too, though not to cover the whole value of the work or works to be executed. 57. However, the second example also covers situations where the public authority disburses money or other public resources but does not acquire ownership of the property to be produced. As the Court held in Auroux and Others, ownership is not an essential element. Moreover, it appears to be perfectly consistent with the requirements of equity and compliance with the fundamental principles of the Directive that, when the public authorities intend to employ public resources, the selection of the persons who are to receive those resources should be accompanied by the guarantees provided by the Directive. 58. It goes without saying that that example also includes situations where the public resources that are employed are not of a pecuniary nature: I am thinking, for example, of cases where, for the purpose of carrying out the work or works, public land is made available to the contractor or concessionaire free of charge or at a price below the market price. 59. A third and last example of a direct link between the public authority and the work or works to be carried out concerns cases where the work and/or works, whether or not they are examples of the first or second kind, are in any case the result of an initiative taken by the authority in question. This is the case, in particular, where the public authorities start, on their own initiative, a procedure which leads to the execution or realisation of the work or works. An example of this kind of situation is the situation assessed by the Court in Auroux and Others. (30) 60. However, the third and last example calls for clarification in an important respect. The activity pursued by the public authority in that context must extend beyond mere exercise of the general powers vested in that authority with respect to town planning. That is the only way to draw a clear line between activities which fall within the scope of the Directive and ‘normal’ town planning activities which, as such, do not. To be precise, the type of activity pursued by the public authority in specific individual cases must be assessed by the national court on a case-by-case basis. 61. Within that framework, the possibility cannot be ruled out that the realisation of a certain scheme for the development of land may be the subject of a contract that falls within the scope of the Directive. Such a possibility requires, however, that there be a direct link, in the sense indicated in the preceding points, between the public authority and the work or works to be carried out. The mere pursuit of the public interest through recourse to ordinary town planning powers is not sufficient cause to apply the Community rules on contracts and concessions. 62. In this case, it is naturally for the referring court to determine whether or not that direct link exists. I should point out however that, on the basis of the information supplied to the Court by the national court, it seems to me difficult to maintain that the direct link exists. On the one hand, it appears to be common ground that the public authority will not acquire any property in this case and will not obtain any immediate economic benefit. Nor does this appear to be an instance of any of the other situations in which a direct link could be detected, since the municipality of Wildeshausen did not take a specific initiative in connection with the execution of the works, confining itself on the contrary to assessing the various projects that were submitted to it, nor did it have to meet any expenses in connection with the construction work. No connections of this kind appear to be discernible in the case of the Bundesanstalt either. C – The fifth and sixth questions 63. The fifth and sixth questions relate only to the third ‘variant’ of the concept of a public works contract (31) and to some extent they restate, with reference to that variant, the problems raised in connection with the first two questions, particularly the second question. 64. To be precise, by the fifth question the referring court seeks to ascertain whether the ‘requirements specified by the public contracting authority’ referred to in the said variant consist simply in the fact that the public authority has the power to ensure that the works to be executed correspond to a public interest. 65. By the sixth question, on the other hand, the Court is asked to determine whether the said ‘requirements specified by the contracting authority’ may in fact consist in the power vested in the public authority to examine and approve building plans. 1. Arguments of the parties 66. With the sole and obvious exception of Helmut Müller, all the parties which submitted observations agree in principle that, in a situation such as that at issue in the main proceedings, the conditions required for there to be a public works contract within the meaning of the third variant are not met. 67. To be precise, the Commission and the Netherlands and French Governments stress the need to distinguish between an ‘active’ role, in which the public authorities take the initiative or exercise a decisive influence on the execution of the work, and a purely ‘passive’ role, in which they confine themselves to the functions of approving and monitoring projects promoted by private persons. This, it is suggested, does not constitute a public contract but represents at the very most a case of the public authorities exercising their normal functions of planning, approval, monitoring, and so forth. 68. The German Government, for its part, takes a position based on the view that the conditions which it considers to be essential in the case of both the first two variants of the concept of a public works contract, including in particular the requirement of an immediate economic benefit for the public authority, are also essential in the case of the third variant of that concept. 2. Assessment 69. The referring court’s decision, when framing the questions to be put to the Court, to separate the issues connected with the first two variants of the concept of a public works contract, which are the subject of the second question in particular, from the issues connected with the third variant, which are at the centre of the fifth and sixth questions, is based, in my view, on the wish to infer from the wording of the third variant that the scope of the Directive is very wide. 70. There is no doubt, as the Commission has emphasised in its observations, that the third variant of the concept of a public works contract was in fact designed to prevent avoidance of the application of the legislation by including in the concept cases of various kinds which could not be exhaustively identified in advance. 71. However, as I observed earlier, the wording of the measure cannot be used to extend its scope indefinitely. In particular, if the ‘requirements specified by the contracting authority’ were to include all the public authorities’ approval and planning functions in the area of urban development, the scope of the Directive would be unduly extended. 72. In fact, the considerations which I advanced earlier in connection with the first two questions also apply to the third variant. There is no reason to suppose, with reference to the third variant, that it is possible to dispense with the requirement, for the purposes of Directive 2004/18, of a direct link between the public authority and the works to be executed. D – Partial conclusions 73. Concluding my analysis of the first, second, fifth and sixth questions, I therefore suggest that the Court’s answer to these questions should be that, in order for there to be a public works contract or a public works concession within the meaning of Directive 2004/18, there must be a direct link between the public contracting authority and the work or works to be carried out. That direct link may consist, in particular, in the fact that the works are to be carried out for the public contracting authority or that they bring it an immediate economic benefit, or in the fact that the public contracting authority has taken the initiative for the execution of the works or bears at least some of the costs in that connection. E – The third and fourth questions 74. By the third and fourth questions, the Oberlandesgericht Düsseldorf essentially asks whether the concept of a public works contract necessarily implies that the contractor is obliged to carry out the work or works. The reason for these apparently singular questions is that, in the case at issue before the national court, it is common ground that the purchaser of the land was not under any obligation to build on it. 75. Almost all the parties which have submitted observations are generally agreed that the answer to these questions should be in the affirmative, and there appear to be no substantial differences between their respective positions. Only Helmut Müller, the plaintiff in the main proceedings, suggests for obvious reasons that, on the contrary, the Court should accept the referring court’s approach, according to which the obligation in question is not essential. 76. In my view, however, it is clear that the answer to the questions should be in the affirmative and that the obligation to carry out the work and/or works constitutes an essential element in order for there to be a public works contract or a public works concession. 77. This follows, first and foremost, from the provisions of Directive 2004/18 itself which, as we have seen, defines public works contracts as contracts for pecuniary interest. The concept is therefore based on the idea of an exchange of services between the contracting authority, which pays a price (or, alternatively, grants a right of use), and the contractor, who is required to execute a work or works. Thus, public contracts are clearly mutually binding. It would obviously be inconsistent with that characteristic to accept that, after being awarded a contract, a contractor could, without any repercussions, simply decide unilaterally not to carry out the specified work. Otherwise, it would mean that contractors were entitled to exercise discretion with regard to the requirements and needs of the contracting authority. 78. A different and conceptually separate question that is also raised by the referring court is whether or not, in order for there to be a public works contract, any obligation assumed by the contractor vis-à-vis the public authority must be legally enforceable. That is to say, the national court is asking whether, if the work is not done, the contracting authority can institute legal proceedings to oblige the contractor to do it. 79. If, by putting the question in this form, the referring court’s intention is to ask the Court whether, in connection with works contracts within the meaning of Directive 2004/18, the national legal order must necessarily provide mechanisms to oblige contractors to carry out the work or works specified in the contract, I consider that the answer should be in the negative, since it is impossible to find any indication to that effect in the Directive. 80. However, that does not mean that the contractor’s failure to fulfil obligations is irrelevant. It should not be forgotten that, as I pointed out earlier, a public works contract is to all intents and purposes a contract, that is to say, a legal document which, in all the variety of national legal systems, is by nature binding at all times and in all circumstances. As the German Government rightly points out in its observations, in order for there to be a public works contract, the contractor must be under a contractual obligation to provide the specified service. However, the consequences of any failure to fulfil obligations are a matter of national law: for example, in the event of a contractor failing to fulfil obligations, there is nothing to prevent the national law of a State from providing that the contract is to be terminated, that it is to be awarded to another contractor, and that the public authority is entitled simply to require the first contractor to compensate for any loss or damage. 81. I therefore propose that the Court’s answer to the third and fourth questions should be that the concepts of a public works contract and a public works concession within the meaning of Directive 2004/18 presuppose that the contractor is under a contractual obligation to the public authority to provide the agreed service. It is for national law to determine the consequences of any failure by the contractor to fulfil obligations. F – The seventh question 82. By the seventh question, the referring court ask whether there can be a public works concession within the meaning of Directive 2004/18 if the ‘concessionaire’ holds a right of ownership which by definition confers the right to use the property that is the object of the concession. (32) More generally, the question concerns the admissibility under Community law of a concession of unlimited duration. 1. The positions of the parties 83. The clearest position on the problem is that of the German Government, which generally rules out the possibility of the institution of concessions being compatible with the existence of a right of ownership. The reason for this is that a concession implies, by definition, that the grantor owns the rights which are transferred to the concessionaire. 84. The Netherlands and Austrian Governments, for their part, while not absolutely excluding the possibility of concessions being compatible with a right of ownership, consider that in the present case the public authority’s role is too limited for there to be a concession. For there to be a concession, the public authorities would, in their view, have at the very least to give the concessionaire precise instructions concerning the work and/or works to be carried out. 85. The Commission is the only party to take a more open position. In particular, on the ground that the characteristic element of a works concession is the fact that the concessionaire bears the economic risk connected with the execution of the work or works, the Commission considers that the economic risk in the present case is to be detected in the concessionaire’s uncertainty as to whether the public authority would accept the building plans, for which the land had to be purchased in advance. 2. Assessment 86. The seventh question is in some ways the most difficult, at least in one important respect. The problem of compatibility between public works concessions and the right of ownership has significant theoretical and practical implications. 87. There are various reasons why a public authority may opt for a public works concession. In some cases, the decision may be prompted by a desire to take advantage of specific experience available in the private sector or to construct building works more efficiently. However, there is no doubt that, in most cases, the choice of a concession meets financial requirements. By employing that arrangement, it is possible to carry out works of public interest without placing a burden on the public purse. (33) 88. By its very definition, a concession is a way of allowing a person to exploit property to which that person could not otherwise claim any right. 89. Directive 2004/18, for its part, simply speaks in the definition of public works concessions of ‘the right to exploit the work’ by way of consideration for the person responsible for constructing it. 90. However, in so far as the ‘right to exploit’ may be interpreted broadly, one possibility which I consider ought to be excluded, in view of the meaning and the general system of the measure in question, is the possibility of a public works concession in which the concessionaire has a right of ownership in the finished works. 91. In the first place, as the German Government in particular has observed, the fact that the Directive speaks of the concessionaire’s right to exploit the works would logically seem to imply that the concessionaire cannot have a more extensive right, such as the right of ownership, in the property. 92. Moreover, apart from being difficult to reconcile with the wording of the provision concerned, such a situation would deprive the public authorities of what seems to me to be one of the essential characteristics of public works concessions: the opportunity for the public authority eventually to take possession of the finished works, even if only to reassign the right to exploit them. 93. In other words, the problem arises not so much from the objective characteristics of the right of ownership in connection with the possibility of exploiting the property, as from the potentially unlimited duration of that right. Consequently, the exploitation entrusted to the concessionaire can never be granted for an unlimited period of time, regardless of the legal title by virtue of which it may be exercised. 94. It must also be borne in mind that, in the typical model of concessions under Community law, the crucial distinctive element which serves in particular to distinguish concessions from public contracts is that there is an economic risk to be borne by the concessionaire in the case of concessions whereas there is no such risk in the case of public contracts. (34) In the present case, in order to determine that there is a risk of this kind, the Commission has to attribute it to the fact that, after the persons concerned have purchased the land, the public authorities in the exercise of their town planning functions may refuse to grant building permits for the proposed works. However, the ‘chance’ of that happening appears to be not so much a risk associated with the economic exploitation of the works as the normal uncertainty attendant on any private person who depends on a decision to be taken by the public authority at its discretion. 95. Moreover, the economic risk that is a characteristic of the public works concessions covered by the Directive is clearly a direct consequence of the limited duration of concessions. A right of unlimited duration in the property to be constructed, on the contrary, would in principle always exclude the possibility of there being any economic risk because any difficulties that may occur in the exploitation of the property can always be remedied in the course of time. 96. Lastly, there is another argument for the generally limited duration of concessions within the ambit of Community law. It has already been observed several times in this Opinion that the fundamental objective of the Community rules on public contracts is, generally, to encourage competition to the greatest possible extent by abolishing all restrictions on fundamental freedoms. In that context, to admit the possibility of concessions of unlimited duration would be to preclude, to the detriment of competition and efficiency, the possibility of the works being exploited in the future by other persons employing more efficient methods based on more effective criteria. 97. These considerations have two consequences. On the one hand, concessions of unlimited duration cannot generally be granted. (35) On the other hand, a person cannot be granted a concession for property of which that person is already the owner, except where, under national law, the public authority acquires a right of ownership or a similar right in the property after a certain period of time. 98. In conclusion, I propose that the Court’s answer to the seventh question should be that a public works concession within the meaning of Directive 2004/18 can never provide for the concessionaire to have a right of unlimited duration in the property that is the object of the concession. G – The eighth and ninth questions 99. The eighth and ninth questions can also be taken together, in view of their subject-matter. By the eighth question, the referring court seeks to ascertain whether the rules contained in Directive 2004/18 apply from the time when a public authority, although it has not yet formally decided to award a public contract, sells land with the intention of subsequently awarding a contract in that connection. The ninth question, on the other hand, concerns the possibility of regarding the sale of the land and the subsequent award of the contract as one and the same from a legal point of view. 100. Both questions, as we see, concern the possibility of dealing with a possible abuse of rights for the purpose of evading the Community provisions on public contracts, by applying those provisions in a way that does not take into account the typical chronological order considered in the Directive. 101. It should be noted that, in view of the answers I propose to give to the preceding questions, particularly the seventh question, it is probably unnecessary to provide the referring court with an answer to the eighth and ninth questions, since the possibility that a public works contract or a public works concession within the meaning of Community law is compatible with the presumed contractor/concessionaire having a right of ownership in the property concerned must be excluded. However, for the sake of completeness and in the event of the Court not sharing my approach on the preceding questions, I shall offer some brief considerations on the matter. 102. Of the parties which submitted observations in the present case, only the Commission appeared to be willing to consider the approach favoured by the referring court. While noting that it is for the national courts to make the assessment in each specific case, the Commission admits that in a situation such as that at issue in the main proceedings Directive 2004/18 could in principle apply from the time when the authority decides to sell the land. All the other parties, albeit with various nuances, consider that the public authority’s intention alone is irrelevant. 103. As the referring court points out, the answer to the eighth and ninth questions must undoubtedly take the Court’s ruling in Mödling (36) into account. In that case, the Court was faced with a situation in which an Austrian municipality entrusted direct responsibility for the waste collection service to a company wholly controlled by the municipality and then proceeded, a few days later, to transfer 49% of the shares in that company to a private undertaking. The Court consequently held that where there is a clearly ‘artificial construction’, (37) the result of which is essentially to prejudice the effectiveness of the Directive on the award of contracts, the legal assessment of the case may be made ‘taking into account all those stages as well as their purpose and not on the basis of their strictly chronological order’. (38) 104. In my view, the Court’s ruling in Mödling is clearly based on two principal grounds. The first, explicitly stated, is the need to maintain the effectiveness of the Directive. (39) The second, implicit but basically the other side of the same coin, is the wish to deal with an abuse of rights. 105. The Court’s ruling in Mödling certainly applies generally and it can therefore be stated that, in order to avoid an abuse of rights and ensure the effectiveness of the Community rules on public contracts, two formally and chronologically separate acts may be regarded as contemporaneous or as constituting a single legal act. 106. The assessment is naturally a matter for the national court, which alone has all the necessary elements of fact and of law at its disposal. However, for obvious reasons connected with the need to ensure legal certainty, a number of strict conditions must be met. In particular, there must be a reasonably short space of time between the sale of the land and the award of the contract, and there must be convincing evidence that the authority already intended to award the contract when the land was sold. Except in cases of major abuse where the intention to evade the rules is quite clear from the outset, only ex post facto assessment can take due account of all these elements. 107. I therefore propose that, if necessary, the answer to the eighth and ninth questions should be that, in cases where there is clear evidence of an intention to evade the Community provisions on public contracts and concessions, the legal assessment may regard the two formally and chronologically separate acts of a sale of land and the award of a contract or a concession in that connection as constituting a single legal act. It is for the national court to determine, on the basis of all the circumstances in the case, whether there was an intention to evade the rules. V – Conclusion 108. I therefore propose that the Court give the following answers to the questions submitted by the Oberlandesgericht Düsseldorf: In order for there to be a public works contract or a public works concession within the meaning of Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts, there must be a direct link between the public contracting authority and the work or works to be carried out. That direct link may consist, in particular, in the fact that the works are to be carried out for the public contracting authority or that they bring it an immediate economic benefit, or in the fact that the public contracting authority has taken the initiative for the execution of the works or bears at least some of the costs in that connection. The concepts of a public works contract and a public works concession within the meaning of Directive 2004/18 presuppose that the contractor is under a contractual obligation to the public authority to provide the agreed service. It is for national law to determine the consequences of any failure by the contractor to fulfil obligations. A public works concession within the meaning of Directive 2004/18 can never provide for the concessionaire to have a right of unlimited duration in the property that is the object of the concession. In cases where there is clear evidence of an intention to evade the Community provisions on public contracts and concessions, the legal assessment may regard the two formally and chronologically separate acts of a sale of land and the award of a contract or a concession in that connection as constituting a single legal act. It is for the national court to determine, on the basis of all the circumstances in the case, whether there was an intention to evade the rules. 1 – Original language: Italian. 2 – Clearly, a form of State aid may exist where public property is sold at a price below the market value. See, in this connection, the Commission communication on State aid elements in sales of land and buildings by public authorities (OJ 1997 C 209, p. 3). 3 – Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts (OJ 2004 L 134, p. 114). 4 – Case C‑399/98 [2001] ECR I‑5409. 5 – Case C‑264/03 [2005] ECR I‑8831. 6 – Case C‑220/05 [2007] ECR I‑385. 7 – The German legislation was altered, after the order for reference was made, by the Law of 20 April 2009 modernising the Law on contracts (Gesetz zur Modernisierung des Vergaberechts, BGBl. I, p. 790), which amended Paragraph 99 of the GWB (the Law on protecting competition), specifying inter alia that, in the case referred to in the third variant of the definition of a public works contract, the contracting authority must obtain a direct economic benefit. See also footnote 35 below. 8 – However, it is not entirely clear which body awarded the concession. The Commission itself, although inclined to accept the referring court’s position on this point, was obliged to recognise at the hearing that both the Bundesanstalt and the municipality of Wildeshausen exhibited some of the typical characteristics associated with that role but that it was impossible to recognise either as bearing the main responsibility in this connection. 9 – On the basis of the order for reference, there is no doubt that the specified thresholds for the application of the Directive are amply exceeded in the present case. In fact, since the value of the land does not in itself exceed the thresholds, clearly the national court’s arguments are to some extent hypothetical. On the other hand, in the light of the settled case-law, according to which it is for the national court to determine whether the questions are relevant for the purpose of ruling on the dispute, I consider that in the present case the Court should reply to the questions referred by the Oberlandesgericht Düsseldorf. See in this connection, inter alia, Case C‑415/93 Bosman [1995] ECR I‑4921, paragraph 61; Case C‑355/97 Beck and Bergdorf [1999] ECR I‑4977, paragraph 22; Joined Cases C‑222/05 to C‑225/05 van der Weerd and Others [2007] ECR I‑4233, paragraph 22; and Case C‑500/06 Corporación Dermoestética [2008] ECR I‑5785, paragraph 23. 10 – Case C‑29/04 [2005] ECR I‑9705. 11 – Not in all, however: for example, there is no equivalent for the second variant in the Portuguese version. 12 – German: ‘von Bauvorhaben’; French: ‘de travaux’; Spanish: ‘de obras’; Dutch: ‘van werken’; Portuguese: ‘de trabalhos’; Greek: ‘εργασιων’; Italian: ‘di lavori’. 13 – German: ‘eines Bauwerks’; French: ‘d’un ouvrage’; Spanish: ‘de una obra’; Dutch: ‘van een werk’; Greek: ‘ενός έργου’; Italian: ‘di un’opera’. 14 – German: ‘einer Bauleistung’; French: ‘d’un ouvrage’; Spanish: ‘de una obra’; Dutch: ‘van een werk’; Portuguese: ‘de uma obra’; Greek: ‘ενός έργου’; Italian: ‘di un’opera’. 15 – German: ‘Bauwerk’; French: ‘ouvrage’; Spanish: ‘obra’; Dutch: ‘werk’; Portuguese: ‘obra’; Greek: ‘έργο’; Italian: ‘opera’. 16 – I note however that, as the Austrian Government in particular pointed out at the hearing, the additional detail contained in the German text, although divergent, in fact simply makes it ‘more specific’ than the other language versions. In view of the structure of the provision in question, it is hardly possible, even with reference to the other language versions, to identify a case falling within the third variant in which the works are not carried out by a ‘third party’. In any event, it should be noted that it is settled case-law that the wording used in one language version of a Community provision cannot serve as the sole basis for the interpretation of that provision or be made to override the other language versions in that regard. See in this connection, inter alia, Case C‑372/88 Cricket St Thomas [1990] ECR I‑1345, paragraph 18, and Case C‑455/05 Velvet & Steel Immobilien [2007] ECR I‑3225, paragraph 19. 17 – That specific feature of the German version is based on Council Directive 89/440/EEC of 18 July 1989 amending Directive 71/305/EEC concerning coordination of the procedures for the award of public works contracts (OJ 1989 L 210, p. 1). Directive 89/440 introduced the current ‘threefold’ definition of public works contracts into the Community legal order for the first time. 18 – See Auroux and Others, cited in footnote 6 above, paragraph 40. 19 – See Article 16 of the Directive. 20 – For example, in addition to paying a sum in cash, the public authority may exempt a person from payment of certain taxes (see Ordine degli Architetti and Others, cited in footnote 4 above, paragraphs 76 to 86). 21 – Case C‑44/96 Mannesmann Anlagenbau Austria and Others [1998] ECR I‑73, paragraph 32. See also Case C‑126/03 Commission v Germany [2004] ECR I‑11197, paragraph 18, and Case C‑26/03 Stadt Halle and RPL Lochau [2005] ECR I‑1, paragraph 26. 22 – See, in particular, recital 2 in the preamble to Directive 2004/18 and, earlier, the 2nd and 10th recitals in the preamble to Council Directive 93/37/EEC of 14 June 1993 concerning the coordination of procedures for the award of public works contracts (OJ 1993 L 199, p. 54), now repealed. See also, on this point, Ordine degli Architetti and Others, cited in footnote 4 above, paragraph 52, and Case C‑470/99 Universale-Bau and Others [2002] ECR I‑11617, paragraph 51 and the case-law cited therein. 23 – See, for example, Universale-Bau and Others, cited in footnote 22 above, paragraph 53; Case C‑337/06 Bayerischer Rundfunk and Others [2007] ECR I‑11173, paragraph 37; and Case C‑393/06 Ing. Aigner [2008] ECR I‑2339, paragraph 37. 24 – Universale-Bau and Others, cited in footnote 22 above. 25 – Bayerischer Rundfunk and Others, cited in footnote 23 above. See also, in connection with a similar situation, Case C‑300/07 Hans & Christophorus Oymanns [2009] ECR I‑0000, paragraph 57. 26 – See, for example, Case 292/82 Merck [1983] ECR 3781, paragraph 12; Case C‑223/98 Adidas [1999] ECR I‑7081, paragraph 23; and Case C‑17/03 VEMW and Others [2005] ECR I‑4983, paragraph 41. 27 – Cited in footnote 6 above. 28 – Ibidem, paragraph 47. 29 – See point 35 et seq. above. 30 – Cited in footnote 6 above, paragraph 42. 31 – See point 20 above. 32 – To be precise, in the formulation of the question, the referring court actually speaks of ownership of the land on which the works are to be carried out. However, as the court observes in the grounds for the reference, under German law, the right to use a building is a direct consequence of the right of ownership with respect to the land on which the building is erected. Thus, the real problem underlying this question is precisely the problem of the relationship between a concession and the right of ownership. 33 – On this ratio legis, see the Commission interpretative communication on concessions under Community law (OJ 2000 C 121, p. 2, paragraph 1.2) and the more recent communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on public-private partnerships and Community law on public procurement and concessions of 15 November 2005 (COM(2005) 569 final, paragraph 1). 34 – See Case C‑458/03 Parking Brixen [2005] ECR I‑8585, paragraph 40, and the judgment of 13 November 2008 in Case C‑437/07 Commission v Italy, paragraphs 29 to 31. The risk need not necessarily be very great, as there are activities in which the risk is intrinsically limited: but it must represent all or at least a significant share of the risk to which the public authority would be exposed if it were to carry out the activities directly (Case C‑206/08 Eurawasser [2009] ECR I‑0000, paragraphs 69 to 77). 35 – In my view, the new German law cited in footnote 7 above, which introduced inter alia a definition of public works concessions explicitly stating that the rights conferred on the concessionaire are of limited duration, is therefore correct and consistent with Community law. 36 – Cited in footnote 10 above. 37 – Ibidem, paragraph 40. 38 – Ibidem, paragraph 41. 39 – Ibidem, paragraph 42.

ORIGINAL JURISDICTION Petition No. 9 of 1957. Petition under Article 32 of the Constitution of India for enforcement of fundamental rights. D. Sharma, for the petitioner. K. Daphtary, Solicitar-General of India R. H. Dhebar and T. M. Sen, for the respondents. 1959. December 2. The Judgment of the Court was delivered by KAPUR J.-The petitioner was a wholesale and retail dealer in tobacco at Banaras and also owned a private bonded warehouse for tobacco and held licences for the same. In this petition he challenges the legality of certain orders passed by the Collector of Excise, Allahabad, which on appeal were companyfirmed and revisions against those orders were dismissed by the Central Government. The petitioners warehouse was checked by Inspector Das who on finding some irregularity sealed the warehouse on December 8, 1953, and subsequently took possession of all the registers and stock cards. On December22,1953, 11 1/2 bags of kandi i.e. stems of tobacco . which were found in the petitioners warehouse, were removed from the warehouse by the Inspector and stored in some other place. Against those orders the petitioner made certain representations to the Collector and some companyrespondence passed. On June 15, 1954, the Collector, Central Excise, issued a numberice to the petitioner to show cause why a penalty should number be imposed on him for the companytravention of Rules 151 C and 226 of the Central Excise Rules, 1944, and why the bags of kandi should number be companyfiscatted. The petitioner showed cause, the Collector heard the petitioner who had also filed written arguments. Finding the charges against the petitioner proved, the Collector ordered companyfiscation of the bags of kandi, imposed a fine of Rs. 150 and the duty leviable thereon in lieu of companyfiscation. He further imposed a penalty of Rs. 2,000 under rr. 151 C and 226 of the Central Excise Rules. The appeal taken to the Central Board of Revenue was dismissed as the petitioner refused to deposit the penalty of Rs. 2,000 and a revision to the Central Board of Revenue was also dismissed for the same reason. This is one of the orders which is challenged by the petitioner. On July 29, 1954, the Collector called upon the petitioner to produce another surety as the previous surety Mohammad Satar was number prepared to act as such. The petitioner states that he thereupon furnished two bonds in Form B-4 and B-5 for Rs. 7,000 and Rs. 10,000 respectively. As there was a sum of Rs. 15, 263-8-0 due from him the petitioner as Excise duty, 373 Mds. of tobaco were attached by the Excise Department and sold by auction for Rs. 6,878-5-0 thus leaving a balance of Rs. 8,385-3-0. As the Department made demands for the recovery of this balance of duty the petitioner filed a civil suit in the companyrt of the First Additional Civil Judge, Banaras, who issued an ad-interim injunction against the Department restraining it to recover the amount. On January 25, 1956, the Superintendent of Excise called upon the petitioner to deposit a cash security of Rs. 10,000 otherwise his licence would be treated as cancelled under r. 181 1 of the Central Excise Rules. The petitioner demurred to this and as the outstanding amount of excise duty was number paid the Deputy Collector ordered on February 13, 1956, that till the deposit was made the petitioners licence shall remain inoperative. The petitioner took an appeal against this order to the Central Board of Revenue which was dissmissed. The petitioner also filed a petition under Art. 226 in the Punjab High Court which was also dismissed and a revision against the order of the Deputy Collector making the licence inoperative was dismissed by the Central Board of Revenue on December 20, 1956. This is the second order which is challenged. The present petition was filed on January 21, 1957, in which the petitioner prayed 1 that the provisions of ss. 6, 8, 9 and 10 of the Central Excises and Salt Act, 1944, Act 1 of 1944 which for the sake of companyvenience will hereinafter be termed the Act and the rr. 140 to 148, 150, 171 to 181, 215 and 226 of the Central Excise Rules made under the Act be declared ultra vires and to issue a writ of certiorari or any other writ to quash the orders passed by the Collector as companyfirmed on appeal and revision by the Central Board of Revenue and the Central Government respectively. These orders have already been referred to. 2 For a writ of mandamus directing the respondents number to interfere with the fundamental right of the petitioner to carry on trade in tobacco or to store tobacco 3 directing the respondents to return the goods companyfiscated by them. For the petitioner three points were raised 1 that ss. 6 and 8 of the Act and the Rules made thereunder were beyond the legislative companypetence of the Central legislature under the Constitution Act of 1935 2 even if they were within the legislative companypetence they impose excessive and unreasonable restraint on the fundamental right of the petitioner to trade in tobacco and they were number in the interest of the general public and therefore were number saved by Art. 19 6 3 orders passed were ultra vires the Act and the Rules made thereunder. Before we proceed to companysider the arguments raised on behalf of the petitioner, it is necessary to examine the scheme of the Act. Its scope as given in the preamble isto companysolidate and amend the law relating to central-duties of excise on goods manufactured or produced in British India and to salt. Section-2 of the Act gives the definitions. Chapter 11 provides for levy and companylection of duty. The two main sections, i.e., 6 and 8 fall under this Chapter. Section 6 provides for certain operations to be subject to licences and when quoted it runs as follows S. 6 The Central Government may, by numberification in the official Gazette, provide that, from such date as may be specified in the numberification, numberperson shall, except under the authority and in accordance with the terms and companyditions of a licence granted under this Act engage in a the production or manufacture or any process of the production or manufacture of any specified excisable goods or of saltpetre or of any specified companyponent parts or ingredients of such goods or of specified companytainers of such goods, or b the wholesale purchase or sale whether on his own account or as a broker or companymission agent or the storage of any excisable goods specified in this behalf, in part A of the Second Schedule. Section 8 imposes restriction on possession of excisable goods. It is as follows From such date as may be specified in this behalf by the Central Government by numberification in the official Gazette, numberperson shall, except as provided by rules made under this Act, have in his possession any excisable goods specified in this behalf in Part B of the Second Schedule in excess of such quantity as may be prescribed for the purpose of this section as the maximum amount of such goods or of any variety of such goods which may be possessed at any one-time by such a person. Section 9 deals with offences and penalties. Section 10 gives to the companyrt the power to order forfeiture. Section 11 makes provision for recovery of duties due to Government. Chapter VI deals with adjudication of companyfiscation and penalties specifying the powers of the Collector of Central Excise and appeals against such orders and revision to the Central Government. Chapter VII companytains supplementary provisions s. 37 therein empowers the Central Government to make rules and in the Schedule the rates or duties leviable on each class of goods are given and tobacco falls in item 9. The question is, as to whether the Act falls within item No. 45 of List 1 read with s. 100 of the Government of India Act. It was companytended on behalf of the petitioner that even though the imposition of excise duties may fall under item No. 45 of List 1 of the Constitution Act it is a serious encroachment on the territory companyered by items 27 and 29 of List 11 of that Act. The argument raised was that although the Act imposes duty of excise within item 45 of List 1 and, that was one of its objects, it also regulates trade or companymerce and therefore falls within the above-mentioned items of List 11 and would, to that extent, be ultra vires. It was companytended that the pith and substance of a statute may companyer two fields and in support re -lied upon the following observation of Mahajan, C.J., in Cooverjee B. Bharucha v. The Excise Commissioner and The Chief Commissioner Ajmer Ors. 1 The pith and substance of the regulation is that it raises excise revenue by imposing duties on liquor and intoxicating drugs by different methods and it also regulates the import, export, transport, manufacture, sale and possession of intoxicating liquors. But that case did number raise the question of legislative companypetence the point for decision was whether the statute there impugned, infringed the right to carry on trade in liquor and also whether the auction money was a fee or a tax. It was in that companynection that the observation above quoted was made. It was also argued that if the purpose and object of the Act is levying of duty of excise then it companyld number provide for regulation of trade and reliance was 1 1954 S.C.R. 873, 877, 882. placed on King v. Barger 1 where by a majority it was held that the question in substance was number an exercise of the power of taxation and if it was, the statute would be invalid as being in companytravention of S. 55 of the Constitution Act of Australia. The minority, however, was of the opinion that the reserved powers of the States are those which remain after full effect was given to the powers granted to the Commonwealth. In support of the argument that the Act did number only relate to levying of excise duties but also regulated trade, reference was made to rr. 174 to 182 of the Central Excise Rules which relate to licensing. Particular reliance was placed on r. 176 2 imposing a licence fee which in the case of tobacco is as much as Rs 100. Reference was also made to r. 181 which deals with revocation and suspension of licences and empowers the Licensing Department to revoke or suspend a licence under certain circumstances. The rule is as follows- R. 181 1 Any licence granted under. these Rules may be revoked or suspended by the licensing authority if the holder, or any person in his employ, is found to have companymitted a breach of the companyditions thereof, or any of the provisions of the Act or these Rules or has been companyvicted of an offence under s. 161, read with s. 109 or with s. 116 of the Indian Penal Code . 2 3 Counsel then drew our attention to r. 182 which relates to matches Only but which places limitation on the issue of licences for the manufacture of matches. The next set of Rules which were relied upon were rr. 140 to 148 in regard to warehousing and then our attention was drawn to rr. 210 to 215 relating to penalties, companyfiscation and appeals. In regard to the latter set of Rules it was submitted that they laid down numberprocedure and did number make any provision for issuing of numberice to licensees or hearing them or their witnesses before imposing penalties. From all this 1 1908 6 C.L.R. 41. the companyclusion which companynsel wished us to draw was that the Act read with Rules shows that the pith and substance is number merely levying an excise duty but the possession of and trade in tobacco was also regulated and therefore the subject matter of the Act did number fall exclusively in the legislative field companyered by List 1 but it trenched upon the provincial field of legislation and must be held to fall under List 11 also. In every case where the legislative companypetence of a legislature in regard to a particular enactment is challenged with reference to the entries in the various lists it is necessary to examine the pith and substance of the Act and if the matter companyes substantially within an item in the Central List it is number deemed to companye within an entry in the Provincial list even though the classes of subjects looked at singly overlap in many respects. It is within the companypetence of the Central legislature to provide for matters which may otherwise fall within the companypetence of the Provincial legislature if they are necessarily incidental to effective legislation by the Central legislature on a subject of legislation expressly within its power. Attorney-General for Canada v. Attorney-General, for British Columbia 1 Attorney-General for Canada v. Attorney-General for Quebec 2 . In Gallagher v. Lynn 3 it was held that if the true nature and character of an Act is to protect the health of the inhabitants then even though it may incidentally affect trade, it is number enacted in respect of trade. Moreover it is a fundamental principle of companystitutional law that everything necessary to the exercise, of a power is included in the grant of the power. Edward Mills Co. Ltd. v. The State of Ajmer 4 . The item which falls for companysideration in the present case is No. 45 of List 1 which is as follows Duties of excise on tobacco and other good, manufactured or produced in India except a alcoholic liquors for human companysumption b opium, Indian hemp and other narcotic drugs and narcotics number-narcotic drugs 1 1930 A.C. 111, 118. 2 1947 A.C. 33, 43. 3 1937 A.C. 863. 4 1955 1 S.C.R. 735, 749. c medical and toilet preparations companytaining alcohol, or any substance included in sub-paragraph b of this entry. The other items which have to be companysidered are items Nos. 27, 29 and 31 of List 11 which are as follows - Item 27. Trade and companymerce within the Province markets and fairs money lending and money lenders. Item 29. Production, supply and distribution of goods development of industries, subject to the provisions in List 1 with respect to the development of certain industries under Federal companytrol. The question for decision is whether the Act in question is a law with respect to the matters enumerated in item 45 of List 1 or to the matters enumerated in item 27 and 29 of List 11. In other words does it, in pith and substance, relate to duties of excise on tobacco as companytained in item 45 or it falls within the boundaries of items 27 and 29 of the provincial list and if it falls within the former, is its validity affected by its incidental trespass into the territory reserved for provincial legislation. In the interpretation of the scope of these items the widest possible amplitude must be given to the words used and each general word must be held to extend to ancillary or subsidiary matters which can fairly be said to be companyprehended in it. United Provinces v.Mst. Atiqa Begum Ors. 1 Navinchandra Mafatlal v.The Commissioner of Incometax 2 The State of Madras v. Gannon Dunkerley Co. 5 . In Subramanyan Chettiar v. Muthuswamy Goundan 4 Sir Maurice Gwyer, C.J., dealing with items in the Lists observed It must inevitably happen from time to time that legislation, though purporting to deal with a subject in one list, touches also on a subject in another list, and the different provisions of the enactment may be so closely intertwined that blind adherence to a strictly verbal interpretation would result in a large number of statutes being declared invalid because 1 1940 F.C.R. 111. 2 1955 1 S.C.R. 829, 833, 836. 3 1959 S.C.R. 379, 391, 393. 4 1940 F.C.R. 188, 201. the Legislature enacting them may appear to have legislated in a forbidden sphere. We agree as did the Privy Council in Prafulla Kumar Mukherjee and Ors. v. Bank of Commerce Ltd. 1 and this Court did in State of Rajasihan v. G. Chawla 2 that this passage companyrectly describes the ground on which the rule is founded and in our opinion it is a companyrect method of interpreting the words of the various items in the Lists read with s. 100 of the Constitution Act. Hidayatullah, J., in State of Rajasthan v. G. Chawla 2 said at p. 546 - It is equally well-settled that the power to legislate on a topic of legislation carries with it the power to legislate on an ancillary matter which can be said to be reasonably included in the power given. We number proceed to determine the true nature and character or the pith and substance of the Act. It is a fiscal measure to levy and realise duty on tobacco. The method of realising duty must be left to the wisdom of the legislature taking each individual trade and its peculiarities and difficulties which arise in that matter. Various provisions of the Act and the Rules show that the authorities are on the track of the movement of tobacco from the time it is grown to the time it is manufactured and sold in the market and the various provisions of the Act and the Rules made thereunder have been companysidered necessary for effectuating the purpose of the Act. Rules made under the Act also are directed for achieving the same objective. Chapter IV in the Rules deals with unmanufactured products. Rule 15 therein requires the growers to make a declaration in respect of all land upon which tobacco is to be grown. Rule 17 which requires curing to be done on the declared and approved premises is also a step in the same direction. Under Rule 18 a security can be demanded from a grower and curer, Rules 19, 20 and 21 deal with liability to duty, exemption from duty of certain kinds of tobacco for personal use, books to be kept by growers and curers and the 1 1947 L.R. 74 I.A. 23, 41. A.I.R. 1959 S.C. 544. manner of keeping the entries in the books.Rule 31 deals with transport of tobacco from thegrower to the premises of a curer and from the premises of a curer to a public or a private warehouse. Chapter V of the rules deals with manufactured tobacco and how that is to be kept in warehouses. Similarly at every stage whether the tobacco is in unmanufactured stage or manufactured stage provisions have been made in the Rules to keep a watch over the movement of tobacco. All these Rules show that the object of the Act is to make companylection of excise duties on tobacco effective and the levying of fees is only a companylection of money for the upkeep of supervision over the movement of tobacco for the purpose of excise duty. The system of licensing of bonded warehouses was always companysidered to be a part of effective companytrol of evasion of tax in England and Parliament must be deemed to have companytemplated the inclusion of this power. Besides, the levying of licence fees is itself a form of taxation. Cooverji B. Bharucha v. The Excise Commissioner of Ajmer 1 and would in this case be within the legislative companypetence of the Central legislature whose powers of taxation should number be restricted so as to exclude the raising of revenue by imposing licensing fees. In the State of Madras v. Gannon Dunkerley Co. 2 the following passage from the Broken Hill South Ltd. v. Commmissioner of Taxation N.S. W. 3 In any investigation of the companystitutional powers of these great Dominion legislatures, it is number proper that a Court should deny to such a legislature the right of solving taxation problems unfettered by a priori legal categories which often derive from the exercise of legislative power in the same companystitutional writ was quoted with approval by Venkatarama Aiyar, J., and if it is only a fee, its companystitutionality cannot be challenged because of item 69 relating to fees on matters in List 1. Counsel for the petitioner relied upon r. 181. This rule may have an indirect effect of depriving an owner of a bonded warehouse from the 1 1954 S.C.R. 873, 877, 822. 2 1959 S.C.R. 379, 391, 393. 3 1936-37 56 C.L.R. 337, 379. privilege of keeping such a warehouse but that does number mean that the object and purpose of the Act is number imposition, companylection and realisation of duty of excise. This rule is a means of making the realisation of duty effective and necessarily incidental to effectual legislation for companylection of duties. Attorney-General for Canada v. Attorney-General for British Columbia 1 . Looking at the scheme of the Act, its object and purpose, its true nature and character and the pith and substance the companyclusion is inevitable that the Act was within the legislative companypetence of the Central legislature and although there may be certain matters otherwise within the legislative companypetence of the provincial legislature they are necessarily incidental to effective legislation by the Central legislature. The various provisions of the Act and the Rules made thereunder were, in our opinion, essentially companynected with the levying companylection of excise duty and in its true nature and character the Act remains one that falls under item 45 of List 1 and the incidental trenching upon the provincial field of items 27 or 29 would number affect its companystitutionality because the extent of invasion of the provincial field may be a circumstance to determine the true pith and substance but once that question is determined the Act, in our opinion, would fall on the side of Central field and number that of the provincial field. Prafulla Kumar Mukherjee v. Bank of Commerce Ltd. . It was then companytended that the restrictions imposed were unreasonable and therefore number saved by Art. 19 6 . The basis of this argument was that there is numberprocedure laid down in the provisions for levying penalties number any provision made for numberice or the taking of evidence and power of companyfiscation was given to persons who companyld number be termed unbiased. If the tribunal is to act judicially it must companyfirm to the principles of natural justice of audi alteram partem and there is numberdispute that in the instant case there was numberbreach of this rule. Not only this, there is a right of appeal and a revision is also provided and both these remedies the petitioner availed himself of. The 1 1930 A.C. 111, 118. 2 1947 L.R. 74 I.A. 23, 41, argument of unreasonable restriction because of this ground must also fail. Lastly, it was companytended that the two main orders passed were ultra vires because in the first case the petitioner was asked to deposit the penalty before his appeal or revision companyld be heard and reliance was placed on Himmatlal Harilal Mehta v. The State of Madhya Pradesh 1 . But it is difficult to see how that case applies. There was numberillegal imposition on the petitioner number is it shown that anything was threatened to be realised without the authority of law. In regard to the second order Mohammad Satar had ceased to be the petitioners surety and therefore in terms of the proviso to r. 140 of the Excise Rules which was as follows - Provided that in the event of death, insolvency or inefficiency of the surety or where the amount of the bond is inadequate, the companylector may in his discretion demand a fresh bond and may, if the security furnished for a bond is number adequate, demand additional security. The Collector was acting within his powers if he asked for the deposit of cash security of Rs. 10,000.

SECOND SECTION CASE OF TÜRK v. TURKEY (Application no. 22744/07) JUDGMENT STRASBOURG 5 September 2017 FINAL 05/12/2017 This judgment has become final under Article 44 § 2 of the Convention. It may be subject to editorial revision. In the case of Türk v. Turkey, The European Court of Human Rights (Second Section), sitting as a Chamber composed of: Robert Spano, President,Julia Laffranque,Ledi Bianku,Işıl Karakaş,Paul Lemmens,Valeriu Griţco,Jon Fridrik Kjølbro, judges,and Stanley Naismith, Section Registrar, Having deliberated in private on 4 July 2017, Delivers the following judgment, which was adopted on that date: PROCEDURE 1. The case originated in an application (no. 22744/07) against the Republic of Turkey lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Turkish national, Mr Mehmet Ali Türk (“the applicant”), on 18 May 2007. 2. The applicant was represented by Mr A. Bozan, a lawyer practising in Mersin. The Turkish Government (“the Government”) were represented by their Agent. 3. The applicant alleged, in particular, that he had not had a fair trial on account of the fact that he had been tricked by the police into making incriminating statements without having been advised of his basic rights and in the absence of legal assistance. He also complained that he had not had an opportunity at any stage of the proceedings to question, examine and confront M.N.A., whose statements had been used, to a decisive extent, to convict him. 4. On 4 January 2012 the application was communicated to the Government. THE FACTS I. THE CIRCUMSTANCES OF THE CASE 5. The applicant was born in 1972 and is currently serving a life sentence in Antalya. 6. On an unspecified date the applicant went to the Mersin Security Directorate headquarters to complete certain procedures regarding the sale of his car and found out that a warrant for his arrest had been issued by the Antalya Security Directorate. 7. Subsequently, at approximately 1 p.m. on 16 February 2004 the applicant went to the Antalya Security Directorate. It appears that at some point he confessed to his involvement in the shooting of a certain K.G. and as a result, at 4 p.m. the same day he took part in a photo identification procedure. According to a report drawn up by the police and signed by the applicant, the applicant turned himself in and confessed to his involvement in the shooting of K.G., which had taken place in 1992, and identified S.K., M.N.A. and A.Y. as his accomplices. There was no record indicating that the applicant had been advised of his rights, including his right to legal assistance and his right to remain silent, under the Code of Criminal Procedure in force at the material time. 8. At around 5.30 p.m. the same day, the applicant participated in a reconstruction of the events (yer gösterme). According to the record drafted by police officers and signed by the applicant, the latter described in detail what steps he had taken before the shooting, how he had shot K.G. in 1992 in Antalya, and how he had left the crime scene. There was no record indicating that the applicant had been advised of his rights, including his right to legal assistance and to remain silent, under the Code of Criminal Procedure in force at the material time. 9. The police started questioning the applicant at around 6.30 p.m. the same day. According to the applicant, he was shown an arrest warrant, dated 19 November 1992, in which the offence was indicated as “breaching Law no. 6136 (the Firearms Act)” and the deadline stipulated in the statute of limitations was “2 September 1997”. In this connection, the police officers told him that the offence for which he was being sought was illegal possession of firearms and explosives contrary to Law no. 6136. They said that any statement given by him was merely a “formality”, since the time-limit for prosecution of that offence had already expired in 1997. The applicant therefore agreed to give a statement. His statements were transcribed on a pre-printed form. According to this form, he had been reminded of his rights to remain silent and to be represented by a lawyer. It appears that the applicant had refused legal assistance, since the first page of the record includes a pre-printed phrase stating “No lawyer is requested” with the applicant’s signature underneath. He was thus questioned in the absence of a lawyer. 10. The applicant was accordingly questioned at the Anti-Terrorism Department of the Antalya Security Directorate about his involvement in the PKK (the Workers’ Party of Kurdistan, an illegal organisation) and the wounding of a certain K.G. in 1992. In his nine-page statement, the applicant admitted to his involvement in the PKK and explained in detail that he had shot K.G. upon the instructions of the illegal organisation. 11. On 17 February 2004 the applicant was questioned again by the Antalya public prosecutor and the investigating judge. According to the statement drawn up during the questioning by the public prosecutor, the applicant had been advised of his rights again. However, the statement he gave was similar to his police statement. 12. Before the investigating judge, the applicant was advised of his rights again. He stated that he did not want the assistance of a lawyer and repeated the content of his police statement. The investigating judge first ordered the applicant’s release; however, following an objection by the prosecutor, he ordered that the applicant be placed in detention pending trial. 13. On 10 March 2004 the public prosecutor at the Izmir State Security Court filed an indictment with that court and accused the applicant of carrying out activities for the purposes of bringing about the secession of part of the national territory, an offence under Article 125 of the Criminal Code. In his indictment, the public prosecutor also indicated that the applicant had turned himself in. 14. During the hearings before the Izmir State Security Court the applicant was represented by a lawyer. At a hearing held on 4 May 2004, the applicant gave evidence in the presence of his lawyer and retracted the statements he had made previously. He maintained, in particular, that he had been tricked by the police into giving incriminating statements by being shown a paper in which the time-limit for prosecution of the offence he was accused of committing had expired. He denied his involvement in the shooting and rejected the accusations against him. The applicant further submitted that he did not know the co-accused, A.Y., S.K. or M.N.A. 15. During the same hearing, the trial court deemed it necessary to hear from people who had been tried for the same incident in a previous case, no. 1996/9, namely M.N.A., S.K. and B.Ç., with a view to verifying the defence submissions of the applicant and his co-accused, A.Y. In this connection, the trial court ordered that the necessary steps be taken to find out in which prisons M.N.A., S.K. and B.Ç. had been held and ordered an enquiry as to their addresses in the event that they had been released from prison. The trial court further ordered that a confrontation take place once the witnesses had been located. It ordered that photographs be taken of the applicant and A.Y., one from the side and the other from the front, and sent with the reports concerning the case, in the event that M.N.A., S.K. and B.Ç. were located outside its jurisdiction. If they resided in the centre of İzmir, they should be heard in person. 16. The trial court also ordered that the address of the victim, K.G., be ascertained with a view to bringing him before the court, so that evidence could be taken from him in person. 17. At a hearing held on 29 June 2004, the trial court heard evidence from S.K. as a witness. S.K. said that he neither knew nor had ever seen the applicant and A.Y. He did not have direct knowledge of K.G.’s shooting and had given his previous statement as a result of information he had obtained from M.N.A. and B.Ç. The trial court reiterated its orders concerning M.N.A., B.Ç. and K.G. 18. At a hearing held on 26 August 2004, A.Y.’s lawyer submitted a medical report issued by the Elazığ Psychiatric Hospital, dated 3 September 2002, which stated that M.N.A. suffered from depression. The lawyer accordingly asked the trial court not to call M.N.A. as a witness. The trial court did not respond to that request. 19. Under Law no. 5190 of 16 June 2004, published in the Official Gazette on 30 June 2004, State Security Courts were abolished. The case against the applicant was therefore transferred to the Izmir Assize Court. 20. On 19 August 2004 M.N.A. was questioned by the Siirt Assize Court, pursuant to a letter rogatory from the trial court. According to the transcript of the hearing at the Siirt Assize Court, M.N.A. was serving a sentence in the Siirt E-type Prison at that time. He explained that in 1992, together with the applicant and a certain A.Y., he had received instructions from the PKK and S.K. to shoot K.G. Accordingly, while he had secured the area, the applicant and A.Y. had gone to shoot K.G. He had heard gunshots but had not seen K.G. being shot. He further identified the applicant and A.Y. from the photographs. The Siirt Assize Court then asked M.N.A. to clarify the inconsistency between the statements he had given to the police and the public prosecutor in 1995 and those he had just given to the court. M.N.A. insisted that he was now telling them the correct version of the events. The court reminded him that in his statement of 29 November 1995 before the public prosecutor he had said that he had not known the accused, and asked him to clarify that point. M.N.A then explained that it was because he had been questioned as an accused on 29 November 1995. He repeated that he was now telling them the correct version of the events. 21. On 17 December 2004, at the seventh hearing, M.N.A.’s statement was read out. The applicant objected to the statement, referring to the inconsistency of M.N.A.’s statements since 1995. A.Y.’s lawyer also referred to the medical report in respect of M.N.A. and requested that his statement be considered as unreliable. The trial court did not provide a response to that request. It reiterated its orders concerning B.Ç. and K.G. 22. On 17 February 2005 the eighth hearing was held, and the trial court again reiterated its orders concerning B.Ç. and K.G. 23. At the ninth hearing on 28 April 2005 the trial court once again reiterated its orders concerning B.Ç. and K.G. 24. At the tenth hearing on 12 July 2005 the victim, K.G. appeared before the trial court and gave evidence as a witness. K.G. submitted that he had not seen the applicant or A.Y. at the crime scene and that they had not been involved in his shooting. He gave a detailed description of the people who had shot him. 25. On 4 October 2005 the Izmir Assize Court found the applicant guilty as charged and convicted him on the basis of the case file as a whole, including the record of the reconstruction of the events and the report of the photo identification. 26. The court accordingly sentenced the applicant to life imprisonment, under Article 125 of the former Criminal Code, for carrying out activities with the aim of bringing about the secession of part of the national territory. 27. On 14 February 2006 the Court of Cassation quashed the judgment and remitted the case to the first-instance court in order to determine whether the terms of the new Criminal Code, which had entered into force on 1 June 2005 (no. 5237), were more favourable for the applicant. The case was thus re-examined by the Izmir Assize Court in view of the recent legislative changes. 28. On 13 June 2006 the applicant’s lawyer requested that the trial court bring M.N.A before the court in order to cross-examine him directly and arrange a physical confrontation between him and the applicant. The Izmir Assize Court rejected the request on the grounds that it had already examined and rejected the same request. 29. On the same date the Izmir Assize Court, relying on the same pieces of evidence, once again found the applicant guilty as charged under Article 125 of the Criminal Code and sentenced him to life imprisonment. 30. The applicant lodged an appeal on 3 July 2003, in which his lawyer submitted, inter alia, that M.N.A.’s statements should not have been taken into consideration given the medical report on his mental state. He further submitted that the applicant had been deceived by the police and asked the Court of Cassation to declare his statements inadmissible and in contravention of Article 6 of the Convention. 31. On 19 December 2006 the Court of Cassation rejected the applicant’s appeal. II. RELEVANT DOMESTIC LAW 32. A description of the relevant domestic law concerning the right of access to a lawyer may be found in Salduz v. Turkey ([GC] no. 36391/02, §§ 27‑31, 27 November 2008). 33. On 15 July 2003 Law no. 4928 repealed Section 31 of Law no. 3842, thus the restriction on an accused’s right of access to a lawyer in proceedings before the State Security Courts was lifted. 34. Under Article 135 (a) of the Code of Criminal Procedure in force at the relevant time, statements were to be given by the accused of his or her own free will. Methods such as ill-treatment, torture, induced fatigue, the administration of drugs, torment and deception that “impairs the will of the accused” were proscribed. Statements that were obtained through such methods could not be used in evidence, even if the accused had agreed to their use. 35. Article 238 of the same Code empowered the criminal courts to refuse to admit any inappropriate evidence pursuant to the law. Furthermore, Article 254 of the same Code explicitly stated that evidence that had been obtained unlawfully could not be used by the courts. 36. Pursuant to Article 6 § 5 of “the Regulation on arrest, custody and questioning” (Regulation no. 23480, in force from 1 October 1998 and repealed on 1 June 2005) (Yakalama, Gözaltına Alma ve İfade Alma Yönetmeliği) in force at the relevant time, in the course of arrest and irrespective of the offence, individuals had to be informed of the reasons for their arrest and the allegations against them, and of their rights to remain silent, to have legal assistance and to have someone informed of their arrest. THE LAW I. ALLEGED VIOLATION OF ARTICLE 6 §§ 1 and 3 (c) OF THE CONVENTION 37. The applicant complained that he had not had a fair trial on account of the fact that he had been denied legal assistance while in police custody and had been tricked into giving statements without being notified of his rights. He relied on Article 6 of the Convention, which, in so far as relevant, reads as follows: “1. In the determination of ... any criminal charge against him, everyone is entitled to a fair ... hearing ... by [a] ... tribunal ... 3. Everyone charged with a criminal offence has the following minimum rights: ... (c) to defend himself in person or through legal assistance of his own choosing or, if he has not sufficient means to pay for legal assistance, to be given it free when the interests of justice so require; ...” A. Admissibility 38. The Court notes that this complaint is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible. B. Merits 1. The parties’ submissions 39. The applicant submitted that he had not been reminded of his basic rights and had been denied legal assistance while in police custody. According to the applicant, the police deceived him by showing him an arrest warrant in which the time-limit specified in the statute of limitations for the offence he had been accused of committing had expired. He further maintained that the offence attributed to him had been indicated in the arrest warrant as “breaching Law no. 6136”, and not shooting K.G. In such circumstances, the applicant maintained that he could not be regarded as having unequivocally waived his right to legal assistance during the pre-trial stage of the criminal proceedings against him. 40. The Government contested that argument and maintained that there was no evidence corroborating the applicant’s allegations that the police had tricked him into making incriminating statements. The Government argued that even assuming the applicant’s version to be genuine, he had been reminded of his rights and had refused legal assistance from a lawyer during his questioning before the police, the public prosecutor and the investigating judge, and had made incriminatory statements before those bodies. 41. The Government submitted that any reasonable person who had confessed to having shot a man ought to have appreciated the consequences of accepting to be questioned without legal assistance. The applicant had not been forced to waive his right to legal assistance. In the light of those arguments, the Government invited the Court to conclude that there had been no violation of Article 6 §§ 1 and 3 (c) in the present case. 2. The Court’s assessment (a) General principles 42. The general principles with regard to access to a lawyer, the right to remain silent, the privilege against self-incrimination, the waiver of the right to legal assistance and the relationship of those rights to the overall fairness of the proceedings under the criminal limb of Article 6 of the Convention can be found in the recent judgment in the case of Simeonovi v. Bulgaria ([GC], no. 21980/04, §§ 110-120, 12 May 2017). (b) Application to the present case 43. The Court notes that already on 16 February 2004, when the applicant was being questioned by the police about the shooting and participated in the photo identification and later in the reconstruction of the events, the applicant was “charged” of a criminal offence within the meaning of Article 6 of the Convention, and thus entitled to the assistance of a lawyer as well as to be informed of his rights thereof (see, Simeonovi, cited above, § 121). 44. The Court further notes that at the material time, there was no restriction in law on the availability of legal assistance for those in custody (see, by contrast, Salduz v. Turkey [GC], no. 36391/02, § 14, ECHR 2008, and the relevant domestic law in §§ 32-36) because the restriction on an accused’s right of access to a lawyer in proceedings before the State Security Courts had already been repealed. 45. In the instant case, the Court is called upon to assess whether the applicant unequivocally waived his right to be assisted by a lawyer at the pre-trial stage. As such, the Court must ascertain whether the applicant’s waiver was unequivocal, ran counter to any important public interest and was attended by minimum safeguards commensurate with its importance (see Simeonovi, cited above, § 115). 46. The Court makes the following findings as to the sequence of events concerning the applicant’s waiver. The applicant was arrested on 16 February 2004 in Antalya on suspicion of having been involved in the shooting of K.G. in 1992. According to the police reports, the applicant turned himself in at approximately 1 p.m. to the Antalya Security Directorate. At between 1 and 4 p.m. the same day, and prior to his questioning, the applicant confessed to his involvement in the shooting of K.G. some twelve years after the incident. He also told the police that he was able to identify his accomplices in the shooting and show them the crime scene. 47. The Court further observes that following his confession and before he was reminded of his rights, the applicant participated in an identification procedure via photographs (fotoğraftan teşhis tutanağı) and a reconstruction of the events (ifadeli yer gösterme tutanağı). He again confessed to his involvement in K.G.’s shooting. However, all those investigative steps were taken in the absence of a lawyer and without informing the applicant of his basic rights under the domestic law then in force. Moreover, the Government have not submitted any other document showing that the applicant was informed of his rights when confessing to a very serious offence during the course of those investigative measures. Subsequently, at 6.30 p.m. on 16 February 2004 the police informed the applicant of his rights, but only after he had already confessed to his involvement in K.G.’s shooting. For the Court, these findings undoubtedly weaken the “unequivocal” character of the applicant’s waiver. 48. The Court further notes that according to the record of the police questioning on 16 February 2004, any instructions as regards the applicant’s procedural rights were given to him via the first pages of the pre-printed forms on which his pre-trial statements had been transcribed. Such instructions went only as far as informing the applicant, without providing any commentary or further explanation, that he had the right to remain silent and the right to choose a lawyer. Conversely, there has been no allegation or other indication that any individualised advice about his situation and rights was provided to him (see Zachar and Čierny v. Slovakia, nos. 29376/12 and 29384/12, § 70, 21 July 2015). Thus, the first page of the applicant’s statement to the police includes the pre-printed phrase “No lawyer is requested” and the applicant’s signature at the bottom. 49. Moreover, the Court notes that at the material time there was no statutory basis for a so-called “reconstruction of the events” under the former Code of Criminal Procedure. That fact supports the view that that method of collecting evidence was not accompanied by the relevant procedural safeguards. As a result, prior to his questioning by the police, the applicant made incriminating statements in circumstances where he had not been allowed access to a lawyer and informed of his basic rights. The fact that the practice of carrying out a reconstruction of the events became an accepted one by the domestic courts does not remedy the absence of the minimum safeguards required in order for a waiver to be considered valid for the purposes of a fair trial under Article 6. The Government did not make any submissions in this respect. 50. Furthermore, the Court finds that the present case shows certain similarities to the case of Hakan Duman v. Turkey (no. 28439/03, § 50, 23 March 2010). In the latter case the Court noted that the applicant was neither subjected to ill-treatment nor coerced into making statements in police custody. Nonetheless, it was not convinced that the presence of an undated, pre-printed and signed document in the case file demonstrated with certainty that the applicant had been properly informed of his right to a lawyer and his right to remain silent prior to his confession and subsequent participation in a number of reconstructions of the events, which were later used to convict him. 51. In the present case, the Court observes that there is no document at all that can even arguably demonstrate that the applicant was informed of his rights prior to confessing to a particularly grave offence, both before and during the reconstruction of the events and the photo identification (see Hakan Duman, cited above, § 50). As such, it does not appear that the applicant waived, even implicitly, his basic rights, including his right to remain silent and the right to legal assistance, either before or during the reconstruction of the events and the photo identification. 52. The Court considers that the foregoing facts considerably weaken the value of the pre-printed phrase “No lawyer is requested” in demonstrating that the applicant unequivocally waived his right to a lawyer guaranteed by Article 6 of the Convention (see Savaş v. Turkey, no. 9762/03, § 70, 8 December 2009). In such circumstances, it cannot be said that the applicant unequivocally, knowingly and intelligently waived his rights under Article 6 (see, Simeonovi, cited above, § 115). 53. The Court reiterates that it was in the first place the trial court’s duty to establish in a convincing manner whether or not the applicant’s confessions and waivers of legal assistance had been voluntary (see Ogorodnik v. Ukraine, no. 29644/10, § 108, 5 February 2015). It must therefore be further examined whether that flaw was rectified during the subsequent trial and whether the proceedings as a whole can be considered as fair within the meaning of Article 6 § 1 of the Convention (see Zachar and Čierny, cited above, § 75). 54. For the Court, the İzmir Assize Court’s failure to examine the circumstances surrounding the applicant’s waiver, despite the procedural safeguards provided for by the Code of Criminal Procedure, was tantamount to depriving the applicant of a possibility of remedying a situation contrary to the requirements of the Convention (see Yunus Aktaş and Others v. Turkey, no. 24744/03, § 51, 20 October 2009). 55. The Court notes that under Article 135 (a) of the Code of Criminal Procedure in force at the time, impairing the will of the accused by means of deception was proscribed and statements obtained by such a method could not be used in evidence at trial. Moreover, Article 238 of the same Code empowered the criminal courts to refuse inadmissible evidence pursuant to the law. Lastly, Article 254 of the same Code explicitly stated that evidence that had been obtained unlawfully could not be used by the courts. However, the İzmir Assize Court failed to examine the admissibility of the evidence in the case file before going on to examine the merits of the case, despite the fact that the applicant was being tried for an offence carrying the heaviest penalty in the Turkish criminal law system (see, by contrast, Ibrahim and Others, cited above, § 282). Likewise, the Court of Cassation dealt with the applicant’s complaints about the violation of his procedural rights in a formalistic manner. 56. What is more, the İzmir Assize Court relied, to a decisive extent, on the applicant’s pre-trial statements when convicting him of K.G.’s shooting, despite the fact that it had not carried out an examination of either the admissibility or the reliability of his statements. 57. Hence, the Court is not satisfied that the applicant’s grievance received an appropriate response from the national courts and considers that fair procedures for assessing the issue of legal assistance proved non-existent in the present case (see, mutatis mutandis, Vanfuli v. Russia, no. 24885/05, § 103, 3 November 2011, and Nechto v. Russia, no. 24893/05, § 111, 24 January 2012). 58. Against such a background, the Court is of the view that the absence of close scrutiny by the national courts of the circumstances surrounding the applicant’s waiver and the fact that that flaw was not remedied by any other procedural safeguards during the proceedings coupled with the use of those statements by the trial court to convict the applicant, rendered the trial as a whole unfair. 59. Accordingly, the Court considers that there has been a violation of Article 6 §§1 and 3 (c) of the Convention. II. ALLEGED VIOLATION OF ARTICLE 6 §§ 1 and 3 (d) OF THE CONVENTION 60. The applicant further complained that he had been unable to question, confront and examine a key witness, namely M.N.A., whose statements were relied on by the domestic court to convict him. 61. The Court considers that this complaint may be declared admissible. However, having regard to the facts of the case and its finding of a violation of Articles 6 § 1 and 6 §§ 3 (c) of the Convention, and referring to paragraph 72 below, the Court considers that there is no need to give a separate ruling on the merits of the applicant’s complaints under this head (see, mutatis mutandis, Abdulgafur Batmaz v. Turkey, no. 44023/09, § 54, 24 May 2016). III. OTHER ALLEGED VIOLATIONS OF THE CONVENTION 62. The applicant also complained under Article 6 § 1 of the Convention that the State Security Court and the Assize Court, which took over the case following the abolition of the former, lacked independence and impartiality. 63. The Court notes that following the amendments made by Law no. 4390 on 22 June 1999, the military judges sitting on the bench of the State Security Courts were replaced by civilian judges. In the present case, the proceedings commenced before the İzmir State Security Court following an indictment filed by the public prosecutor on 10 March 2004, that is, after the removal of the military judge from the bench. Accordingly, the applicant was tried by a panel of three civilian judges. The Court acknowledges that the case was examined by the Assize Court for the most part, except for the first two hearings. Furthermore, the Court notes that, although the applicant complained generally that the State Security Court and the Assize Court were not independent and impartial, he did not substantiate his claim. The Court therefore concludes that the applicant cannot be regarded as having been deprived of a fair hearing on account of the composition of the court (see Sever and Aslan v. Turkey (dec.), no. 33675/02, 12 April 2007; Şaman v. Turkey, no. 35292/05, § 39, 5 April 2011; and Karaatay v. Turkey (dec.), no. 13350/09, 28 January 2014). 64. It follows that this part of the application is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 and 4 of the Convention. 65. Lastly, without submitting any document in respect of his complaint, the applicant alleged under Article 14 of the Convention that he had faced discrimination on account of the fact that his co-accused, who had previously been tried before the Izmir State Security Court in a different set of criminal proceedings, had been acquitted of the charges against them. In the absence of any documents supporting this allegation, the Court considers this complaint unsubstantiated. 66. It follows that this part of the application is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 and 4 of the Convention. IV. APPLICATION OF ARTICLE 41 OF THE CONVENTION 67. Article 41 of the Convention provides: “If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.” A. Damage 68. The applicant claimed 30,000 euros (EUR) in respect of non-pecuniary damage. He did not submit a claim for pecuniary damage. 69. The Government contested the applicant’s claim, submitting that the amount was unsubstantiated and excessive. The Court considers that the finding of a violation constitutes sufficient just satisfaction (see Dvorski v. Croatia [GC], no. 25703/11, § 117, ECHR 2015). It further considers that the most appropriate form of redress would be the retrial of the applicant in accordance with the requirements of Article 6 of the Convention, should he so request (see Salduz, cited above, § 72). It therefore rejects the applicant’s claim. B. Costs and expenses 70. The applicant also claimed EUR 5,284 for the costs and expenses incurred both in the domestic proceedings and before the Court, giving a breakdown of the number of hours of work for which his lawyer needed to be paid. 71. The Government contested the applicant’s claims, submitting that the amounts requested were unsubstantiated and not supported by adequate documentary evidence. 72. According to the Court’s case-law, an applicant is entitled to the reimbursement of costs and expenses only in so far as it has been shown that these have been actually and necessarily incurred and are reasonable as to quantum. In this connection, the Court reiterates that time sheets have been accepted in the past as supporting documents in a number of cases (see Beker v. Turkey, no. 27866/03, § 68, 24 March 2009; Çoşelav v. Turkey, no. 1413/07, § 89, 9 October 2012; Amine Güzel v. Turkey, no. 41844/09, § 50, 17 September 2013; and Yiğitdoğan v. Turkey (no. 2), no. 72174/10, § 76, 3 June 2014). In the present case, regard being had to the documents in its possession and the above criteria, the Court considers it reasonable to award the sum of EUR 2,000, covering costs under all heads. C. Default interest 73. The Court considers it appropriate that the default interest rate should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points. FOR THESE REASONS, THE COURT, UNANIMOUSLY, 1. Declares the complaints under Article 14 and Article 6 § 1 of the Convention in as much as it concerns the independence and impartiality of the State Security Court and the Assize Court inadmissible and the remainder of the application admissible; 2. Holds that there has been a violation of Article 6 §§ 1 and 3 (c) of the Convention; 3. Holds that there is no need to examine the complaint under Article 6 §§ 1 and 3 (d) of the Convention; 4. Holds that the finding of a violation constitutes in itself sufficient just satisfaction in respect of any non-pecuniary damage that may have been sustained by the applicant; 5. Holds (a) that the respondent State is to pay the applicant, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, the following amount, to be converted into the currency of the respondent State at the rate applicable at the date of settlement: (i) EUR 2,000 (two thousand euros), plus any tax that may be chargeable to the applicant, in respect of costs and expenses; (b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amount at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points; 6. Dismisses the remainder of the applicant’s claim for just satisfaction. Done in English, and notified in writing on 5 September 2017, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. Stanley NaismithRobert SpanoRegistrarPresident

esOPINION OF ADVOCATE GENERAL M. POIARES MADURO delivered on 19 May 2004 (1) Case C-170/03 Staatssecretaris van Financiën v J.H.M. Feron (Reference for a preliminary ruling from the Hoge Raad der Nederlanden (Netherlands)) (Importation of motor vehicle by private individual – Exemption from payment of tax – Council Directive 83/183/EEC – Council Regulation (EEC) No 918/83 – Notion of ‘personal property’ – Notion of ‘possession’ – Motor vehicle made available to the employee with an option to buy granted on delivery of the vehicle) 1. In this reference for a preliminary ruling, the Hoge Raad der Nederlanden seeks guidance on the interpretation of concepts such as ‘personal property’ and ‘possession’ used in Council Regulation (EEC) No 918/83 of 28 March 1983 setting up a Community system of reliefs from customs duty (hereinafter ‘Regulation 918/83’). (2) The questions have been raised in a case concerning the tax payable on a private car imported into the Netherlands by a private individual who transferred his normal place of residence from Austria. In this context it also becomes necessary to analyse the problem of the applicability of Council Directive 83/183/EEC of 28 March 1983 on tax exemptions applicable to permanent imports from a Member State of the personal property of individuals (hereinafter ‘Directive 83/183’). (3) I – Facts of the main proceedings and questions referred to the Court 2. Mr J.H.M. Feron (hereinafter ‘Mr. Feron’) was employed in Austria by Océ Österreich GmbH (hereinafter ‘the employer’ or ‘Océ’). During the period from 18 October 1996 to 14 December 1997 Océ made a car available to Mr Feron for both private use and use in connection with his occupation. During that period the car was wholly and exclusively at the disposal of Mr Feron but the employer remained the owner of the car. On 15 December 1997 Mr Feron exercised the option to buy the car which had been granted to him by the employer on delivery to him of the car in October 1996. 3. In January 1998 Mr Feron left his normal place of residence in Austria and on 10 February 1998 he made a declaration with the municipality of Venlo in the Netherlands concerning his installation there. 4. On 4 March 1998 the inspector of the Staatssecretaris van Financiën (State Secretary for Finance) made a determination refusing exemption from Belasting van personenauto’s en motorrijwielen (tax on cars and motorcycles, hereinafter ‘BPM’) in respect of the car brought by Mr Feron into the Netherlands from Austria. The inspector took the view that the exemption in respect of the removal of household effects from one MemberState to another when a change of normal place of residence occurs was not applicable in regard to the levying of BPM. 5. It is this determination by the inspector that lies at the origin of the dispute between Mr Feron and the Staatssecretaris van Financiën which eventually came before the Hoge Raad and gave rise to this reference to the Court for a preliminary ruling. 6. According to the Hoge Raad in its reference for a preliminary ruling, under Article 1(2) of the Wet op de belasting van personenauto’s en motorrijwielen 1992, the law on tax payable on cars and motorcycles of 1992 (hereinafter ‘the BPM Law’), BPM is payable on cars and motorcycles in connection with the registration of a car or a motorcycle in the register of declared registration numbers. 7. Article 14(1) of the BPM Law determines that ‘exemption from BPM may be granted by regulation of the public service, according to the modalities and the exceptions to be established, for cars and motorcycles from a different country which have been imported into the Netherlands for specific purposes or in particular circumstances…’. 8. Article 14(1) of the BPM Law was implemented by the Uitvoeringsbesluit belasting van personenauto’s en motorrijwielen of 24 December 1992, a decree implementing the BPM Law (hereinafter ‘the BPM decree’). Article 4(1) of the BPM decree provides that ‘exemption from the [BPM] tax is granted on cars and motorcycles originating in another country where in respect of imports thereof entitlement to exemption from import duties subsists or would subsist if the vehicle were imported from a country other than a Member State of the European Community in which it was in free circulation’. 9. Under Article 4(1) of the BPM decree, exemption from BPM is granted for cars and motorcycles originating abroad, including in another Member State, where exemption from import duties on entry into free circulation is available under Regulation 918/83. In its reference for a preliminary ruling, the Hoge Raad does not consider the issue of the applicability, in this case, of Directive No 83/183, specifically establishing a regime of tax exemptions applicable to permanent imports from a MemberState of the personal property of individuals. 10. Article 2 of Regulation No 918/83 provides that ‘personal property imported by natural persons transferring their normal place of residence from a third country to the customs territory of the Community shall be admitted free of import duties’. 11. Article 3 of Regulation 918/83 provides that ‘[t]he relief shall be limited to personal property which: (a) except in special cases justified by the circumstances, has been in the possession of and, in the case of non-consumable goods, used by the person concerned at his former normal place of residence for a minimum of six months before the date on which he ceases to have his normal place of residence in the third country of departure…’. 12. For the purposes of Regulation No 918/83, Article 1(2) provides that: 13. ‘(c) “personal property” means any property intended for the personal use of the persons concerned or for meeting their household needs. 14. The following, in particular, shall constitute “personal property”: 15. … 16. ― cycles and motor cycles, private motor vehicles and their trailers, camping caravans, pleasure craft and private aeroplanes. 17. Household provisions appropriate to normal family requirements, household pets and saddle animals, as well as the portable instruments of the applied or liberal arts, required by the person concerned for the pursuit of his trade or profession, shall also constitute “personal property”. Personal property must not be such as might indicate, by its nature or quantity, that it is being imported for commercial reasons…’. 18. The dispute between Mr Feron and the State Secretary for Finance, as is apparent from the two grounds of appeal presented before the Hoge Raad by the State Secretary for Finance, concerns, first, the characterisation of Mr Feron’s car as ‘personal property’ for the purposes of Articles 2 and 3 of Regulation No 918/83 and, second, the question as to whether Mr Feron may be regarded as having had ‘possession’ of the car during the six months preceding the date on which he ceased to have his normal place of residence in Austria. 19. In the light of these factual and legal data, the Hoge Raad has referred the following three questions to the Court: (1) Must a car which is made available to a natural person by his employer and is used by him for both business and private purposes be regarded as personal property within the meaning of Article 1(2)(c) of Council Regulation (EEC) No 918/83 of 28 March 1983 setting up a Community system of reliefs from customs duty? (2) Must Article 3(a) of that regulation requiring property to have been in the possession of the person concerned at least six months before the date on which he gave up his normal place of residence in the country of origin be interpreted as meaning that the person concerned who has had property made available to him, albeit free of charge, in the context of his employment by the owner of the property in question, is to be deemed to be in possession of the property for the purposes of the abovementioned provision? (3) Is it material to the reply to be given to Question 2 that during the whole period of six months the person concerned had the right to buy the car?’ 20. Written and oral observations have been submitted by the Netherlands Government and by the Commission. They will be referred to in the context of the assessment of the legal issues raised by this case. II – Assessment A – Preliminary observations 21. It is appropriate to make a number of observations at this point in order to define the scope of the questions arising in this case and the plan of the analysis, or the order in which those questions will be assessed. 22. As expressly described by the Netherlands Government in its written observations ‘the Netherlands legislation states that the conditions for relief from Community duties on importation presented in Regulation No 918/83 are applicable by analogy’ to the granting of exemption from payment of BPM on a car imported into the Netherlands by a natural person transferring his normal place of residence to the Netherlands. Relief from payment of BPM will apply, therefore, regardless of whether the person moving to the Netherlands had his normal place of residence in a MemberState or in a non-member country 23. This reference by the Netherlands legislation to the legal regime established in Title I of Regulation No 918/83, concerning ‘Relief from import duty’ for ‘personal property belonging to natural persons transferring their normal place of residence from a third country to the Community’, has the consequence that, for the purpose of exemption from payment of BPM, situations in which a person transfers his residence to the Netherlands, either from a non-member country or from a Member State, are treated equally. 24. The Commission, in its written observations, draws attention to the fact that the Community legislature, alongside Regulation No 918/83, established in Directive 83/183 a specific Community law regime on tax exemptions applicable to permanent imports from a MemberState of the personal property of individuals. (4) According to the Commission, the present case concerns a tax levied on personal property imported by a private person transferring his normal place of residence between Member States, which falls within the scope of Directive 83/183. If, as the Commission claims, Directive 83/183 establishes a tax exemption which directly benefits Mr Feron, this will be decisive for the resolution of the case in the main proceedings before the Hoge Raad. 25. In so far as ‘[i]t is the Court’s duty to interpret all provisions of Community law which national courts need in order to decide the actions pending before them, even if those provisions are not expressly indicated in the questions referred to the Court of Justice by those courts’, (5) I cannot agree with the Netherlands Government’s argument at the hearing that the Court cannot examine the issue of the applicability of Directive 83/183 raised by the Commission. This issue will be assessed first in this Opinion. 26. Secondly, should the Court of Justice rule that a tax such as BPM is excluded from the regime of tax exemptions established by Directive 83/183, it will be necessary to ascertain whether the Court is competent to interpret provisions and concepts of Regulation No 918/83 which is applicable to this case by virtue of a reference in Netherlands national law. 27. Finally, to the extent that this problem of competence of the Court concerning the interpretation of Regulation No 918/83 is answered in the affirmative, an answer to the specific questions raised by the Hoge Raad will be provided. With respect to those questions, I shall analyse the second and third questions together. The right to buy the car granted to Mr Feron by the employer at the time of the delivery of the car constitutes a circumstance which will be examined together with other circumstances mentioned in Question 2. B – The problem of the application of Directive 83/183 1. The objectives of Directive 83/183 and the determinant reasons for the actual definition of its scope of application. 28. Article 1 of the directive defines the ‘scope’ of the directive as follows: 29. ‘1. Every Member State shall, subject to the conditions and in the cases hereinafter set out, exempt personal property imported permanently from another Member State by private individuals from turnover tax, excise duty and other consumption taxes which normally apply to such property. 30. 2. Specific and/or periodical duties and taxes connected with the use of such property within the country, such as for instance motor vehicle registration fees, road taxes and television licences, are not covered by this Directive.’ 31. Directive 83/183 was repealed in part by Council Directive 91/680/EEC of 16 December 1991 supplementing the common system of value added tax and amending Directive 77/388/EEC with a view to the abolition of fiscal frontiers. (6) Article 2(2) of Directive 91/680 provides that ‘[t]he provisions on value added tax laid down in the following Directive shall cease to have effect on 31 December 1992: … ― Directive 83/183/EEC’. Similarly, Council Directive 92/12/EEC of 25 February 1992 on the general arrangements for products subject to excise duty and on the holding, movement and monitoring of such products (7) also repealed Directive 83/183 in part, by providing in Article 23(3) that ‘[t]he provisions on excise duty laid down in the following Directives shall cease to apply on 31 December 1992: … ― Directive 83/183/EEC’. Despite thus being repealed in part, Directive 83/183 remains in force after the completion of the internal market in 1992 except in relation to VAT and excise duties. (8) 32. Directive 83/183 has as its objective to eliminate, through the introduction of a harmonised regime of tax exemptions concerning turnover taxes, excise duty and other consumption taxes affecting the importation of property, (9) the tax obstacles which hinder the free movement of persons within the Community. (10) It is for that purpose that, according to Article 1(1), exemption from consumption taxes which normally apply to personal property imported by a natural person who changes his normal place of residence from one MemberState to another is granted on the conditions set out in Directive 83/183. 33. This directive seeks to ensure that a private individual who acquired personal property in the Member State of origin and paid the corresponding taxes there, is not required to pay consumption taxes in the Member State of the new place of residence, with respect to that property, which would undoubtedly hinder the free movement of persons within the Community. If a private individual who had paid all consumption taxes at the time of the acquisition of personal property (a television set, or a car, for example) in his normal place of residence had to pay other consumption taxes on the same property as a consequence of the change of residence to another Member State, this would influence the decision to move. (11) The taxation in the new MemberState of residence would constitute an incentive for the person to leave the personal property behind in the country of origin and, ultimately, to decide not to move. (12) 34. It is by no means inconsistent with these objectives that the Community legislature expressly left certain duties and taxes outside the scope of the regime of exemption of Directive 83/183. In effect Article 1(2) expressly provides that ‘[s]pecific and/or periodical duties and taxes connected with the use of such [personal] property within the country …’ remain outside the scope of the directive and are not therefore subject to the tax exemption regime therein established. 35. It follows from paragraphs 1 and 2 of Article 1 that the definition of the scope of Directive is made on the basis of the distinction between taxes connected with the use of the property within the country and consumption taxes normally applied to the importation of such property. At this point we face the central issue of determining the meaning of ‘connected with the use of the property within the country’ for the purposes of Article 1(2). For this interpretation and, subsequently, in order to determine whether or not BPM is a tax connected with the use of vehicles in the Netherlands, it is necessary to consider the reasons behind the inclusion of Article 1(2) in the directive. 36. Although it was not included in the initial proposal for the directive submitted by the Commission to the Council on 30 October 1975, Article 1(2) was added later, in response to the demands of certain Member States, namely the Kingdom of Denmark. (13) 37. There is surely no reason why ‘a citizen of the Community who establishes his normal residence in a different MemberState and there lives and makes use of that property should be exempted from the payment of the taxes connected to the use of such goods in that MemberState’. (14) The inclusion of paragraph 2 in Article 1 is therefore perfectly understandable. This is so in so far as the use of certain goods within a country may entail costs for the State, resulting from the use of such property in its territory. Among these costs we find, for instance, the development and maintenance of the road network, the provision of conditions of safety, vigilance and emergency services for users of vehicles in the territory of the State and also environmental costs. A MemberState may therefore legitimately decide to impose certain taxes related to those costs on the individuals who are ultimately responsible for them in so far as they use that property on a permanent basis within its territory. This is confirmed by the examples of such taxes provided by Article 1(2) of Directive 83/183: ‘motor vehicle registration fees, road taxes and television licences’. 38. These costs may vary from one State to another, according to the specific conditions of the use of motor vehicles in its territory. They are State-specific. The corresponding taxes and duties will, consequently, also vary from one country to another. States may also have different reasonable judgments on the amount and nature of taxation related to the cost generated by the use of the vehicle. The fact that each Member State is free to demand payment of such taxes will not in any event impose a tax burden on private individuals transferring their normal place of residence from one Member State to another, which would be incompatible with Directive 83/183. That is so, of course, in so far as such taxes present a link with the costs related to the use of the property within the country. 39. As the Court stated in Cura Anlagen, ‘the taxation of motor vehicles is not harmonised in the Community and differs considerably from one MemberState to another’. (15) Although ‘registration appears to be the natural corollary of the exercise of those powers of taxation’, (16) Member States are ‘free to exercise their powers of taxation in this area, provided that they do so in compliance with Community law’. (17) 40. Directive 83/183 is precisely one limit which Community law places on the freedom of Member States to levy consumption taxes which affect the importation of motor vehicles by private individuals when they change their normal place of residence from one MemberState to another. Member States’ freedom to levy taxes in this context is confined by the legislature, in a positive and express manner, in Article 1(2) of the directive solely to taxes ‘connected with the use’ of the car in the territory of the State. Consumption taxes instead affect the decision whether or not to buy the car. This decision is taken according to the tax conditions existing at the time of the acquisition and should not be affected ex post facto by a later decision to move to another MemberState. If a tax levied in the course of a subsequent importation of the car due to a permanent change of residence is such that de facto it would have a negative effect on the initial decision to buy the car, then that tax will certainly hinder the decision to move to another MemberState. In other words, the decision to move to another State should be neutral with respect to the previous consumption decision taken in the MemberState of origin. If it is not, then the decision to move will be substantially affected. 2. Is the fact that the tax is payable at the time of registration a decisive element for the characterisation of a tax such as BPM as a tax ‘connected with the use’ of the car within the meaning of Article 1(2) of Directive 83/183? 41. According to the information provided by the Hoge Raad, BPM is levied at the time of registration of the vehicle and taxes such as ‘registration fees’ (or in the French version ‘droits perçus lors de l’immatriculation des voitures automobiles’) are presented in Article 1(2) as examples of ‘taxes connected with the use of the car’. 42. The fact that the chargeable event for a tax such as BPM is the registration of the car merely constitutes a prima facie indication that the tax is ‘connected with the use’ of the car ‘within the country’. If this were the crucial element for the characterisation of a tax as ‘connected with the use’ of the car, the category of duties levied on registration of motor vehicles would become a ‘catch-all’ concept within which a Member State could include any tax, irrespective of its substantial elements and finalities, by virtue of the mere chronological fact that such tax was levied by the State at the time of registration of the vehicle. (18) This would allow a MemberState to continue to levy genuine consumption taxes on imported property to the extent that the tax was payable some time after the introduction of the property into the country, based on a different chargeable event such as the time of registration of the vehicle. This would deprive of all useful effect Directive 83/183 with respect to the importation of motor vehicles. It would also be virtually impossible to achieve uniformity in the harmonisation of the tax exemption regime pursued by Directive 83/183. 43. To illustrate this point, let us consider two identical taxes imposed in connection with the importation of a car from the point of view of their characteristics, objectives and amount, each levied in a different MemberState. One would be regarded as being outside the scope of the Directive 83/183, in Member State X, where the tax is payable at the time of registration of the car after its importation, whereas payment of the other, in Member State Y, would have to be exempted simply because the State had chosen to levy it earlier, at the time of the introduction of the vehicle into the territory of the State. 44. As Advocate General Stix-Hackl stated in Lindfors ‘the fact, alone, that a tax is levied as a consequence or as a condition of the registration cannot exclude that it can be considered a kind of consumption tax on the importation’. (19) The fact that a particular tax is called a ‘registration tax’ and levied at that time cannot dispense with an analysis of its characteristics and finalities, indispensable to conclude that the tax is, in substance, connected with the use of the vehicle within the country and, therefore, legally outside the scope of Directive 83/183. A determination of whether or not a tax such as BPM is, within the meaning of Article 1(2) of Directive 83/183, a tax ‘connected with the use’ of the car in the Netherlands, must, therefore, take into account the reasons underlying Article 1(2), the finalities of the tax exemption regime of Directive 83/183 and the essential material elements of a tax such as BPM. 45. The Netherlands Government argued at the hearing that BPM is connected with the use of the property and is not a consumption tax connected with importation, since a private individual may always decide to import a vehicle as part of his personal property in order to keep it at home or in a museum as part of a collection of vehicles and thus avoid having to register it after importation. 46. This argument purports to demonstrate that a tax levied on registration would not be apt to affect the importation of the car as a tax payable at the precise time of importation, because the individual importing the vehicle is able to avoid taxes levied by the MemberState at the time of registration. It would therefore demonstrate the material relevance of the distinction between taxes levied at the time of registration and taxes levied at another time prior to that. This argument would also reveal that the adoption of this criterion does not contradict the finalities of Directive 83/183, because a private individual importing a motor vehicle with the intention of keeping it outside the road network, in a museum or in a garage, would not be required to pay any taxes on importing the vehicle. This example would illustrate how the tax exemption regime granted by the directive always remains valid. 47. To my mind, there is no doubt that a private individual may, in fact, choose not to register the imported car simply by deciding to keep it at home or in a museum. The problem is that this occurs only in this very unusual situation, where a person decides to import his motor vehicle with the intention of not using it for the normal and essential purpose for which a motor vehicle is designed, that is, for use as a means of transport. 48. It must be recalled that an argument similar to that presented by the Netherlands Government was rejected by the Court in Commission v Belgium. (20) Advocate General Mischo then stated that ‘[t]he case of a person wishing to purchase a car without also applying for a registration plate is in practice so unusual that it may be disregarded’. (21) I must draw attention to the fact that in the context of Commission v Belgium the argument could actually weigh more than in the present case. In fact, it is more plausible that someone should acquire a motor vehicle in one Member State but decide to register it in a different Member State, than that a private individual transferring his normal place of residence from one Member State to another should import a vehicle ― and there will most likely be only one vehicle, constituting his personal property (22) ― for a purpose other than that of using it for its normal and essential purpose as a means of transport on the road network. 49. Consistently with this, the Court has, in a different context, also rejected similar formal arguments. In Lehtonen (23) the Court considered that certain rules on transfer periods restricted the freedom of movement of workers who intended to pursue their activity in another MemberState by preventing clubs from fielding in championship matches basketball players engaged after a specified date. The Court held that although such rules did not ‘concern the employment of such players, on which there is no restriction … [i]n so far as participation in such matches is the essential purpose of a professional player’s activity, a rule which restricts that participation obviously also restricts the chances of employment of the player concerned’. To accept that a motor vehicle may be imported by an individual not to be used on the road is to ignore the essential purpose of a motor vehicle, just as to accept that a basket ball player may be employed by a club not to play in championship matches is to ignore the essential purpose of a professional player’s activity. In both cases, the restriction imposed within the MemberState amounts, in fact, to a restriction on freedom of movement to that State. 3. Is BPM, in substance, a tax connected with the use of the vehicle in the territory of the MemberState, within the meaning of Article 1(2)? 50. Article 1(2) of Directive 83/183 refers to specific and/or periodical taxes connected with the use of personal property within the country. Periodical duties are taxes payable at regular intervals, such as road taxes existing in some Member States. In the Netherlands the Motorrijtuigenbelastingis a good example of a road tax which undoubtedly falls outside the scope of Directive 83/183. Its connection with the use of the motor vehicle in the Netherlands, as the Commission has pointed out at the hearing, is clear from the fact that payment of this tax may be suspended when the car is not in use. (24) This is perfectly understandable if we consider that during that period of non-use the owner of the vehicle will not be responsible for any costs related to its use within the country. This is material evidence of the connection between the tax and the use of the vehicle. 51. Article 1(2) also mentions specific duties or taxes connected with the use of the motor vehicles within the country. There are numerous examples of such specific duties which are not payable at regular intervals but are clearly connected with the use of the vehicle, such as motorway or bridge tolls. A person may use a certain motorway only once, or never, or several times. There is no characteristic of payment of these duties at regular intervals, unlike road taxes. We can also imagine specific taxes with environmental objectives, for example a tax payable to allow motor vehicles to enter and travel within a particular natural park, even where the tax is payable without reference to the length of time the car remains in the protected area. 52. It may also happen that a specific tax or duty is levied only once and permanently and is without doubt connected with the use of the motor vehicle within the meaning of Article 1(2). This is the case of the registration duty charged in the Netherlands, alongside BPM, at the time of registration of the vehicle. According to the description made at the hearing by the Netherlands Government and the Commission, this duty, corresponding, for the year 2004, to EUR 47.20 is clearly connected with the use of the vehicle in the Netherlands. It has the characteristics of a duty purporting to compensate the administrative costs inherent in the registration of the vehicle in that MemberState. 53. These are what I would consider the ‘easy cases’ of taxes falling outside the scope of Directive 83/183, in so far as they reveal, in substance, by their characteristics, a connection with the use of the vehicle within the country, which is not simply a formal one. The analysis of the characteristics of such taxes materially reveals the existence of a link between their payment and the costs related to the use of the vehicle, be it the costs of building and maintaining motorways or bridges, environmental costs or administrative costs. With respect to BPM, the situation is different. 54. The Netherlands Government asserted at the hearing that BPM does not have the objective of compensating the costs which result from the use of the vehicles in the national territory. Moreover, it stated that the proceeds of BPM constitute general revenue of the State which goes to the public purse and has no direct link with the costs related to the use of vehicles in the territory of the State. (25) 55. Having regard to the evidence before the Court, a tax such as BPM does not reveal, in substance, by its characteristics, any link with the costs related to the use of the vehicle in the territory of the State. A tax such as this does not even have any connection with the administrative costs of registration (including the cost of the registration plate), which are already compensated by another specific duty charged by the Netherlands Government, and also levied at the time of registration of the vehicle. 56. This last fact, however, contrary to the understanding of the Commission, does not mean that in order to come within Article 1(2) a tax such as the BPM would have to be limited to the mere compensation of the administrative costs related to the registration of the vehicle in the Netherlands. Such a reading of Article 1(2) is too narrow and a literal argument based on the English version, which refers to ‘motor vehicle registration fees’ does not provide conclusive support for it. In my view, Article 1(2) clearly allows Member States to levy taxes or duties at the time of registration or at any other time, provided that they are connected with the use of the vehicle within the country, in the sense that their essential elements provide some indication of a relationship between such taxes and the costs (administrative costs or others) related to the use of the vehicle within the territory of the State. 57. This connection between a tax such as BPM and the use of the vehicle within the territory of the Netherlands cannot be acknowledged, except for the chargeable event which, as I have argued, is a purely fortuitous and formal sign of that connection. Moreover, it is the Netherlands legislation that clearly indicates that such connection with use is absent. In fact, this conclusion results from the fact that the Netherlands legislation grants exemption from BPM to motor vehicles originating abroad (either in a Member State or in a non-member country), in cases where exemption from import duties on entry into free circulation is available under Regulation No 918/83. The Netherlands Government emphasises in its observations that the conditions established in Regulation No 918/83 for relief from Community import duties ‘are applicable by analogy’ with respect to the granting of relief from payment of BPM. This reference to Regulation No 918/83 ‘by analogy’ is incompatible with a characterisation of a tax such as BPM as being connected in substance with the use of the vehicle in the Netherlands. 58. There would be, in effect, no rational explanation, from an economic point of view, why the BPM law and the BPM decree should grant relief by reference to Regulation No 918/83, as they actually do, to a car permanently imported by a person transferring his normal place of residence to the Netherlands, if BPM were in substance conceived as a tax connected with the use of the property in that Member State. That exemption would mean that the Netherlands legislature was deliberately granting to new residents in the Netherlands the status of typical ‘free-riders’ by comparison with all other users of motor vehicles who registered their vehicles in the Netherlands and necessarily paid BPM. In fact, private individuals moving permanently to the Netherlands with their motor vehicles would be allowed to register and use their cars there and generate all the costs related to such use within the country, largely at the expense of all the other citizens who have always lived in the Netherlands and, consequently, had to pay BPM at the time of registration of their vehicles. This runs directly counter to the objective sought by Article 1(2) of Directive 83/183, already described above, (26) when it expressly recognises that Member States remain free to levy any ‘[s]pecific and/or periodical duties and taxes connected with the use of such property within the country’. 59. On the contrary, that exemption granted by Netherlands law makes perfect sense if a tax such as BPM is characterised as a consumer tax which, owing to the elevated amounts involved and also to the fact that all consumption taxes have already been paid in the country of origin, the Netherlands legislature decided to exempt. 60. This reasoning is consistent with the justification for the tax exemption regime of Directive 83/183, despite the significant disagreement between the Commission and the Netherlands Government owing to the fact that the Netherlands Government does not consider itself to be obliged by Directive 83/183 to grant exemption from BPM. It voluntarily grants the exemption, but only on the slightly stricter terms of Regulation No 918/83. (27) In any event, the justification for the exemption granted by BPM law and BPM decree, and the justification for the exemption granted by Directive 83/183, are functionally the same. To this extent, a tax such as BPM cannot be rationally considered by Netherlands law as a tax connected with the use of the vehicle within the country. In this regard, I must assume that a decision such as the one made by the Netherlands tax legislature to grant an exemption from BPM by analogy to an import tax relief has an economically rational basis, and is not the outcome of an economically irrational act of generosity which would, moreover, discriminate against all car owners who have always resided in the Netherlands. 61. Moreover, according to the information provided at the hearing by the Commission and not contradicted by the Netherlands Government, the basis of calculation of BPM is the net list price of the vehicle, which basically corresponds to the suggested retail price of the vehicle, applying on the day of assignment of the licence plate or, for a used vehicle, applying on the day of first use, less turnover tax and BPM. The percentage rate of BPM corresponds to about 45% less a certain fixed amount according to the age of the vehicle. 62. On the one hand, the elevated amount of BPM, as the Commission points out, constitutes, as a matter of fact, a decisive obstacle to the free movement of persons into the Netherlands, thus contradicting the objective of Directive 83/183 as stated in Article 1(1). That is not to say that taxes connected with use cannot be high. They can certainly be high, but only to the extent that there is evidence of a connection, in substance, with the use of the property within the country, which in this case is absent. How high is too high is a difficult question but it is certainly not difficult to say that in this case the size of the tax is so high that it becomes reasonably impossible to discern any connection with the use of the vehicle. Its calculation on the basis of the list price of the vehicle (which is linked to the decision of buying) is further evidence of its consumption nature. 63. On the other hand, the level of the tax rate and the fact that the taxable amount for the purposes of BPM is basically the list price of the vehicle, and not even, for example, the engine size, shows that the tax is clearly intended to generate revenue for the State. (28) A tax such as BPM, with these characteristics, can hardly be considered to be connected, in substance, with the use of the property within the country, but is rather a consumption tax normally applied to a motor vehicle once it is permanently imported by a private individual into the Netherlands. 4. Does BPM operate as a consumption tax within the meaning of Article 1(1) of Directive 83/183? 64. The conclusion that a tax such as BPM is ultimately a consumption tax within the meaning of Article 1(1), despite the purely fortuitous chronological circumstance, exclusively decided by the State, that it is levied not at the time of importation but at the time of registration, is emphasised by other information provided by the Commission and not contradicted by the Netherlands Government. 65. According to the Commission, BPM was introduced in 1993 and it purported to revise the regime of a pre-existing special consumption tax on motor vehicles (bijzondere verbruiksbelasting van personenauto’s, hereinafter ‘BVB’) for which the chargeable event was the importation or delivery of the vehicle and not its registration. Taxes levied on importation of property transferred from one MemberState ceased to be allowed after 31 December 1992, and therefore, according to the Commission, the BPM law purported to retain the taxable amount of BVB, by levying the tax at a different time. 66. The Court has already analysed this Netherlands tax in Wisselink (29) in the different context of the analysis of the compatibility of BVB with the Community system of value-added tax. BVB was levied only once and passed on in full at the next marketing stage without any fresh taxation and it amounted to 18.2% for the part of the list price below HFL 10 000 and 27.3% for the part of the list price in excess of that amount. (30) The BPM law expressly refers to BVB in Article 9(8), which excludes the amount corresponding to BVB from the list price used for the calculation of the taxable amount for the purposes of BPM, if the day of the assignment of the licence plate, or the day of the first use of the vehicle, falls before 1 January 1993, when BVB existed but BPM did not. Just as the amount of BPM is not included in the list price, the amount of the pre-existing BVB, is also excluded from that list price. 67. It is therefore the BPM law that expressly recognises this equivalence between BPM and the pre-existing special consumption tax. To this extent, even if this case were analysed in the light of the reasoning followed, in a different context, in Commission v Belgium, (31) the relationship between these two taxes is in my view strong enough to eliminate ‘the notional difference between the events upon which the two taxes become chargeable’. (32) 68. As the Court stated with respect to BVB in Wisselink, even though it does not exhibit the features of a turnover tax, ‘it is a consumption tax whose basis of assessment is proportional to the price of passenger cars …’. ‘[I]t is applied once only, at the time of supply by the manufacturer or at the time of importation, and is then passed on in full at the next marketing stage without being levied anew. BVB paid is not deductible but forms an integral part of the cost price of the car.’ (33) With BPM, too, once the amount of the tax is paid it becomes irreversibly incorporated in the price of the car in future transactions (i.e. with no possibility of reimbursement or suspension) and will be passed on to a subsequent buyer of the car. This characteristic is typical of a consumption tax and not of periodical or specific taxes connected with the use of the vehicle already described. 69. As a consumption tax affecting, in substance, the importation of motor vehicles at the time of their registration, it constitutes a good illustration of the kind of obstacle to the free movement of persons within the Community which Directive 83/183 was intended to eliminate. It suffices to imagine the situation of Mr A who lived and worked in Member State X. He bought a car there, and paid a tax such as BPM in that country at the time of registration of the vehicle. One year later he moved to Member State Y to work. There Mr A had to register the vehicle and pay, again, a tax with the characteristics of BPM. If at the end of that year Mr A decides to move to another MemberState (or even to return to Member State X …), he will be required to pay, for the third time, a tax such as BPM. Mr A had to pay a very high ‘price’ each time he moved from one Member State to another, corresponding more or less to one third of the list price of the vehicle. The cost of the car for Mr A doubled, although its market value naturally decreased. If Mr A had always remained in Member State X he would not have had such loss, even though the use made of the vehicle would have been to a large extent the same. 70. In my view, therefore, a tax such as the Netherlands BPM, which is levied once and for all at the time of registration of a motor vehicle subsequent to its importation, the amount of which is calculated on the basis of the list price of the car and is included in its cost and passed on in future transactions relating to the vehicle and whose characteristics do not reveal, in substance, a link with the costs related to the use of the vehicle within the country, does not constitute a tax falling outside the scope of Directive 83/183, within the meaning of Article 1(2), but is, rather, a consumption tax normally applied to personal property permanently imported by a private individual changing his normal place of residence from one Member State to another, within the meaning of Article 1(1) of Directive 83/183, which is the relevant instrument of Community law applicable. C – The competence of the Court to interpret provisions of an instrument of Community law which is applicable by virtue of domestic law. 71. If the Court considers that Directive 83/183 is not applicable to the case in the main proceedings, it will be necessary to analyse the specific questions referred by the Hoge Raad concerning the interpretation of certain concepts and provisions of Regulation No 918/83. 72. There is no doubt that Regulation No 918/83 is made applicable to the present situation before the Hoge Raad purely by virtue of Netherlands national law. This regulation is applicable to the importation of property originating in non-memberStates and concerns relief from Community import duties. It is therefore not applicable in the context of permanent imports from a MemberState. (34) 73. The Court has, nevertheless, explained its competence to interpret provisions in legal instruments of Community law, when requested to do so by national courts on the basis of Article 234 EC, in cases in which such provisions are applicable by virtue of a reference in domestic law, such as in the present case. (35) I do not wish to suggest that the Court, in the context of the present case, should follow a different path. The decisions of the Court have been clear in this regard. In Dzodzi the Court stated that ‘it is manifestly in the interest of the Community legal order that, in order to forestall future differences of interpretation, every Community provision should be given a uniform interpretation irrespective of the circumstances in which it is to be applied.’. (36) It is then for the national court to apply the provisions or concepts of Community law thus interpreted, taking into account the circumstances of fact and law of the particular case being examined. (37) D – The concept of ‘personal property’ within the meaning of Article 2(1) of Regulation No 918/83 74. The first question referred by the Hoge Raad concerns the interpretation of the concept of personal property within the meaning of Article 1(2)(c) of Regulation No 918/83, which defines ‘personal property’ as ‘any property intended for the personal use of the persons concerned …, including, in particular, private motor vehicles …’ and further provides that ‘portable instruments of the applied or liberal arts, required by the person concerned for the pursuit of his trade or profession, shall also constitute “personal property”. Personal property must not be such as might indicate, by its nature or quantity, that it is being imported for commercial reasons...’. 75. The question arises because, although at the time of the importation of the vehicle into the Netherlands in 1998 it was fully owned by Mr Feron and intended for his personal use, until 15 December 1997 the car did not belong to him and was made available by his employer not only for Mr Feron’s personal use but also for use in connection with his occupation as Océ’s employee. 76. The notion of personal property provided in Article 1(2)(c) does not make the characterisation of a vehicle as ‘personal property’ dependant upon the fact that the person concerned fully owns the property for a specific time before importation. It suffices that the vehicle ‘is intended for the personal use of the persons concerned or for meeting their household needs’, in order to be characterised as personal property. Contrary to the view of the Netherlands Government, the fact that Mr Feron was not the owner of the car during the six months before the date on which he ceased to have his normal place of residence in Austria does not affect the characterisation of the vehicle as his ‘personal property’. 77. Certainly, at the time of importation, the personal property― after having been characterised as such according to Article 1(2)(c) ― must belong to the person concerned in order to be granted relief from import duty. Furthermore Article 3(a) of Regulation No 918/83 establishes a requirement of attachment to the ‘personal property’, before importation, which constitutes a condition precedent to the grant to that property of relief from import tax. According to Article 3(a) such attachment is analysed not in terms of ownership, but rather in terms of ‘possession’ and ‘use’ during a certain period of time before importation. 78. In any event, these are conditions which must be met in order for tax relief to be granted to personal property, and not conditions for the characterisation of the property concerned as ‘personal property’. Even if these requirements for tax relief are not satisfied, the property may continue to be the ‘personal property’ of the person concerned, within the meaning of Article 1(2)(c) (although not qualifying for tax exemption), to the extent that it is intended for his ‘personal use’. 79. But should the notion of personal property in Article 1(2)(c) be restricted to property exclusively ‘intended for the personal use’ of the person concerned during the period of six months at the normal place of residence? This would be justified, according to the Netherlands Government, by the necessity for a strict interpretation of exempting provisions such as the one in the present case. The Netherlands Government implies, therefore, that the adjective ‘exclusive’ must be added to characterise ‘personal use’ in the definition of ‘personal property’ provided by Article 1(2)(c). 80. In my view, this constitutes a particularly strict interpretation. It leaves outside the scope of the concept of personal property all goods, which, despite the fact that they are intended for the exclusive personal use of the person concerned at the time of importation, were used also for the purposes of that person’s occupation, during the six months preceding the transfer of residence. Such a restrictive interpretation would have to be imposed by the objectives of the exemption regime established in Title I of Chapter I of Regulation 918/83. (38) 81. It is apparent from the preamble Regulation to 918/83 that such tax relief has the purpose of avoiding taxation which would be unjustified ‘in certain well defined circumstances, where by virtue of the special conditions under which goods are imported the usual need to protect the economy is absent’. Moreover, the objective of facilitating the establishment of the new residence in the MemberState, as well as the work of the customs authorities of the Member States, would be rendered more difficult if personal property imported without any commercial purpose were subject to taxation upon importation. (39) 82. The concern with the non-commercial nature of the importation assumes particular relevance in the analysis. It is made explicit by the last sentence of Article 1(2)(c) to Regulation No 918/83, which clarifies, in a negative way, the definition of personal property, by saying that this property ‘must not be such as might indicate, by its nature or quantity, that it is being imported for commercial reasons’. (40) If to this we add that such tax relief is particularly connected with the personal sphere of natural persons and their families, and does not have a significant impact on Member States’ fiscal resources, there is no justification for the restrictive interpretation of the notion of personal use proposed by the Netherlands Government. (41) 83. For the characterisation of certain property as personal property of an individual, the relevant criterion is not whether that property is used, or not, also for the pursuit of his trade or profession during the period preceding the importation. (42) This does not disqualify it as personal property. The relevant criterion is, rather, whether the importation being examined is of a non-commercial nature. The information provided by the Hoge Raad does not present any evidence that Mr Feron imported his car for any commercial purpose. 84. It cannot be assumed, therefore, that ‘personal use’ ought to be interpreted as requiring ‘exclusive personal use’ during the last six months of residence in the country of origin. Such distinction was not expressly made by the Community legislature and there is no reason why the expression should be interpreted in that way. (43) E – The concept of ‘possession’ within the meaning of Article 2(1) of Regulation No 918/83 85. The second and third questions referred by the Hoge Raad seek to ascertain whether a private individual is in possession of certain property (such as a motor vehicle), within the meaning of Article 3 of Regulation No 918/83, when that person has its exclusive use and an option to buy granted by the employer owner of that property at the time of delivery and eventually exercised that option before the change of residence occurred. 86. The Court has held that ‘the need for uniform application of Community law and the principle of equality require that the terms of a provision of Community law which makes no express reference to the law of the Member States for the purpose of determining its meaning and scope must normally be given an autonomous and uniform interpretation throughout the Community; that interpretation must take into account the context of the provision and the purpose of the legislation in question.’ (44) 87. Article 3 of Regulation No 918/83 requires possession and use of the non-consumable personal property during six months before the date on which the person concerned ceases to have his normal place of residence in the non-member country of departure. This requirement is stipulated in order to preclude the tax relief from operating as an incentive to sudden and possibly extensive acquisitions of property immediately before the change of residence. Through this requirement for possession during a certain period of time, the Community legislature defined the required level of attachment between the individual and the personal property indispensable in order to avoid such undesirable consequences. 88. The concept of ‘possession’ is a well-known legal concept extensively discussed in most legal systems. In broad terms, and as a common denominator, possession is characterised by the factual relationship concerning an object irrespective of whether one is owner or not. (45) It means the exercise of factual control by a person over a thing, either in its own or through someone else. From a different perspective it consists ultimately on an outward appearance that the possessor has a proprietary right over the thing which does not have to be ownership but can be a more limited proprietary interest. At this point the differences among legal systems become more visible, because it is the understanding of the structure of proprietary rights on each legal system that is ultimately at stake. (46) I do not endorse, therefore, the possibility, mentioned by the Hoge Raad, of construing the legal concept of possession within the meaning of Article 3 of Regulation No 918/83, by reference to the common language usage or generally accepted views. (47) This construction would not only ignore the manifest legal nature of the concept of possession, but also would render particularly difficult the achievement of a uniform meaning to this concept within Article 3 of Regulation No 918/83. 89. An autonomous interpretation which takes account of the context and objectives of the requirement of possession for the purposes of Article 3 of Regulation No 918/83 must be based on certain preliminary considerations compatible with the common core understanding of the concept of possession in Member States: firstly, that an individual may be in possession of certain property if he has de facto control over that property even though he is not the owner and does not claim to have the ownership over that property; and, secondly, that when the Community legislature employed the concept of possession in Article 3, it certainly did not intend to have its meaning dependaent on the understanding of each legal system with respect to possession and proprietary rights. 90. This has to be so despite the fact that the existence of a situation of possession over certain property will depend, in principle, on the rules of possession in force in the State in which the property is situated, just as the assessment of the existence and/or the extent of proprietary rights will depend on the national law of the place in which the property is situated, the lex situs. (48) In fact, if this approach were to be adopted for the interpretation of the concept of possession within the meaning of Article 3 of Regulation No 918/83, it would be impossible to achieve uniformity in the regime of relief from import taxes with respect to personal property, owing to the diversity between legal systems with respect to proprietary rights and, consequently, also to possession. (49) 91. Were that the case, in order to determine whether a certain person coming from a non-member country had possession over certain personal property, it would be necessary to determine whether that person could be considered possessor according to the law of his State of origin. The concept of possession would vary, in fact, according to the specific law of the place where the property was located during the six-month period referred to in Article 3. In the context of Regulation No 918/83, which deals with tax relief in the case of a transfer of residence from non-member States, this situation would mean that the concept could have as many different meanings as there are legal systems in the world. This would not only impose an enormous burden on the national authorities notably customs authorities, which would need to be familiar with the law of an almost infinite number of legal systems with respect to the concept of possession, but also result in a lack of uniformity in the rights granted by Regulation No 918/83. (50) 92. In my view, in order to correspond to the objectives for which the concept of possession was included in Article 3 it is sufficient that the private individual concerned has had, during the relevant six-month period, the exclusive use of that property and a legally enforceable right against the proprietor which enables him to acquire ownership. Such right does not need to be characterised as a proprietary right, according to the law of the normal place of residence in the third country of origin. It is sufficient that it is a qualified right in the sense that it gives rise to a claim against the owner in the event of breach. 93. I suggest that the Court, in the alternative, in case Directive 83/183 is deemed to be inapplicable, should answer the second and third questions referred by the Hoge Raad in the sense that when a private individual has property at his full disposal and for his exclusive use, including personal use, with the right to buy it expressly granted by the employer and owner of that property, at the time of its delivery, that person shall be considered to be in possession of such property within the meaning of Article 3 of Regulation No 918/83. III – Conclusion 94. I am therefore of the opinion that the Court should give the following answer to the questions raised by the national jurisdiction: 95. A tax such as Netherlands BPM, which is levied once and for all at the time of registration of a motor vehicle subsequent to its importation, the amount of which is calculated on the basis of the list price of the car and is included in its cost and passed on in future transactions relating to the vehicle and whose characteristics do not reveal, in substance, a link with the costs related to the use of the vehicle within the country, does not constitute a tax falling outside the scope of Directive 83/183, within the meaning of Article 1(2), but is, rather, a consumption tax normally applied to personal property permanently imported by a private individual changing his normal place of residence from one Member State to another, within the meaning of Article 1(1) of Directive 83/183, which is the relevant instrument of Community law applicable. 1 – Original language: Portuguese. 2 – OJ 1983 L 105, p. 1 3 – OJ 1983 L 105, p. 64. 4 – Directive 83/183 and Regulation No 918/83 were published on the same date as Directive 83/181/EEC determining the scope of Article 14(1)(d) of Directive 77/388/EEC as regards exemption from value added tax on the final importation of certain goods (OJ 1983 L 105, p. 38) and Directive 83/182/EEC on tax exemptions within the Community for certain means of transport temporarily imported into one Member State from another (OJ 1983 L 105, p. 59). All of these Directives, together with Regulation No 918/83, purport to establish a uniform regime of tax reliefs in the Community on the importation of property. 5 – Case C-280/91 Wiessman [1993] ECR I-971, paragraph 17. 6 – OJ 1992 L 376, p. 1. 7 – OJ 1991 L 76, p. 1. 8 – Recent cases at the Court of Justice (case C-387/01 Weigel, Opinion of Advocate General Tizzano delivered on 3 July 2003, and Case C-365/02 Lindfors, Opinion of Advocate General Stix-Hackl delivered on 4 March 2004) but not yet decided, have focused on this problem of the alleged inclusion within the scope of the tax exemption established in Directive 83/183, of taxes such as the NoVA and the Autovero payable in Austria and Finland respectively, in the context of the permanent importation of a motor vehicle by a natural person transferring his normal place of residence from one Member State to another. Immediately before the delivery of this opinion the Second Chamber delivered the judgment in Weigel which conflicts in part with the analysis followed in this opinion. 9 – Article 99 of the EEC Treaty (now Article 93 EC), which constitutes the legal basis of Directive 83/183, provides that ‘[t]he Council shall … adopt provisions for the harmonisation of legislation concerning turnover taxes, excise duties and other forms of indirect taxation to the extent that such harmonisation is necessary to the establishment and the functioning of the internal market …’. 10 – See the second recital of the preamble to Directive 83/183. 11 – Article 2(2)(a) provides that the exemption is to be granted only for personal property ‘which has been acquired under the general conditions of taxation in force in the domestic market of one of the Member States and which is not the subject, on the grounds of exportation, of any exemption or any refund of turnover tax, excise duty or any other consumption tax’. 12 – It is worth mentioning that the Economic and Social Committee considered that ‘the provisions of the draft Directive are a major step … [which] will have a significant psychological effect on members of the general public’. See Opinion on the proposal for a Council Directive on tax exemption for personal property of individuals permanently imported from another Member State (OJ 1976 C 131, p. 49). 13 – See the observations of the Danish Government in Lindfors. 14 – Opinion of Advocate General Stix Hackl in Lindfors, not yet published in ECR, point 39. 15 – Case C-451/99 Cura Anlagen v Auto Service [2002] ECR I-3193, paragraph 40. 16 – See Cura Anlagen, paragraph 41. 17 – Cura Anlagen, paragraph 40 (emphasis added). 18 – On its Opinion referred to in footnote 12 above, the Economic and Social Committee expressly stated with regard to Directive 83/183 that ‘[s]ince the proposed provisions are very generous, the detailed implementing provisions which are to be brought out subsequently should be tightly worded; they should not leave loopholes which might lead to abuse of the scheme and cause Member States to withdraw support for the very principle of tax exemptions’. 19 – Opinion of Advocate General Stix-Hackl in Lindfors, not yet published in ECR, point 56. 20 – Case 391/85 Commission v Belgium [1988] ECR 579. 21 – Commission v Belgium, point 44. 22 – In this regard it must be emphasised that according to Article 2(1) ‘«personal property» means property for the personal use of the persons concerned or the needs of their household. Such property must not, by reason of its nature or quantity, reflect any commercial interest …’ (emphasis added). 23 – Case C-176/96 Lehtonen and Castors Braine [2000] ECR I-2681, paragraphs 49 and 50. 24 – It follows from Article 19 of the road tax law (Wet van 16 december 1993, tot vastselling van de Wet op de motorrijtuigenbelasting 1994) that for a vehicle for which a licence plate was either suspenderd or cancelled, this tax will not be charged. According to Article 6 of the Wet van 21 april 1994, houdende vervanging van de Wegenverkeerswet, referred to by Article 19 of the road tax law, the owner of the vehicle may request the suspension of the licence plate. 25 – The Netherlands Government argues that the same occurs with the Netherlands road tax (the Motorrijtuigenbelasting). Nevertheless, as the Commission pointed out, this tax may be suspended as long as the owner of the car decides not to use it for a certain period, or permanently, within the country, thus avoiding making a contribution towards those costs. Nothing comparable occurs with BPM. This tax is levied only once, at the time of registration of the vehicle, and cannot be reimbursed, even partially, to the owner of the car if for some reason (sale to a buyer in a different country, subsequent change of residence by the owner, terminal accident, etc.) the vehicle is not used any more in the territory of the Netherlands. 26 – See above, point 30 of this Opinion. 27 – Unlike Regulation No 918/83, Article 2(2) of Directive 83/183 does not make the tax exemption dependent on the condition that the property has been in possession of the person during the last six months at his normal place of residence in the country of origin. Directive 83/183 only requires that the motor vehicle has been used by the person concerned in the Member State of origin, for a period of at least six months before the change of residence. 28 – This basic purpose of raising revenue for the State in the case of BPM largely takes priority even over some environmental concerns which are evident, for instance, in the level of deductions accepted by the BPM law from the basic 45% rate. 29 – Joined cases 93/88 and 94/88 Wisselink and Others [1989] ECR 2671. 30 – See Opinion of Advocate General Mischo in Wisselink, point 2. 31 – See footnote 20 above. 32 – Commission v Belgium, paragraph 25. 33 – Wisselink, paragraph 20. 34 – See, to that effect, Opinion of Advocate General Tizzano in Weigel, point 62. 35 – See Case C-247/97 Schonbroodt [1998] ECR I-8095, paragraphs 13 and 14, where the Court held that it had jurisdiction to interpret a certain provision of Regulation No 918/83 rendered applicable by Belgian domestic law. 36 – Joined cases C-297/88 and C-197/89 [1990] ECR I-3763, paragraph 37. 37 – Case C-231/89 Gmurzynska-Bscher [1990] ECR I-4003, paragraph 21; see also Case C-28/95 Leur-Bloem [1997] ECR I-4161, paragraphs 32 and 34. 38 – That a restrictive interpretation in the context of tax exemption regimes has to be based on the consideration of the objectives of such regimes, is made clear, for example, in Case C-287/00 Commission v Germany [2002] ECR I-5811, paragraphs 45 to 48. See also Case 348/87 StichtingUitvoering Financiële Acties [1989] ECR 1737, paragraphs 13 and 14. 39 – See specifically to this effect the Opinion of Advocate General Saggio in Case C-394/97 Heinonen [1999] ECR I-3599, point 16, with express reference to Regulation No 918/83 together with Council Directive 69/169/EEC of 28 May 1969 on the harmonisation of provisions laid down by law, regulation or administrative action relating to exemption from turnover tax and excise duty on imports in international travel (OJ, English Special Edition 1969 (I), p. 232). See also the judgment in Heinonen, paragraph 24. 40 – See with respect to the justification for these autonomous reliefs from customs duty the ‘Proposal for a Council Regulation setting up a Community system of relief from customs duty (presented by the Commission to the Council)’ Com (79) 104 final, Brussels, 12 March 1979, paragraph 4. 41 – See Opinion on the proposal for a Council Regulation setting up a Community system of reliefs from customs duty (OJ 1980 C 72, pp. 20 and 21) where the Economic and Social Committee observed that ‘[i]t should thus be clearly stated that the subject matter being dealt with affects the lives of private individuals and families, and a restrictive approach should not be adopted. Furthermore, the conditions under which the goods granted relief are imported are such that these goods cannot be in real competition with similar goods of Community origin or have an adverse tax effect on States’ tax revenue.’ Later in the Opinion, regarding the definition of personal property, the Committee suggested that ‘saddle horses’ be changed to ‘riding animals’ (a change which was eventually accepted in the form of ‘saddle animals’) with the following comment: ‘[e]ven though the list is not exhaustive, terms which could be used to restrict the text’s scope must be avoided’. 42 – It is significant that Article 1(2)(c) of Regulation No 918/83 expressly states that ‘portable instruments of the applied or liberal arts, required by the person concerned for the pursuit of his trade or profession, shall also constitute “personal property”. Personal property must not be such as might indicate, by its nature or quantity, that it is being imported for commercial reasons …’. 43 – It was affirmed, in a different context, that when adopting provisions granting suspension of customs duties, the Council must take account ‘of the requirements of legal certainty and of the difficulties confronting national customs administrations’ (Case 58/85 [1986] ECR 1131, paragraph 12). Such provisions must be interpreted according to objective criteria derived from their wording. 44 – See Case 327/82 Ekro [1984] ECR 107, paragraph 11, Case C-287/98 Linster [2000] ECR I-6917, paragraph 43, and Case C-357/98 Yiadom [2000] ECR I-9265, paragraph 26. 45 – See Beekhuis, Jacob H., ‘Structural Variations in Property Law – Civil Law’, International Encyclopedia of Comparative Law, Vol. VI, Property and Trust, Chapter 2, J.C.B. Mohr, 1972, p. 18, and Lawson, F.H., ‘Structural Variations in Property Law – Common Law’, ult. op. cit., p. 24. 46 – See Sacco, Rodolfo, ‘Possesso (Diritto Privato)’, Enciclopedia del Diritto, Vol. XXXIV, Giuffrè, pp. 491 to 519, esp. pp. 496 to 499 and also pp. 506 to 510. 47 – See, to that effect, Case 139/84 Van Dijk’s Boekhuis [1985] ECR 1405, paragraph 20 and operative part. 48 – This classic conflict of laws approach may be seen in the Opinion of Advocate General Jacobs in Case C-291/92 Armbrecht [1995] ECR I-2775, at I-2790, point 15, on which it affirmed that ‘[t]here can, I think, be little doubt that Article 5(1) [of Directive 77/388/EEC which provides that «supply of goods shall mean the transfer of the right to dispose of tangible property as owner»] refers to national law for the purpose of determining the extent of the property rights transferred …’. 49 – See Gambaro, Antonio, ‘Perspectives on the codification of the law of property, an overview’, European Review of Private Law, Vol. 5, (1997), pp. 497-504, p. 503. 50 – See above point 74 of this Opinion. Also unacceptable would be the alternative of interpreting the concept of possession according to the law of the Member State in which the person concerned established the new normal place of residence. In this case, the lack of uniformity in the interpretation would also exist and would, de facto, leave entirely to that Member State the decision to grant the exemption.